Our trade deficit fell 21.0% in November, the largest one month drop since the 2009 recession, as both the value of our exports and the value of our imports decreased, but the value of our imports decreased by quite a bit more.  The Commerce Dept report on our international trade in goods and services for November indicated that our seasonally adjusted goods and services trade deficit fell by $16.3 billion to $61.5 billion in November, from an October deficit of $77.8 billion, which was revised from the $78.2 billion deficit reported for October a month ago.  The value of our exports fell by $5.1 billion to a rounded $251.9 billion in November as a $5.3 billion decrease to $170.8 billion in our exports of goods was slightly offset by a $0.2 billion increase to $81.0 billion in our exports of services, while the value of our imports fell by $21.5 billion to $313.4 billion on a $20.7 billion decrease to $254.9 billion in our imports of goods and a decrease of $0.8 billion to $58.5 billion in our imports of services.  Export prices were on average 0.3% lower in November, which means the decrease in the value of this month's exports was partly due to lower prices, and that real exports actually fell about 1.7%, while import prices were 0.6% lower, meaning that the drop in the value of our imports was also exacerbated by lower prices and that our real imports probably fell by about 5.8%.....

The $5.3 billion decrease in the value of our exports of goods in November largely resulted from lower exports of industrial supplies and materials and of capital goods. Referencing the Full Release and Tables for November (pdf), in Exhibit 7, we find that the value of our exports of industrial supplies and materials fell by $3,613 million to $66,249 million on a $1,613 million decrease in the value of our exports of natural gas, a $842 million decrease in the value of our exports of nonmonetary gold, and a $1,358 million decrease in the value of our exports of crude oil, which were partially offset by a $386 million increase in the value of our exports of fuel oil, and that the value of our exports of capital goods fell by $1,256 million to $48,398 million, led by a $543 million decrease in our exports of civilian aircraft and a $249 million decrease in our exports of telecommunications equipment..  In addition, our November exports of foods, feeds and beverages fell by $596 million to $13,546 million, led by lower exports of meat, poultry and soybeans, and our exports of other goods not categorized by end use fell by $634 million to $5,976 million.  Partially offsetting the decreases in the value of those export categories, the value of our exports of consumer goods rose $871 million to $20,412 million due to a $1248 million increase in our exports pharmaceutical preparations, and the value of our exports of automotive vehicles, parts, and engines rose by $261million to $13,966 million led by a $475 million increase in our exports of trucks, buses, and special purpose vehicles, which were mostly offset by a $420 million decrease in our exports of new and used passenger cars.

Exhibit 8 in the Full Release and Tables gives us seasonally adjusted details on our imports of goods, and shows that lower imports of consumer goods, of industrial supplies and materials, of automotive vehicles, parts, and engines, and of capital goods accounted for most of November's $20.7 billion decrease in our imports of goods.  The value of our imports of consumer goods fell by $8,776 million to $59,775 million on a $2,885 million decrease in our imports of pharmaceutical preparations, a $2,700 million decrease in our imports of cellphones, a $608 million increase in our imports of toys, games, and sporting goods, and a $308 million increase in our imports of apparel and textiles other than those of wool or cotton, while the value of our imports of industrial supplies and materials fell by $3,711 million to $62,114 million, led by a $1,674 million decrease in the value of our imports of crude oil, and a $301 million decrease in the value of our imports of natural gas. In addition, the value of our imports of automotive vehicles, parts and engines fell by $3,272 million to $32,294 million on a $1,596 million decrease in our imports of new and used passenger cars, a $992 million decrease in our imports of automotive parts and accessories other than engines, chassis, and tires, and a $315 million decrease in our imports of trucks, buses, and special purpose vehicles, and the value of our imports of capital goods fell by $3,031 million to $71,523 million led by a $1,125 million decrease in our imports of computers and a $732 million decrease in our imports of telecommunications equipment. Furthermore, the value of our imports of foods, feeds, and beverages fell by $977 million to $16,723 million, led by lower imports of wine, beer, and other alcoholic beverages and of green coffee, and our imports of other goods not categorized by end use fell by $853 million to $9,915 million....

The News Release for this month's report also summarizes Exhibit 19 in the Full Release and tables, which gives us surplus and deficit details on our goods trade with selected countries:

The November figures show surpluses, in billions of dollars, with South and Central America ($5.3), Netherlands ($2.4), Hong Kong ($1.6), United Kingdom ($1.2), Australia ($1.0), Singapore ($1.0), Brazil ($0.5), and Belgium ($0.1). Deficits were recorded, in billions of dollars, with China ($20.4), European Union ($19.5), Mexico ($10.9), Vietnam ($8.5), Germany ($7.2), Ireland ($5.6), Japan ($5.6), Taiwan ($4.1), South Korea ($3.7), Canada ($3.5), Italy ($3.4), Malaysia ($3.1), India ($2.3), Switzerland ($1.3), Saudi Arabia ($0.9), Israel ($0.7), and France ($0.6).

• The deficit with China decreased $5.8 billion to $20.4 billion in November. Exports decreased $0.1 billion to $13.5 billion and imports decreased $5.8 billion to $33.9 billion.

• The deficit with the European Union decreased $3.6 billion to $19.5 billion in November. Exports decreased $0.3 billion to $28.5 billion and imports decreased $3.9 billion to $48.0 billion.
• The deficit with Switzerland increased $0.8 billion to $1.3 billion in November. Exports decreased $1.8 billion to $3.0 billion and imports decreased $1.0 billion to $4.2 billion.

To estimate the impact of October's and November's trade in goods on the eventual 4th quarter GDP growth figures, we use exhibit 10 in the pdf for this report, which gives us monthly goods trade figures by end use category and in total, already adjusted in chained 2012 dollars, the same inflation adjustment used by the BEA to compute trade figures for GDP, with the exception that they are not annualized here.  From that table, we can figure that our 3rd quarter real exports of goods averaged 162,229.7 million monthly in 2012 dollars, while our similarly inflation adjusted October and November exports were at 158,155 million and 154,116 million respectively, in that same 2012 dollar quantity index representation.  Annualizing the change between the average monthly real exports of the two quarters, we find that the 4th quarter's real exports of goods are running at a 14.2% annual rate below those of the 3rd quarter, or at a pace that would subtract about 1.60 percentage points from 4th quarter GDP if it were to continue at the same pace through December. In a similar manner, we find that the 3rd quarter real imports of goods averaged 263,682 million monthly in chained 2012 dollars, while inflation adjusted October and November imports were at 271,229 million and 251,265 million in 2012 dollars respectively.  Those chained dollar representations of real goods imports would indicate that so far in the 4th quarter, our real imports have been falling at annual rate of 3.64% from those of the 3rd quarter. Since imports are subtracted from GDP because they represent the portion of the consumption and investment components of GDP that occurred during the quarter that was not produced domestically, their decrease at a 3.64% rate would conversely add about 0.60 percentage points back to 4th quarter GDP.. Hence, if our October and November trade deficit in goods is maintained at the same levels throughout December, our deteriorating balance of trade in goods would subtract a net of roughly 1.00 percentage points from the growth of 4th quarter GDP.....

Note that we have not computed the impact of the usually less volatile change in services here, because the BEA does not provide inflation adjusted data on those, and because we don't have a straightforward way to adjust the various services for all their price changes. However, we do know that the value of our exports in services grew by $2.0 billion over October and November, whereas the value of our imports in services fell $1.0 billion over those two months, which would suggest a moderate boost to GDP on the services side of the trade ledger.

Note: the above was first published as part of my weekly synopsis at MarketWatch 666...