Trade deficit declines for third consecutive month

Wednesday, January 10th 2007, 8:53 am

By: News On 6

WASHINGTON (AP) _ The U.S. trade deficit unexpectedly fell for a third straight month in November as exports of commercial airplanes and other products hit an all-time high and the bill for foreign oil declined to the lowest level in 16 months.

The Commerce Department reported Wednesday that the deficit fell by 1 percent to $58.2 billion in November, the lowest monthly total since July 2005. The deficit hasn't declined for three consecutive months since early 2003.

The November improvement came as a surprise. Analysts had forecast a slight increase from October's deficit of $58.8 billion.

The politically sensitive deficit with China declined in November after setting records for three straight months. Shipments of cell phones and clothing eased following a huge surge in previous months as retailers had stocked their shelves for holiday shoppers.

Even with the improvement, the imbalance with China for 2006 climbed to an all-time high of $213.5 billion, surpassing the 2005 12-month total of $202 billion, which had been the previous record deficit for a single country.

The overall deficit for 2006 is running at an annual rate of $765.4 billion, putting the country on track to see a record imbalance for the fifth consecutive year. The deficit for all of 2005 was $716.7 billion.

While American consumers benefit from cheaper goods imported from abroad, critics contend that the deficit represents the loss of manufacturing jobs to foreign nations that compete unfairly against American workers. Since President Bush took office in 2001, the country has lost nearly 3 million manufacturing jobs.

Democrats used the soaring trade deficits, especially in hard-hit manufacturing regions, in their campaigns last fall to win back control of Congress and they are now expected to step up pressure on the administration to do more to lower the trade deficit.

For November, U.S. exports of goods and services rose 0.9 percent to a record high of $124.8 billion, reflecting a big jump in sales of commercial aircraft and aircraft parts.

Imports were also up, rising by 0.3 percent to $183 billion. This increase came even though America's bill for foreign oil fell to $21.5 billion, an improvement of $86 million from the October level and far below the all-time high of $29.3 billion set in August when global oil prices were surging.

Analysts believe oil imports will continue to moderate with oil now trading around $55 per barrel, compared to the all-time high above $78 per barrel set last summer.

After China, the United States ran its second largest deficit in November with Japan, an imbalance of $7.9 billion, down 4.2 percent from October.

The deficit with Canada, America's biggest trading partner, slipped to $5.4 billion in November, down 0.8 percent from October, while the imbalance with the European Union edged up 0.5 percent to $9.5 billion.