Merchandise Trade Deficit Falls Slightly : * Economy: It dipped to $5.77 billion in January, despite a drop in U.S. exports. Earlier this month, jobless claims also fell, by 27,000.
The merchandise trade deficit narrowed slightly to $5.77 billion in January even though American exports fell for a third straight month, the government said Thursday.
The Bush Administration called the weakness in exports temporary, but private economists worried that the lull could prove more lasting and imperil chances to mount a sustained recovery.
In another economic report Thursday, the Labor Department said the number of Americans filing for unemployment compensation totaled 433,000 in the week ending March 7, a decline of 27,000 from the previous week.
The drop was larger than expected, as private economists had forecast a decline of only 6,000, on average.
Labor Secretary Lynn Martin noted that the weekly claims level is now 80,000 below where it was a year ago. She said the improvement was a “hopeful sign of growing labor market stability.”
But private economists said they were still looking for the overall jobless rate, now at a six-year high of 7.3%, to rise to around 7.5% by mid-year before starting a gradual improvement.
The Commerce Department said the January trade deficit was 3.9% lower than December’s $6 billion imbalance. Imports, held down by weak demand in the United States, dropped 1.4% to $41.30 billion while exports fell 1% to $35.54 billion.
Last year, the merchandise trade deficit fell to an eight-year low of $66.26 billion, down from $101.72 billion in 1990.
But many economists are forecasting that the deficit will resume its upward climb this year as the recovery spurs Americans’ demand for imports and spreading weakness overseas cuts into export growth.
“The good news is that our economy has hit bottom and is coming out of the recession, but one of the costs of that rebound will be a wider trade deficit,” said Jay Goldinger, an economist at Capital Insight, an investment firm in Beverly Hills.
John Endean, a vice president with the American Business Conference, a trade group for mid-size corporations, said that U.S. companies will face growing competition from countries trying to make up for weak domestic demand by export sales.
“Japan and Germany are making no secret of their intention to ignite their faltering domestic economies through more exports and less imports,” he said.
As usual, the country’s largest deficit was rung up with Japan, $3.82 billion in January, or two-thirds of the total, although that was down by $645 million from the December deficit. The second biggest imbalance was with China, a deficit of $1.4 billion.
America’s surplus with the 12-nation European Community climbed by $713 million to $1.88 billion in January. This gain was cited as an encouraging development by Stephen Cooney, trade expert at the National Assn. of Manufacturers.
“A strong performance by U.S. exporters of industrial supplies and materials, the basic building blocks of industry, indicates that U.S. exports may regain upward movement in the near future,” Cooney said.
The 1% drop in exports followed a 2.8% December decline and a 2.3% November drop. The decline was led by a $270-million decrease in sales of aircraft and parts and a drop of $283 million in farm shipments, reflecting weaker demand for soybeans in particular.
The 1.4% decline in imports was led by an 8% drop in petroleum imports, which fell to $3.62 billion in January. Non-petroleum imports were down a smaller 0.7% to $37.69 billion.
Trade Deficit Narrows
Merchandise trade deficit in billions of dollars, seasonally adjusted; import figures exclude shipping and insurance.
Jan., ‘92: 5.77
Dec., ‘91: 6.00
Jan., ‘91: 3.74
Source: Commerce Department
