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The U.S. trade deficit fell for the first time in six months in November amid declines in imports of cellphones and petroleum products, leading economists to boost their economic growth estimates for the fourth quarter.

The consumer-goods-led drop in imports reported by the Commerce Department on Wednesday would normally raise concerns about slowing domestic demand. But the sharp drop followed five straight monthly increases, which economists said reflected businesses stockpiling imported goods as the trade war between the United States and China escalated.

“The sharp slowdown may reflect increasing caution given the unpredictable outcome of the administration’s current trade talks,” said Chris Rupkey, chief economist at MUFG in New York. “The good news is this will temporarily boost real GDP in the fourth quarter.”

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The trade deficit dropped 11.5 per cent to US$49.3-billion in November. It had increased for five straight months. Economists polled by Reuters had forecast the trade deficit would fall to US$54-billion in November.

The release of the report was delayed by a recently ended five-week partial shutdown of the federal government.

The politically sensitive goods trade deficit with China fell to US$37.90 in November from US$43.1-billion in October.

The overall trade deficit has remained elevated despite the Trump administration’s “America First” policies, which have led Washington to impose tariffs on a range of imported goods from China, sparking a trade war with Beijing.

U.S. President Donald Trump has long railed against China’s trade surplus with the United States, and accuses Beijing of not playing fairly on trade. The United States has also slapped duties on imported steel, aluminum, solar panels and washing machines.

The dollar was stronger against a basket of currencies, while stocks on Wall Street were mostly trading lower after disappointing forecasts from video-game makers. U.S. Treasury prices rose.

BOOST TO GROWTH

When adjusted for inflation, the goods trade deficit decreased US$7.5-billion to US$80.8-billion in November. The drop in what’s known as the “real trade deficit” led some economists to raise their fourth-quarter GDP growth forecasts by as much as four-tenths of a percentage point to as high as a 2.6-per-cent annualized rate.

“We had thought that trade would subtract more than half a point from GDP growth in the fourth quarter, but now it looks like trade will be close to neutral for fourth-quarter growth,” said Daniel Silver, an economist at JPMorgan in New York.

The release of the fourth-quarter GDP report has been delayed by the government shutdown, which ended on Jan. 25 after Mr. Trump and Congress agreed to temporary government funding, without money for his U.S.-Mexico border wall.

Trade subtracted 1.99 percentage points from GDP growth in the July-September quarter. The economy grew at a 3.4-per-cent pace in the third quarter.

In November, imports of goods and services tumbled 2.9 per cent to US$259.2-billion. Consumer goods imports decreased US$4.3-billion, pulled down by a US$2.3-billion drop in imports of cellphones and other household goods.

Imports of petroleum products fell US$1.4-billion, with crude oil imports dropping US$0.7-billion. Cheaper oil prices weighed on the petroleum import bill. The crude oil price averaged US$57.54 a barrel in November, the lowest since April.

A domestic energy boom has enabled the United States to reduce its dependence on foreign oil, leading to a reduction in the volume of crude imports.

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Exports of goods and services fell 0.6 per cent to US$209.9-billion. Exports of consumer goods decreased US$0.9-billion and those of petroleum products fell US$0.6-billion. There were also declines in exports of soybeans, which have been targeted by China in the trade dispute.

Exports of capital goods, however, increased US$1.4-billion, lifted by a US$1.0-billion rise in civilian aircraft shipments.

Given the dollar’s strength and hopeful signs in the U.S.-China trade talks, economists expected the drop in imports to be temporary. The weakness in exports was, however, expected to persist against the backdrop of slowing global economic growth.

Last week, Trump said he would meet with Chinese President Xi Jinping soon to try to seal a trade deal.

“The 2018 trade detente between Trump and Xi has carried into the new year as weaker momentum in China has made Chinese policy-makers more conciliatory,” said Jake McRobie, a U.S. economist at Oxford Economics in New York. “We now believe the 10-per-cent tariffs on US$200-billion of imports from China will not be raised to 25 per cent.”

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