Trade Deficit Drops Sharp 13.4% in April : Exports Increase to a New High; Imports Decline

The U.S. merchandise trade deficit dipped sharply to $8.26 billion in April as exports rose to a new high and imports declined, the government said today.

The Commerce Department said the second straight monthly improvement in the country’s trade balance came from a 0.8% increase in exports and a 2.6% decline in imports.

The April deficit was 13.4% below a revised March imbalance of $9.54 billion. March’s trade gap originally had been estimated at $8.86 billion.

White House spokesman Marlin Fitzwater said the Administration is “very pleased by the continuing decline in trade figures.”

Commerce Secretary Robert A. Mosbacher also hailed the numbers but cautioned: “It is always unwise to put too much weight on any one or two months figures in these volatile statistics.”

Analysts Divided

“The recent strength of the dollar leads us to be concerned about the economy’s ability to sustain the excellent trends seen so far,” Mosbacher said.

April’s trade gap was the lowest since last July, when the deficit hit $8.02 billion. The report was even better than the $8.5-billion gap that many analysts had been expecting for the month.

The trade deficit so far this year has been showing improvement over its 1988 track record. Analysts are divided, however, over how long the nation can expect the good news to continue as oil prices rise and the stronger value of the dollar makes American products more expensive on overseas markets.

For the first four months of 1989, the trade deficit ran at an annual rate of $108.9 billion, a marked improvement over last year’s actual deficit of $119.76 billion.

The April improvement came even though the bill for foreign oil jumped 9.9% to $4.05 billion. The average price of a barrel of oil shot up 11.6% to $17.83 in April, the fifth straight monthly increase. The volume of imported oil, meanwhile, rose to 7.57 million barrels a day from 7.45 million in March.

Overall, imports fell to a seasonally adjusted $38.84 billion. The lower figure included declines in sales of foreign cars, manufactured capital goods and agricultural products.

U.S. exports, meanwhile, hit a record $30.57 billion in April. Exports of industrial supplies, manufactured capital goods and consumer goods all increased.

Economist Joe Carson of Chemical Bank in New York said he expects continued progress on the trade front despite recent strengthening of the dollar against foreign currencies.

“I don’t think the recent rise in the dollar will break the favorable trend that’s been in place for the past two years,” Carson said. “The most recent trade figures have been very encouraging. We’re still experiencing very strong export growth and import growth is slowing.”