According to official figures released on Tuesday, the balance on goods and services showed a deficit of A$980 million in November, a slight improvement on the A$1.127 billion shortfall the previous month.

In September, the trade gap was A$994 million.

The November deficit was close to forecasts of a $900 million shortfall, and caused barely a ripple in financial markets.

But analysts were surprised by the extent of the fall in exports and imports which they said could be a one-month aberration due to gold shipments.

Exports of goods and services fell 3.7 per cent in November, while imports fell by a sharp 4.7 per cent.

``The data confirms that step-up we have seen in the size of the trade deficit in 1998,'' said Commonwealth Bank senior economist Michael Blythe.

``The current account is going to be more of a concern in 1999 than it was in 1998, so may be a lot of that deterioration that we thought was going to happen last year will show up this year.''

One of the success stories of the Australian economy over the past year has been the diversification of export to markets outside of Asia, but that may not be the case for much longer.

``With the US slowing in 1999, the scope for export diversion will be more limited,'' said Bankers Trust senior economist Kieran Davies.

Much of the decline in November was due to a 37 per cent decline in non-monetary gold exports in original terms, while imports of non-monetary gold slumped 45 per cent.

The exports, mainly in the form of gold coins, are mostly destined for Europe, and the Bureau of Statistics said that excluding gold, exports to countries outside Asia rose 11 per cent. Including gold, total merchandise shipments outside Asia were down 14 per cent.

Rural exports were flat during November, while transport equipment was up sharply.

On the imports side, consumption goods fell 6.0 per cent, mainly due to a slowdown in cars, while capital goods were down two per cent and intermediate goods down six per cent.

Analysts were sceptical that the sudden decline in imports of goods and services in November signalled any drop-off in consumer demand.

``With domestic demand remaining strong up into the year-end and with anecdotal evidence pointing to very strong sales over the holiday period, it's likely that import volumes will rebound fairly strongly in December,'' said Societe Generale senior economist Glenn Maguire.

The Reserve Bank has signalled it is prepared for some further large deficits over 1999 and won't react to the worsening balance, saying the current account deficit could reach six per cent of GDP for a couple of quarters.

A separate ABS release of the quarterly business expectations survey suggested some slowdown in economic activity in 1999, although the bureau warned the dip in expectations will have been influenced by seasonal factors.