By Courtney Schlisserman
Jan. 13 (Bloomberg) -- The U.S. trade deficit 29 percent in November, the most in 12 years, as tumbling oil prices and a slump in consumer spending slashed imports.
The gap shrank more than forecast to $40.4 billion, the smallest since November 2003, from a revised $56.7 billion in October, the Commerce Department said today in Washington. Americans bought 12 percent fewer goods and services from overseas, sending imports to the lowest level in three years.
World trade is likely to contract as commodity prices fall and the credit crunch causes consumers and businesses worldwide to pare spending, deepening the economic slump. President-elect Barack Obama faces growing fissures with trading partners as U.S. steel and textile companies seek to slow imports while automakers get government loans to avoid bankruptcy.
“The fact that this is a consumer-led recession means the U.S. trade balance is likely to continue to improve,” said Kevin Logan, a senior market economist at Dresdner Kleinwort in New York. “It will give the economy a bit of a cushion.”
Economists had forecast the deficit would narrow to $51 billion, according to the median of 66 projections in a Bloomberg News survey. Estimates ranged from gaps of $39 billion to $58 billion.
GDP Outlook
After eliminating the effect of prices, which are the numbers used when calculating gross domestic product, the deficit dropped to $39.5 billion from $45.6 billion in October. By subtracting less from growth, the improvement may prompt some economists to boost GDP forecasts for last quarter.
Trade has added to the economy since the first three months of 2007.
The world’s largest economy probably shrank 5 percent in the last three months of 2008 and will continue to contract through the first half of 2009, according to the median forecast of economists surveyed this month.
Imports fell to $183.2 billion, as demand for foreign crude oil, automobiles, computers and televisions sagged, reflecting the deepening slump in consumer and business spending.
The price of imported oil decreased by a record $25.30 a barrel to $66.72 in November, according to today’s report.
Imports from China also declined by the most on record, narrowing the politically sensitive trade deficit to $23.1 billion.
‘Sharp Slowing’
“Heightened systemic risks, falling asset values, and tightening credit have in turn taken a heavy toll on business and consumer confidence and precipitated a sharp slowing in global economic activity,” Federal Reserve Chairman Ben S. Bernanke said in a speech today in London.
U.S. companies are still pressing for more decreases. During the election campaign Obama pledged to take a harder line against China by forcing it to raise the value of its currency, and by accepting industry petitions to impose quotas, called safeguards, on Chinese imports, reversing Bush administration policy. Textile, steel and other U.S.-based manufacturers say they want Obama to make good on those pledges.
China’s economy will expand 7.5 percent this year, the slowest pace in almost two decades, as their exports slump, according to a forecast from World Bank. The lender also projects international trade will shrink this year for the first time in more than a quarter century.
Auto Bailout
Obama faces “a trans-Atlantic trade war” should his economic policies focus on preserving “outdated structures” of U.S. carmakers, a member of German Chancellor Angela Merkel’s Christian Democrats said yesterday. General Motors Corp. is to receive $13.4 billion and Chrysler LLC $4 billion in loans from the U.S. Treasury in return for restructuring to assure their long-term viability.
Exports also plunged in November, declining for a fourth consecutive month as growth overseas slowed. Demand for American- made goods dropped 5.8 percent to $142.8 billion. Foreign purchases of automobiles were the lowest since October 2006.
Today’s report indicates international demand is no longer helping to support factories. The Institute for Supply Management said on Jan. 2 that its export gauge for manufacturers dropped to 35.5 in December, a record low.
Deliveries by Boeing Co. to buyers overseas continued to weaken in November as the world’s second-biggest airplane maker recovered from a two-month strike that was resolved Nov. 1. Boeing delivered 3 aircraft to foreign buyers during the month, down from 4 in October, 6 in September and 23 in August, according to company data.
The Chicago-based planemaker said Jan. 9 it plans to cut about 4,500 jobs, or 6.6 percent of its commercial-aircraft workforce, this year to reduce costs as the weakening global economy hurts demand for new planes.
“We are taking prudent actions to make sure Boeing remains well positioned in today’s difficult economic environment,” Scott Carson, the head of Boeing Commercial Airplanes, said in the statement.
The International Monetary Fund forecasts that advanced economies will contract simultaneously this year for the first time since World War II.
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
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