U.S. trade deficit to have narrowed slightly in November, likely to recover in Q4 2019

The U.S. trade balance report for the month of November is set to release tomorrow. Tomorrow’s report will gain more attention than usual because of the unexpected large fall seen in the advance goods trade report. The advance goods trade deficit contracted USD 3.6 billion in November and came in about USD 5 billion below expectations. U.S. businesses and Chinese producers’ efforts to keep a step ahead of tariffs led to a sharp rise in imports in August and the past three months have seen imports fall at a 13 percent annual rate.

While some of the fall in imports has been countered by less inventory building, the fall in imports might lead to an above expected improvement in the trade deficit in the fourth quarter and boost estimates for fourth quarter real GDP growth, said Wells Fargo in a research report.

“The advance report has been a fairly good predictor of the goods portion of the international trade report, so a substantial improvement is now widely expected”, added Wells Fargo.