WASHINGTON, Jan 13: The US trade deficit fell a hefty 28.7 per cent in November to the lowest level in five years but the improvement comes amid a sharp contraction in global commerce, government data showed on Tuesday.

The $40.4 billion deficit in international trade in goods and services in the penultimate month of 2008 was much lower than the $51 billion forecast by analysts, and followed a revised $56.7 billion chalked up in October.

While the deficit decline is a positive for statistical measures of the US economy, it underscored the global slump stemming from financial turmoil triggered by the US home mortgage crisis, analysts said.

“The key message from this report is bad news -- It shows both export and import volumes contracting sharply as the global economy tumbles into recession,” said IHS Global Insight chief US economist Nigel Gault.

The narrowing November trade gap resulted from exports of $142.8 billion and imports of $183.2 billion, with contraction in both exports and imports, the Commerce Department said.

The trade deficit was “the lowest since November 2003,” it said.

The politically sensitive trade deficit with China dropped 17.5 per cent to $23.1 billion, the department said.

It pointed out that the fall in imports from the world’s most populous nation of $5.7 billion to $28.3 billion was also a record.

Exports to China fell $800 million to $5.2 billion. US imports dropped by 12 per cent in November, with purchases of automotive vehicles, parts and engines the lowest since August 2003, the Commerce Department said.

The November deficit with the biggest US trading partner Canada of $3.3 billion was the lowest since June 2002, it said.

“It is slim comfort that the US cut its demand for imports more rapidly than the rest of the world cut its demand for US exports. That might cushion the US downturn a little, but it is not a route to recovery,” Gault said.

US import volumes are expected to fall faster than those of exports in 2009, with IHS Global Insight forecasting the deficit to average just $23.5 billion per month in 2009, well below even November’s $40.4 billion.

The United States, has been in recession for more than a year with companies shedding jobs in record numbers amid plunging earnings and poor sales.—AFP