WASHINGTON -- The U.S. trade deficit in goods and services narrowed in October, with improving international demand for American products signaling that a turnaround may be near for exporters, a report yesterday showed.
October's trade deficit unexpectedly dropped to $14.19 billion -- as exports rose at a faster pace than imports -- after narrowing in September to $14.4 billion, Commerce Department figures showed. Analysts expected a trade shortfall of $15.1 billion for October.
Exports rose 2.8 percent to $79.6 billion during October, as shipments of food and farm products rose to the highest level since February. Exports of semiconductors and computer accessories also rose. Imports rose 2.2 percent to a record $93.8 billion in October, led by aircraft and engines, and record purchases of autos and advanced technology.
"The deficit seems to be stabilizing, and exports are rising," said Joel Naroff, an economist at First Union Corp. in Philadelphia.
The trade deficit was the narrowest since April's $14.0 billion, and exports returned to a level not seen since late 1997 and early 1998. The rebound in agricultural exports, led by soybeans, suggests the beginnings of a recovery in Asia, analysts said.
"There's been some strengthening in some of the economies we sell to," such as Japan and South Korea, the first- and fourth-largest buyers of U.S. farm products, said Agriculture Secretary Dan Glickman.
Even so, the trade shortfall is on target to post an annual record -- and it probably will remain high in 1999. So far this year, the deficit totaled $139.0 billion, up from $90.4 billion during the first 10 months of 1997. For all of last year, the trade gap widened to $110.2 billion.
At the current pace, the international trade deficit for this year is on target to total $167 billion, surpassing the 1987 record of $153 billion.
Recessions in Japan and other countries have smothered demand, weakened the yen and contributed to lower prices for industrial goods and commodities.
The price of copper, for example, last week fell to its lowest level since 1987.
Oil has tumbled to roughly $11 a barrel.
The strong dollar has also depressed import prices and heightened price competition.
The deficit with Japan, the nation's second-biggest commercial partner behind Canada, widened to almost $6.0 billion in October from $5.1 billion during September and $5.8 billion in October 1997. The U.S.-Japan trade gap appears on track to exceed last year's record $56.1 billion. Japanese steel exports to the United States, for example, have doubled over the past year.
The deficit with China, a major source of clothing and household products for American consumers, decreased to $5.5 billion in October from $5.9 billion during September.
The deficit totaled $5.2 billion in October 1997.
The deficit with Asia's newly industrialized countries, including Hong Kong, Taiwan, Singapore and Korea, fell to $2.1 billion in October from $2.5 billion in September. In October 1997, that deficit totaled $1.4 billion.
Pub Date: 12/18/98