U.S. Exports Increase to Record Levels : Trade: The good showing abroad is tempered by a surge of imports that pushed the nation’s trade imbalance to $8.4 billion.
Sales of American-made goods overseas jumped to record levels in March, the Commerce Department reported Thursday, but a surge in imports widened the nation’s trade deficit to $8.4 billion.
Economists expressed little alarm at March’s trade imbalance, which was slightly higher than expected after a revised $6.1-billion deficit in February. But they hailed the strong export showing as a clear signal of increasing economic strength.
“It’s clear that foreign exports are giving momentum to the U.S. economy now,” said Bruce Steinberg, an economist with Merrill Lynch in New York, noting that exports during the first quarter were 11% higher than a year earlier. “If they keep that up, there’s no way the economy can fall into a recession this year.”
In another encouraging sign, the United States’ trade deficit with Japan posted its first significant decline since the U.S.-Japan trade imbalance emerged as a serious international and political irritant in the mid-1980s.
During the first quarter of 1989, the deficit with Japan was $12.4 billion, the Commerce Department reported. The figure dropped to $9.6 billion this year, an impressive 23% decline.
“The monthly deficit number was worse, but the underpinnings of this report means a stronger economy,” said economist Allen Sinai of the Boston Co. “The record high exports are very encouraging and that says strong economic growth overseas is helping our exports and providing an important prop to growth in our economy.”
Indeed, last month’s increase in the trade deficit was exaggerated by seasonal adjustments as well as by the previous month’s unusually favorable figures. February imports were at their lowest level in a year as U.S. importers and retailers worked off inventory, while exports were boosted by a surge of overseas aircraft sales in the wake of last fall’s Boeing strike.
Aircraft exports declined somewhat in March. But other exports, primarily manufactured goods, easily made up the difference, the government reported.
The big gains in exports, which reached a record $33.3 billion in March, were led by computers, telecommunications equipment, scientific instruments and other high-technology manufactured products, industrial supplies and even automobiles.
Although March imports of $41.7 billion were second only to a peak reached last October, the first-quarter import total was running only 5.5% above the same period in 1989--roughly half the growth rate for exports.
“In the next few months, imports are not going to rise this fast again, because domestic demand is weak . . . , especially for consumer goods and big-ticket consumer durables,” said Merrill Lynch’s Steinberg. “And that’s what we have been buying from Japan.”
The nation’s trade deficit averaged just under $8 billion a month during the first quarter, and economists said that it now appears the deficit will finish the year in the $95-billion range. Until recently, most analysts were predicting only minuscule improvement over last year’s $108.9-billion deficit, which averaged slightly more than $9 billion a month.
Howard Lewis, an international economics and trade specialist with the National Assn. of Manufacturers, noted that most of the improvement in U.S. trade in the past few years has been in exports to other industrial countries.
In the first quarter of 1989, for example, the United States posted a trade surplus of just under $900 million with the European Common Market. This year, the first-quarter surplus with the Europeans was $2.1 billion. It was $1 billion in March alone.
Lewis noted that economic problems in most developing countries largely have eliminated any demand on their part for U.S. manufactured goods. A global expansion of agricultural production, meanwhile, has made it much tougher for American farmers to find steady markets for U.S. grain in non-industrial countries.
In addition, U.S. dependence on foreign oil has resumed the upward march that was interrupted by the oil price and supply disruptions of the 1970s, and fuel has become a steadily growing trade deficit item.
In March, oil imports were nominally the same as in February at $4.8 billion, but a slight decline in price masked an actual increase of 18 million barrels to a monthly total of 261 million barrels.