Highlights
The international trade deficit ballooned in November due to sharply higher petroleum imports and to a lesser degree nonpetroleum imports. But U.S. manufacturers will be happy that exports continued their uptrend. The overall U.S. trade gap widened to $36.4 billion from a revised $33.2 billion shortfall in October. The deficit was larger than the consensus projection for a $35.0 billion shortfall. Exports gained another 0.9 percent while imports surged 2.6 percent. The worsening in the trade deficit was largely due to an expansion of the petroleum deficit, which came in at $19.9 billion compared to a differential of $17.8 billion the previous month. The nonpetroleum gap grew to $27.1 billion from $25.6 billion in October.

Exports were led by foods, feeds & beverages which jumped $1.2 billion in November, followed by automotive and capital goods excluding autos. Consumer goods and industrial supplies exports declined.

Imports were up mainly on a $2.1 billion jump in industrial supplies of which just over half was crude oil. Imports of consumer goods and capital equipment also were strong. Imports of autos and foods, feeds & beverages edged down.

The widening in the petroleum deficit was due to sharply higher prices as the number of barrels imported declined. Physical barrels imported fell 5.2 percent, following a 9.6 drop in October. The price of imported oil jumped to $72.54 per barrel from $67.39 in October.

Year-on-year, overall exports in November improved to minus 5.5 percent from minus 18.6 percent in October while imports increased to down 2.3 percent from down 8.5 percent the prior month.

Today's trade report technically cuts into fourth quarter GDP growth. But looking further out, other than the higher oil prices, the news may actually be good. Exports are boosting U.S. manufacturing. And higher imports indicate some improved optimism on the part of businesses that domestic demand is picking up. The report should be favorable for equities based on this apparent optimism but some may focus on lower fourth quarter GDP growth and higher oil prices. Also, earnings season is a key concern and Alcoa disappointed after yesterday's close. Bond traders should be concerned about the spike in oil prices and its implication for near-term, if not long-term, inflation. The wider trade will be weighing on the dollar.

Market Consensus before announcement
The U.S. international trade gap in October narrowed to $32.9 billion from a $35.7 billion gap in September. The still relatively weak dollar has been boosting the U.S. economy as exports have risen for six consecutive months. In the most recent trade report, exports advanced 2.6 percent while imports gained 0.4 percent. Analysts are looking for higher oil prices to hike imports. But a soft dollar and economic growth in Asia-with a little help from Canada-should keep exports growing for the month. A gain in imports of consumer and capital goods should be seen as a vote of confidence by businesses in the recovery.

2010 Release Schedule

Released On: 1/12 2/10 3/11 4/13 5/12 6/10 7/13 8/11 9/9 10/14 11/10 12/10 Release For: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct