U.S. Trade Deficit Narrows Slightly for First Quarter
The nation’s merchandise trade deficit narrowed slightly to $38.3 billion during the first three months of the year, the government reported today.
The Commerce Department said the imbalance between what the United States imports and what it exports shrank 0.7% from an all-time high of $38.6 billion during the October-December quarter of 1986.
The new report confirmed parallel figures released earlier which put the first-quarter deficit at a slightly higher $41.0 billion. The new deficit total is lower because it reflects trade on a “balance of payments” basis, omitting such factors as military sales and the cost of shipping and insurance.
These new figures will be used in computing the broadest measure of foreign trade, the current account, which includes not only trade in merchandise but also trade in services as well. That report for the first quarter will be released June 16.
Better in Volume Terms
During the first three months of the year, imports rose 1% to $96.5 billion while American exports rose 2.1% to $58.2 billion.
The trade improvement was even better in volume terms than in dollar totals because the costs of imports were inflated by higher prices caused by the weaker dollar.
While imports rose 1% in dollar totals, the volume of imported goods fell 3%. The difference reflected a 4% increase in import prices.
The Reagan Administration two years ago launched a strategy of driving the value of the dollar lower as a way of shrinking Americans’ appetite for foreign goods while boosting the competitiveness of U.S. products overseas.
This program is finally beginning to pay off, although the rise in prices of imported goods has boosted the inflation rate in this country and caused some concern that inflation could again get out of control.
Decrease in Soybean Sales
The gain in exports came from a 3% increase in non-agricultural exports, which rose to $51.6 billion.
This strength offset a 6% drop in agricultural sales, which slipped to $6.6 billion during the first quarter. The decrease came primarily in sales of soybeans, which fell 28% because of decreased exports to Western Europe and Japan.
Imports of non-petroleum products rose less than 1% to $87.9 billion while the volume of shipments decreased by 1%. The largest increase was in automotive parts from areas other than Canada, which were up 18% during the first quarter. One-fourth of that gain came from parts shipments from Mexico, and one-half came from Japan.
Imports of petroleum increased 8% to $8.7 billion, a gain attributed entirely to higher prices.
