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U.S. TRADE DEFICIT SHRINKS TO LOWEST POINT SINCE ’93

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The U.S. trade deficit narrowed dramatically in November to $7.06 billion, the best showing in nearly two years, as the gap with Japan shrank to its smallest level since the spring of 1993.

The Commerce Department said Wednesday that the deficit in goods and services dropped a sharp 13.5 percent from a revised October figure of $8.16 billion. It was the smallest imbalance since a $6.5 billion deficit in March 1994.The November improvement reflected a big jump in sales of aircraft and computer parts as exports of capital goods climbed to a record level of $20.8 billion. Sales of military goods, including Patriot missiles to Saudi Arabia and helicopters to Greece, also took a big jump.

The improvement in the American trade performance was coming none too soon for the Clinton administration, which has been facing a barrage of attacks about America's international performance on the campaign trail.

Republican opponents, most notably presidential candidate Patrick Buchanan, have made America's soaring trade deficits and the lost jobs they represent a key litany in their complaints about the Clinton presidency.

Even with the November improvement, the deficit for the year is headed for an all-time record with the imbalance in merchandise alone expected to come in around $162 billion, surpassing the old mark of $152.1 billion set in 1987.

Analysts cautioned against reading too much into the trade improvement, saying it reflected in large part the fact that a sluggish U.S. economy was cutting into demand for imports as well as domestically produced goods.

"This is not the same as getting a big surge in exports. It is just that foreign producers are sharing some of our pain," said Robert Dederick, chief economic consultant at Northern Trust Co. in Chicago.

But the Clinton administration insisted that its aggressive efforts to tear down foreign barriers are beginning to show results. Officials pointed to a string of improvements this year with Japan.

For November, the deficit with Japan dropped to $4.13 billion, the lowest level since May 1993.

The $7.06 billion deficit in November reflected a 0.9 percent increase in exports of goods and services, which rose to $67.36 billion, and a 0.7 percent drop in imports, which fell to $74.41 billion. The trade deficit is the difference between imports and exports.

The monthly trade deficit peaked in June at a record $11.39 billion and has been showing gradual improvement since. Analysts expect the improving deficit will help bolster the overall economy, which they believe slowed dramatically in the final three months of last year reflecting lackluster consumer demand.