WASHINGTON -- The U.S. trade deficit surged in November, setting an annual record with a month left to go in 1998, as exports fell and increased purchases of computers and cellular phones contributed to a rise in imports, the government reported yesterday.
November's trade deficit rose to $15.5 billion after narrowing in October to a revised $13.6 billion, the Commerce Department said. That boosted the shortfall for the first 11 months of the year to $153.9 billion, topping the previous yearly record shortfall of $153.3 billion set in 1987.
The trade gap is a reflection of the U.S. economy's position as the strongest in the world in 1998, analysts said. Consumer spending "has been exceptionally strong, and a lot of that demand is being satisfied by imported goods," said Paul Kasriel, an economist at Northern Trust Co. in Chicago.
November's 2.0 percent decline in exports reflected weaker demand for civilian aircraft, computer accessories, semiconductors, consumer goods, agricultural products, and iron and steel. Imports rose 0.4 percent on higher demand for high tech and telecommunications equipment and auto parts.
And, while deficits with Asian nations narrowed, the shortfall widened with Canada, the nation's leading trading partner, reflecting strong demand for autos and trucks.
A separate report yesterday by the Federal Reserve Bank of Philadelphia showed that new factory orders rose in January.
That's "the first stage in the overall recovery process for manufacturers now that Asia has stabilized," said Ian Shepherdson, an economist at High Frequency Economics in Valhalla, N.Y.
Indeed, the U.S. deficits with China and with the newly industrialized countries of Hong Kong, Korea, Singapore and Taiwan, narrowed for the third straight month. Still, no one expects a dramatic turnaround. The deficit in goods alone may rise 20 percent this year to $300 billion, mainly reflecting a drop in demand for U.S. exports, U.S. Trade Representative Charlene Barshefsky said in a New York speech yesterday.
In November, exports of goods and services fell to $78.7 billion and imports rose to a record $94.1 billion. Steel imports, which rose on a year-over-year basis, fell in November.
The merchandise deficit with Japan, the nation's third-biggest commercial partner behind Canada and Mexico, narrowed 3.3 percent to $5.8 billion in November. The U.S.-Japan trade gap is on track to exceed last year's record $56.1 billion. Japanese steel exports to the U.S. doubled last year.
The deficit with China, a major source of clothing and household products for U.S. consumers, decreased 9.1 percent to $5.0 billion in November, and the deficit with Asia's newly industrialized countries fell 14.3 percent to $1.8 billion.
Also, the trade balance with the Organization of Petroleum Exporting Countries registered a surplus of $340 million, reflecting a record $1.3 billion surplus between the United States and Saudi Arabia.
Recessions in Japan and many emerging markets smothered demand for U.S. exports and contributed to lower prices for a variety of industrial goods and commodities from oil to copper. U.S. manufacturers, as a result, have cut a quarter-million jobs over the past year.
Pub Date: 1/22/99