Trade gap at 5-year low
Oil price decline in November helps send deficit down to $40.4 billion. Global recession cuts into exports.
NEW YORK (CNNMoney.com) -- The nation's trade deficit narrowed sharply in November, to the lowest level in 5 years, reflecting the sharp drop in the price of imported oil, according to a government report released Tuesday.
The U.S. Department of Commerce reported that imports exceeded exports by $40.4 billion, down substantially from a revised $56.7 billion trade gap in October.
Economists had expected a $51 billion gap, according to a consensus estimate compiled by Briefing.com.
The last time that the trade deficit was this narrow was November 2003, when the gap was $40 billion, according to Department of Commerce records.
The drop in the trade gap was the biggest monthly change in dollar terms since the government added the service sector to the report in 1992.
Imports fell $25 billion, or 12%, to $183.2 billion in November, while exports fell $8.7 billion, or 5.7%, to $142.8 billion.
The plummeting price of crude oil was a key factor in the import decline. According to the report, the drop in imports reflects a decrease by $16.5 billion in industrial supplies and materials, which includes oil.
"The collapse in the price of petroleum since July finally showed up in the nation's import bill," wrote Jay H. Bryson, global economist at Wachovia, in a research note.
According to the report, the part of the trade gap attributed to oil plunged $12.9 billion, or 40%, to $19.4 billion.
The average price of a barrel of imported oil in the month toppled 27% to $66.72 in the month, according to the report, but the volume of oil imports also fell 19% as the economy fell deeper into recession. When the economy slows, so does demand for oil.
As much as the gap fell, the decline could have been steeper. Much of the rest of the world is in recession along with the United States, and with other countries also struggling, they don't demand as many goods.
"Broad-based declines in exports reflect the effects of the global recession," wrote Bryson.
The November deficit of goods decreased $16.6 billion to $52.4 billion. The surplus of services dipped by $400 million to $12 billion.
An earlier version of this story gave the wrong figure for the November imports figure. CNNMoney.com regrets the error. 
