November trade deficit hits $47.8 billion

[January 14, 2012]  WASHINGTON (AP) -- The U.S. trade deficit widened in November for the first time in five months, largely because of a spike in the price of imported oil.

Still, exports fell for a second straight month, a sign that Europe's slowdown has begun to affect the U.S. economy.

The trade gap rose 10.4 percent to $47.8 billion, the Commerce Department said Friday.

Overall exports dropped 0.9 percent to $177.8 billion. But American exports to Europe fell more sharply -- nearly 6 percent.

Many economists say Europe may already be in a recession, which would cut demand for American-made goods. Europe buys roughly one-fifth of U.S. exports.

Growth weakens when exports fall because factories tend to produce fewer goods and U.S. companies earn less.

"The decline in our sales to Europe was fairly large and may be the start of a longer-term trend in declining exports to the Continent," said Joel Naroff, chief economist at Naroff Economic Advisors.

Higher oil prices were the main reason the deficit widen. Imports rose 1.3 percent to a record $225.6 billion. The price of oil rose above $100 per barrel in November. It had been as low as $75 per barrel in the previous month.

The trade deficit hit a 2011 peak of $52.1 billion before it fell for four straight months. That helped boost economic growth because foreign nations were buying more American goods.

Exports hit an all-time high of $180.6 billion in September, reflecting healthy sales of American-made cars and trucks in foreign markets.

Higher exports lead to more U.S. jobs and higher consumer spending, which boosts economic growth.

A weaker trade deficit will subtract from growth in the final three months of the year. Many economists had expected growth to be strong after seeing more hiring, an increase in inventory growth and faster production at U.S. factories.

"The widening in the U.S. trade deficit in November ... is perhaps the first real sign that the crisis in Europe and the more general global slowdown is starting to take its toll on the U.S.," said Paul Dales, senior U.S. economist for Capital Economics.

Through 11 months, the 2011 deficit is running at an annual rate of $559.4 billion, 11.9 percent above the 2010 deficit of $500 billion.

For November, the deficit with China dropped 4.3 percent to $26.9 billion. But for the year, the imbalance with China climbed to $272.3 billion. That's on track to surpass last year's record of $273.1 billion.

Auto imports rose to $22.3 billion. But consumer goods fell to $42.5 billion, reflecting declines in household goods, clothing and televisions.

The drop in exports covered a number of manufacturing categories. Sales of commercial aircraft, U.S.-made cars and machinery were all down.

[Associated Press; By MARTIN CRUTSINGER]

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