Trade Deficit Down 16.6% During April : Improvement Reflects Oil Prices, Declining Dollar, U.S. Reports

The nation’s merchandise trade deficit narrowed sharply in April to $12.1 billion, reflecting reduced oil prices and the long-awaited impact of a declining U.S. dollar, the government reported today.

The Commerce Department said the trade imbalance fell 16.6% from the March level of $14.5 billion.

The improvement in April was led by a 10.2% drop in overall imports, which totaled $30 billion in April, down from $33.4 billion in March.

This drop offset a disappointing 4.8% decline in exports in April, down to $18 billion from March levels of $18.9 billion.

Lowest Since Last August

The April trade deficit was the lowest since a $10.9-billion imbalance last August. For all of 1985, the nation ran a record $148.5-billion trade deficit.

Secretary of Commerce Malcolm Baldrige said the improvement reflects lower oil prices and a smaller deficit in manufactured goods.

“These declines probably do not mark a turning point, but I expect the trend in the deficit to begin to improve later in the year,” Baldrige said.

The April figures also showed the impact of efforts to stabilize the U.S. dollar against foreign currencies.

The dollar has fallen about 30% against other major currencies since a year ago. The weaker dollar makes imports more expensive and U.S. exports more competitive.

No Immediate Major Gains

Analysts have been looking for a turning point in the trade deficit. But despite today’s good news, economists generally do not expect major improvements in the trade deficit from the declining dollar until later in the year.

April’s deficit figures also reflected the full impact of the collapse of world oil prices.

Petroleum product imports declined to $2.1 billion in April from $3.3 billion in March.

It was the lowest dollar amount spent on oil imports in a single month since June, 1975.

The U.S. trade deficit with Japan remained the largest of any single nation but dropped to $4.7 billion in April from the $5.5-billion level of the month before.