U.S. Trade Deficit Drops 13.7% in Jan. : 1st Surplus With W. Europe in 5 1/2 Years; Gap Down 30% to $3.5 Billion With Japan
A slowdown in imports sent the U.S. merchandise trade deficit down 13.7% in January to $9.5 billion, the smallest gap since September, the Commerce Department said today.
The trade deficit with Western Europe switched into a surplus for the first time since September, 1983, with exports to that major trading partner outstripping imports by $46.5 million, the department’s Census Bureau said.
The deficit with Japan also shrank sharply, down 30.3% to $3.5 billion. That was the smallest deficit with Japan since February, 1985, when the red ink totaled $3 billion, the bureau said.
January imports dropped 6.9% to $37.3 billion but exports, which had been fueling U.S. economic growth, also fell, down 4.3% to $27.8 billion, the bureau reported.
‘As Good as Could Be’
The seasonally adjusted $9.5 billion deficit is the smallest since September, when the gap was $9.2 billion, the bureau said.
Allen Sinai, chief economist for the Boston Co., said the January figures were “about as good as a trade report could be for this stage in a business cycle.”
But he predicted the trade improvement this year would be only about half of 1988’s $33.1-billion reduction.
“We’re not home free but the figure is promising,” he said. “The longer-run trend still says a tricky trade deficit.”
Hugh Johnson, chief investment analyst at the First Albany Corp., said the report was good news.
The trade deficit with most major U.S. trading partners narrowed and much of the remaining problem stemmed from higher oil prices that widened the deficit with nations in the Organization of Petroleum Exporting Countries.
But Johnson was cautious because of the sluggish market response. Noting that the Dow Jones industrial average closed unchanged Tuesday for the first time in nearly two years, he said, “The market is sort of rolling over. That’s a rough sign when the market stops responding to clearly good news. They sense something.”
The Commerce Department said Americans imported fewer foreign consumer goods, autos, capital goods and other merchandise but bought more industrial supplies, foods, feeds and beverages in January.
U.S. firms exported fewer capital goods, industrial supplies and autos but exports of food, feeds, beverages and consumer goods rose, the bureau said.
Oil imports fell in volume but the price shot up to $14.46 per barrel from $13.10 in December, the bureau said. That was the highest price for oil since last July.
With the January report, the department began reporting the numbers on a customs value basis, instead of counting in the costs of insurance and freight as it had for the last nine years.
The different method of reporting creates a smaller deficit figure than has been familiar in the past.
