Jan. 14 (Bloomberg) -- The U.S. trade deficit shrank to $38 billion in November, the narrowest in 13 months, after exports climbed to a three-year high. Shipments to China were a record. The excess of imports over exports of goods and services compared with a trade deficit of $41.6 billion a month earlier, the Commerce Department reported in Washington. The trade gap in November was the narrowest since $35.2 billion in October 2002.
The surge in U.S. exports was helped by a dollar that declined 15 percent against a basket of six major currencies last year, and by improved growth in the rest of the world. The rise in foreign demand is helping U.S. manufacturers and may lift gross domestic product, while imports still feed consumer spending. November imports were the second highest on record. ``This is a sign that the weak dollar is boosting exports,'' said Maria Forres, an economist at Griffin Kubik Stephens & Thompson in Chicago. The deficit is likely to ``stay within this range as the strengthening U.S. economy boosts imports.'' U.S. producer prices rose 0.3 percent in December after falling 0.3 percent in November, the Labor Department reported separately. The core rate, which excludes food and energy, fell 0.1 percent, the same as the prior month. All producer prices rose 4 percent from a year earlier. Core prices were up 1 percent. U.S. exports rose 2.9 percent to $90.6 billion, the most since November 2000, from $88.1 billion. The increase was the third in a row, and included $3.3 billion of shipments to China, the most ever.
Capital Goods, Aircraft
Shipments of capital goods, including a 59 percent boost in civilian aircraft, led the increase in exports to all countries. Exports of food products and consumer goods also rose. Boeing Co., the world's second biggest maker of airplanes after Europe's Airbus SAS, says it delivered 15 aircraft to foreign buyers in November, up from 13 in October. November imports fell 0.8 percent to $128.6 billion, second only to the high of $129.7 billion set in October. Federal Reserve Chairman Alan Greenspan said yesterday that the record current account deficit, a broader measure of trade that includes investments, has posed no threat to the global economy so far and hasn't resulted in higher inflation in the U.S. The central banker told participants at a Bundesbank conference in Berlin that he was ``quite optimistic'' there would be no dollar crisis. Economists had expected the deficit to widen to $42 billion in November, based on the median of 64 forecasts in a Bloomberg News survey, from $41.8 billion previously reported for October.
U.S. Economic Growth
The trade deficit had averaged in excess of $41 billion a month since December 2002, a year after the last recession ended. Consumer spending, which accounts for 70 percent of the economy, accelerated in the first nine months of 2003. For the first 11 months of last year, the deficit was $446.8 billion, compared with $418 billion for all of 2002. The U.S. economy will probably expand 4.4 percent this year, the most since 1999, after growing 3.1 percent in 2003, according to the latest Bloomberg News media forecast. The Blue Chip Economic Indicators survey of 54 economists predicts growth of 4.6 percent, the most in 20 years. The deficit with China narrowed to $10.8 billion from $13.6 billion. Imports from China fell. Exports were a record $3.3 billion.
Oil Imports
U.S. manufacturers have urged Congress and the Bush administration to take measures against China. They say China is using its pegged currency to gain advantage. U.S. imports of consumer goods fell 0.8 percent to $28.8 billion. The value of U.S. oil imports fell to $7.7 billion from $8.6 billion the previous month. The price of oil was $26.52 a barrel compared with $26.25. The nation imported 290.2 million barrels, compared with 327.4 million barrels the month before. Crude oil futures surged to as much as $33.20 a barrel, an eight-month high, in mid-November on speculation supplies wouldn't be enough to carry the U.S. through the winter. Imports of capital goods rose 0.8 percent to $25.7 billion. Business investment will probably overtake consumer spending as the engine of economic growth this year, the Blue Chip survey found.
Semiconductor Sales
Worldwide semiconductor sales rose to more than $16 billion in November, up more than 25 percent from a year earlier, the Semiconductor Industry Association reported earlier this month. The group predicted a 16 percent increase in sales for the year. Taiwan Semiconductor Manufacturing Co., the world's largest supporter of made-to-order computer chips, said its December sales were up 68 percent from a year earlier. Taiwan-based United Microelectronics Corp., the No. 2 supplier, reported a 53 percent increase in sales. Expanding economies have proved a draw for U.S. goods and services. China's economy grew 8.3 percent in 2003, the fastest pace in six years, after an 8 percent growth rate in 2002, the Beijing government reported this week. It is the fastest growing economy among the world's 10 biggest.
The Paris-based Organization for Economic Cooperation and Development projects that its 30 member countries, which include the U.S., Japan, Germany, France, Mexico and South Korea, will grow an average of 3 percent in 2004 and 3.1 percent in 2005, up from about 2 percent last year. Capital, Consumer Goods Exports Exports of consumer goods rose 7.3 percent to $8.1 billion. Exports of capital goods rose 6.5 percent to $27.3 billion. Siebel Systems Inc., the world's largest maker of customer- service software, along with competitors Oracle Corp. and SAP AG, says its global sales are improving with a rebound in capital spending. Chinese companies are increasing purchases in the U.S. as well. Motorola Inc., Lucent Technologies Inc., Cisco Systems Inc. and other suppliers yesterday won a total of $2.3 billion in contracts to provide equipment for Chinese telephone companies, the U.S. Commerce Department said.
Chinese companies bought $8.5 billion of airplanes, cars, machinery and agricultural products in the U.S. in November and December. For U.S. retailers, the holiday sales season that just ended was the best in four years. Retailers expect a 5 percent increase in sales this year, the National Retail Federation said. A new wave of tax refunds and an improving economy contributed to the forecast. Wal-Mart Stores Inc., and Kohl's Corp. and other discounters that hold down costs by importing products are most likely to benefit from the higher sales, analysts and executives said. U.S. imports of autos and parts fell 0.5 percent to $18.2 billion. Exports of automobiles and parts from all countries: fell 3.9 percent to $6.7 billion. The deficit with Canada, the largest U.S. trading partner, narrowed to $10.8 billion. The gap with Mexico narrowed to $3 billion. The shortfall with Japan narrowed to $5.7 billion. The deficit with the European Union narrowed to $7.4 billion. //www.bloomberg.com