U.S. Merchandise Trade Deficit for March Revised Upward 22% : Adjustment for Seasonal Changes Being Resumed

The merchandise trade deficit for March was revised upward 22% to $11.9 billion under a system of seasonal adjustments that is being resumed, the government said today.

The Commerce Department released new trade figures that for the first time in two years adjusted the monthly numbers for normal seasonal changes in shipping patterns.

A month ago, the government had reported that the trade deficit was at $9.7 billion, its best showing in three years. However, analysts cautioned at the time that trade figures often improve in March because it is a good month for U.S. export sales.

A February deficit, which had originally been reported at $13.8 billion, was raised to $14.4 billion.

The January deficit, originally reported as $12.4 billion, was lowered by the seasonal adjustment to $11.3 billion.

To Smooth Volatility

The April trade deficit is scheduled to be reported next Tuesday and it will be reported on a seasonally adjusted basis although the government will continue to release the unadjusted figures as well.

Government statisticians hope that by seasonally adjusting the trade figures they will be able to smooth out some of the volatility that has often roiled financial markets around the world.

The U.S. trade deficit has become the most closely watched government statistic, especially on foreign exchange markets. A bad trade figure can trigger a wave of dollar selling which then depresses stock prices as investors become worried about U.S. economic prospects.

Despite the revised figures, White House spokesman Marlin Fitzwater said the data still shows a favorable downward trend in the U.S. deficit.

“The trade deficit is on a downward trend, exports are increasing and it’s a very encouraging picture in terms of the foreign trade deficit,” he said.

Annual Rate of $150 Million

Commerce Undersecretary Robert Ortner, who briefed reporters on the historical revisions, said the trade deficit for the first three months of this year is running at an annual rate of $150 billion, which if it holds for the entire year, will be a substantial improvement from the record $170.3-billion deficit recorded in 1987.

This figure was revised slightly downward from a previously reported $171.2-billion deficit, but this change did not reflect seasonal adjustments but rather the inclusion of previously unreported export sales.

Before 1986, the government had always adjusted the monthly import and export figures to smooth out seasonal shipping patterns, just as it adjusts most of its other statistical reports. However, it was forced to abandon the practice for a time when a tide of imports overwhelmed the ability of the Customs Service to process the trade information on a timely basis.

In some months, the so-called carry-over of late information on imports from previous months accounted for 50% of the new month’s total.

That figure has now been reduced to about 3% per month.