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Trade Deficit in April Hits $11.9 Billion : Factory Orders Fall 3rd Month in Row, Slowing Economy

Associated Press

The U.S. foreign trade deficit, symbol of a sputtering economy, surged to a near-record $11.9 billion in April as domestic manufacturers found it increasingly difficult to market their goods abroad.

A separate Commerce Department report also issued Friday showed that orders to U.S. factories fell for the third straight month, underscoring the manufacturing sector weakness that analysts say is hamstringing overall economic growth.

While government and private economists alike started 1985 projecting a 4% rate of growth, the major forecasting firms have already scaled back and are now saying it is unlikely to reach 3%.

Moreover, forecasts for even that modest growth level are based on the assumption that recent interest rate declines eventually will perk up business activity enough to brighten an economic picture that seems to grow dimmer with each new government report.

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There is a growing consensus that the trade deficit is cutting gross national product growth--0.7% in the first quarter of this year--just about in half.

Imports rose 0.5% in April, compared to a 0.7% rise in March, to stand at $29.6 billion. But exports fell 3.6% after rising 3.3% in March and stood at $17.8 billion for the month--the lowest since last June.

Imbalance Worsening

The result was a 7.2% increase over the March deficit of $11 billion. That brought the imbalance for the first four months of the year to $44.6 billion--5.8% ahead of the pace for the first four months of 1984.

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The April figure, third largest on record, was exceeded only by last July’s $13.7 billion and last May’s $11.93 billion.

Michael Evans of Evans Economics in Washington said the only surprise in the April report was that “exports were so weak. It’s a big drop that would indicate we’re just not able to sell our goods anymore overseas.”

John Green of Wharton Econometrics in Philadelphia said there is little prospect for a near-term decline in imports “so we have to look to exports to make a large contribution to any turnaround” in the deficit.

He noted that the U.S. share of manufactured exports in the world markets has slipped almost 30% since 1980.

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The trade imbalance is blamed on the strength of the U.S. dollar, worth about 80% more than it was five years ago.

Commerce Secretary Malcolm Baldrige, in a statement accompanying the trade report, said a slippage of about 7% in the dollar from a February peak “so far is not enough to improve U.S. competitiveness and should have only a limited effect on our balance of trade.”

The high dollar is blamed mostly on relatively high interest rates in the United States.


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