Trade Deficit Falls by 5.4% in July-Sept. : Imbalance Narrows to $28.5 Billion, Lowest Since Early ’85

The U.S. trade deficit shrank by 5.4% from July through September, the third consecutive quarterly decline, the government said today.

The Commerce Department said that the imbalance between imports and exports narrowed to $28.5 billion in the year’s third quarter.

It was the lowest quarterly deficit since the first quarter of 1985 and reflected the continued improvement the country has enjoyed in trade this year.

The decline followed a revised 14.3% narrowing in the second quarter, when it shrank to $30.15 billion. In the first three months of the year, the deficit had fallen by 14.6%.

For the first nine months of this year, the trade deficit has been running at an annual rate of $125.2 billion, down 22% from the record deficit of $160.3 billion in 1987.

Economists believe this trend will hold for the final three months of the year, marking the first annual improvement in the country’s trade balance since President Reagan took office in 1981.

Gains Already Evident

The new figures confirmed an improvement already evident in the department’s monthly merchandise trade reports.

Today’s report said that U.S. exports climbed 3.4% to $82.3 billion. It was the seventh consecutive quarterly increase in U.S. sales abroad and pushed exports to a record level.

Imports also rose, but by a smaller 0.9% to $110.8 billion as a drop in oil shipments helped offset a rise in non-petroleum imports.

The average number of barrels of oil imported daily rose to 7.54 million, up from 7.4 million. However, the average price of a barrel of oil fell from $15.16 to $14.22. The price drop helped to narrow the country’s foreign oil bill by 4% to $9.9 billion in the third quarter.

Offsetting the decline in oil imports were widespread increases in car shipments.

Foreign car shipments from Canada climbed by 12% while the number of passenger cars from West Germany increased 34%. Car imports from South Korea were up 29% and Japanese shipments rose 16%.

Most U.S. export categories showed increases. Sales of farm produce rose 8% to $10.4 billion, the highest level since the second quarter of 1982.