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Last Updated: Tuesday, 12 December 2006, 14:19 GMT
US trade deficit narrows sharply
Chinese factory workers
China's exports to the US keep rising
Rising exports, sliding oil costs and the weaker dollar have sharply narrowed the US's trade deficit to its lowest level in almost a year.

October's deficit was $58.9bn (30bn), down 8.4% from the previous month's figure - the steepest fall since December 2001.

But the slide did not extend to China, which sold a record $29.3bn worth of goods to the US in October.

Many US politicians blame China for lost jobs and competitiveness.

The deficit figure completes the set of economic data which will help shape the Federal Reserve's decision, due later on Tuesday, on US interest rates.

Dollar help

The unexpectedly large fall in the deficit - which reflects the difference between the value of goods and services being shipped in and out of the US - was partly the result of a 2.7% fall in imports.

That decline was fed by an 11.3% fall in the price of oil to an average of $55.47 a barrel, more than enough to counteract rising imports of food and drink, consumer goods and hi-tech products.

US shoppers at a sale
The weak dollar has helped cut back on sales of imports

At the same time exports were up 0.2%, with consumer goods and services providing much of the impetus.

Another key factor has been the slide in the value of the US dollar, making US products cheaper to overseas customers while pushing up the cost to Americans of imports.

However, the dollar's movement has little effect when it comes to the politically-sensitive trading relationship with China.

Although the Chinese yuan is allowed to trade within a narrow band - and is at fresh highs - the movement remains tiny compared with the dollar's decline against free-floating currencies such as the euro, yen or pound sterling.

The deficit with China rose 6.4% in October to $24.4bn, putting the annual deficit on track to beat 2005's previous record of $202bn.


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