The U.S. trade deficit narrowed unexpectedly in November to $38.0 billion, as civilian aircraft sales pushed exports to their highest level in three years, the U.S. Commerce Department said on Wednesday.
The monthly trade gap was the smallest since October 2002 and well below the mid-point estimate of $42.0 billion from analysts surveyed before the report. Exports rose 2.9 percent to $90.6 billion, while imports retreated slightly to $128.6 billion from October's record high.
The rise in exports was led by a $1.2 billion month-to-month jump in civilian aircraft shipments. Exports of other capital goods, such as industrial and aircraft engines, also showed healthy gains.
"The trend in capital goods is doing well. With the falling dollar, foreigners are looking at the value of U.S. capital equipment. That's the sector doing the best," said Kurl Karl, chief economist with Swiss Re in New York.
U.S. exports have risen steadily over the past year, aided by the weaker dollar. The reversal has led to string of European policy-makers expressing concern that the euro's rapid rise against the dollar could snuff out an export-led recovery in Europe.
Despite the unexpected narrowing in November, cumulative figures show the trade deficit has already set a new annual record. The trade gap totaled $446.8 billion for the first 11 months of 2003, surpassing the record of $418.0 billion in 2002.
The burgeoning U.S. trade deficit has become a political issue, with Democrats tying the loss of U.S. manufacturing jobs to rising imports. However, on Tuesday, Federal Reserve Chairman Alan Greenspan said he was optimistic that the large U.S. trade deficit could be managed without government intervention, and warned against "creeping protectionism," which he said was a greater threat to the global economy.
The politically sensitive trade deficit with China totaled $114.1 billion through November, surpassing the record of $103 billion set in 2002. Analysts expect the trade deficit with China to reach a record $125 billion in 2003.
However, China has emerged as a top export market for U.S. goods despite the wide gap in trade. U.S. exports to China were a record $3.3 billion in November.
U.S. telecommunications and computer equipment companies signed $2.3 billion in contracts with Chinese companies on Tuesday in a deal hailed by Commerce Secretary Don Evans as a sign of growing economic and trade trade ties.
A drop in U.S. oil imports to the lowest level since February also helped narrow the trade gap in November.