By Doug Palmer
WASHINGTON (Reuters) - The U.S. trade deficit shrank 28.7 percent in November, the biggest contraction in 12 years, as weak consumer demand and plummeting oil prices caused a record drop in imports, a U.S. Commerce Department report showed on Tuesday.
The $40.4 billion trade gap in November was the lowest in five years and much lower than expected. Wall Street analyst had expected the trade gap to narrow to around $51.3 billion, from a downwardly revised $56.7 billion in October.
U.S. imports in November fell a record 12 percent to $183.2 billion, as the global financial crisis scared businesses and consumers into cutting their spending.
Imports of both capital and consumers goods were the lowest since mid-2006, while auto and auto part imports fell to levels not seen since August 2003.
The average price for imported oil plunged a record $25.30 per barrel in November as recession fears deepened. Along with the drop in prices to $66.72, the average daily volume of U.S. oil imports fell 1.7 million barrels.
Oil prices have continued to fall since November, suggesting even smaller trade gaps in the month ahead.
"The beauty part is that the trade deficit will shrink as much in the next couple of months because oil prices fell at a pretty constant rate," said Christopher Low, chief economist at FTN Financial in New York, "Obviously it is one of the few things that is working right for ... (the economy) this quarter, but it will be more than offset by other things of course."
Imports from China fell by a record $5.7 billion in November to $28.3 billion. However, the year-to-date U.S. trade gap with China totaled $246.5 billion through the end of November, putting it within striking distance of surpassing the record $256.3 billion set in 2007.
The overall U.S. trade deficit totaled $630.9 billion through November, down from $642.7 billion in the same period last year.
The dollar extended gains against the euro on the trade data and also rose against the yen.
U.S. stock index futures and Treasury debt prices stayed at lower levels after the data.
U.S. exports, in sign of global economic woes, fell 5.8 percent in November to $142.8 billion. Total U.S. goods exports were the lowest since June 2007, while auto and auto part exports were the lowest since October 2006.
(Reporting by Doug Palmer, Editing by Neil Stempleman)
