Trade deficit fell sharply in November
AuthorAffiliation Staff Reporter of The Wall Street Journal</br></br>The deficit in goods narrowed $1.3 billion to $12.48 billion, while the services surplus shrank, too, to $5.42 billion from $5.58 billion.</br></br>The November deficit represents the fourth consecutive month in which the trade deficit narrowed, according to yesterday's Commerce Department report. Clinton administration officials quickly seized on the November improvement as evidence that America's worrisome trade deficit has finally turned around for good. "Obviously, we're going in the correct direction," U.S. Trade Representative Mickey Kantor said. He and Commerce Secretary Ron Brown noted that the trade picture improved despite weak economic growth in Canada, Mexico and Japan, the major U.S. trading partners.</br></br>But economists, while surprised by the narrowed deficit, cautioned that the U.S. trade picture isn't exactly radiant and the deficit isn't likely to keep shrinking in coming months. "Our trading partners are probably under the same kinds of competitive pressures which we are," said Alan Levensen, an economist with UBS Securities in New York. Foreign producers, he said, are encountering sluggish U.S. demand in much the same way U.S. exporters have been plagued by weak demand abroad. "We've improved so much in November that you'll see a widening after this," he predicted.</br></br>The trade gap with China, which expanded most of last year, contracted in November to $2.75 billion from October's $3.63 billion. But that's not likely to ease deepening trade tensions between Washington and Beijing. Yesterday, Mr. Kantor, who has been monitoring reports that China sold nuclear weapons-related equipment to Pakistan last year, warned that the "overall atmosphere" between the U.S. and China "does have some effect" on trade issues. That includes whether the U.S. will slap more than $1 billion in trade sanctions on China if Beijing doesn't crack down on copyright violations.