Trade Gap Narrows Slightly in March
The U.S. trade deficit narrowed in March as sales of American-made products abroad grew faster than imports, the Commerce Department said Friday.
An uptick in foreign demand for U.S. planes, cars and computers helped shrink the trade deficit to $31.6billion in March, a slight improvement from February when the gap hit a 10-month high of $31.8billion. The unexpected drop in the trade deficit pleased some analysts, who viewed the boost in demand for capital goods as sign of an improving global economy.
Still, the modest improvement in March figures couldn’t salvage what has been a rough first quarter for U.S. exporters, which have been hit with a double whammy of a weak global economy and a relatively strong dollar.
“Manufacturers continue to face a daunting challenge,” said Jerry Jasinowski, president of the Washington-based National Assn. of Manufacturers. “There is no sign of significant export growth.”
U.S. exports of goods totaled $166.5billion in the first three months of the year, down 15% from the same quarter in 2001.
The drop was much more severe in California, where first-quarter exports tumbled 26% to $22.5billion. The state’s top three export sectors--computers and electrical equipment, machinery and transportation equipment--posted major declines.
“Industries in California are much more tied into the global supply chain,” said Sacramento trade analyst Jock O’Connell. “It’s a major reason why California is doing more poorly than the nation as a whole.”
Still, some observers say the March trade figures may signal that the worst is over. California’s March exports totaled nearly $8.4billion. That’s down more than 20% compared with the same month a year ago. But it represents the highest monthly export tally since the September terrorist attacks, said Lon Hatamiya, secretary of the California Technology, Trade and Commerce agency.
“We want to see an upward trend, not a downward one,” Hatamiya said. “That bodes well for the rest of this year.”
Cenatek Inc., based in the Silicon Valley city of Morgan Hill, said it’s seeing an increase in demand for its hardware and software from buyers in Germany, Japan and Korea. The company makes technology that allows businesses such as credit card companies to process transactions faster.
With the rest of the world looking to the U.S. to lead the global recovery, economists predict many U.S. firms will see their domestic revenues increase ahead of foreign sales. But Dustin Bogue, executive vice president of Cenatek, said his company’s experience is just the opposite. He said many American customers are so gripped by profit pressure that they are reluctant to invest in any new technology.
“If it doesn’t increase their bottom line immediately, they don’t want it,” Bogue said.
California’s $100-billion-plus export sector is a critical piece of the Golden State’s economy, representing nearly 8% of the state’s $1.4-trillion gross state product.
Some experts don’t expect a major strengthening in the sector until global demand for high-tech products and business equipment rebounds, perhaps not until late 2002 or early 2003.
But a more immediate threat is the prospect of a strike by West Coast dockworkers that could shut down the ports of Los Angeles, Long Beach, Oakland and Portland, Ore.
Tensions are running high between the International Longshore and Warehouse Union and the Pacific Maritime Assn., which represents shippers and cargo distributors. The longshore workers’ contract expires June 30.
Potential trouble at the ports “couldn’t come at a worse time, with the economy just beginning to recover,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “It’s definitely a major concern.”
America’s trade deficit with Mexico, the nation’s second-biggest trading partner, surged 27.2% in March to a record $3.5billion. The deficit with Canada, America’s northern partner in the North American Free Trade Agreement, declined just over 1% to $3.9billion.
The gap with Japan was unchanged at $5.7billion, while the shortfall with China narrowed to $5.6billion from $6.5billion in February.
For the third straight month, the U.S. increased its consumption of imports, which were driven higher by the biggest one-month jump in crude oil prices in nearly 12 years. The U.S. imported 267.3million barrels of oil in March, up from 243.5 million a month earlier. With average prices rising $2.62 a barrel to $19.18, America’s oil tab reached $16.8 billion in March.
In other economic news released Friday, the University of Michigan’s index of consumer confidence rose to its highest level since December 2000.
