Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, May 26, 1990 TAG: 9005260125
SECTION: BUSINESS PAGE: A5 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The Commerce Department said the 8.2 percent improvement in the trade balance was a result of record-high export sales that offset the highest volume of foreign oil shipments in more than 12 years.
The improving trade performance, if it continues, would be good news for the U.S. economy. Over the past three years, rising exports have accounted for more than one-third of total domestic growth as American manufacturers enjoyed a boom in foreign sales.
In other economic news Friday, the Commerce Department reported that consumer spending shot up by 0.6 percent in April. However, the National Association of Realtors reported that sales of existing homes fell 2.1 percent in April.
The better-than-expected performance sent many economists scurrying to revise their trade forecasts for the year. Many had been expecting that weaker foreign demand and a rising oil bill would translate into a worsening trade deficit.
"We have continued strong export growth and that is leading to better trade numbers than a lot of people were predicting, including us," said Howard Lewis, vice president for international economic affairs at the National Association of Manufacturers.
David Jones, an economist with Aubrey G. Lanston & Co., said export growth should continue to be an important source of strength for the U.S. economy for some time to come.
"Europe and Germany in particular and to a lesser degree Asia will be the locomotive for U.S. growth," he said.
However, some analysts cautioned that it was too soon to tell whether the first quarter performance would continue for the rest of the year. They noted that oil imports are surging because U.S. production has dropped to 25-year lows and that the strength of the U.S. dollar in comparison to the Japanese yen could start showing up in rising imports of Japanese products.
Cynthia Latta, an economist at DRI-McGraw Hill, said her forecasting company was still expecting only a small improvement in the overall trade deficit when compared with 1989.
For the first quarter, U.S. exports rose 4.7 percent, to an all-time high of $96.04 billion. Imports were also at a record level, reflecting the surge in oil demand. They climbed 1.6 percent, to $122.4 billion.
The report Friday on merchandise trade as calculated on a balance-of-payments basis confirmed trends already noted in the department's monthly merchandise trade reports. They showed a first quarter deficit of $23.9 billion.
The disparity in the two figures comes from the fact that Friday's report excludes military sales by the U.S. government and makes other minor adjustments to the monthly figures.
The increase in consumer spending was the biggest gain since January and was double the 0.3 percent rise in personal incomes last month.
Analysts said the strength in consumer spending coupled with the strong gains in export sales were good indications for future economic growth.
The decrease in sales of existing home was the third decline in the past four months, with high mortgage rates blamed for the weakness.
The first-quarter trade performance marked the second consecutive quarterly improvement in the deficit. In the fourth quarter, the gap between exports and imports had fallen 3.5 percent, to $28.7 billion.
Exports of machine tools, industrial supplies and consumer goods climbed 4 percent to a record $85.1 billion in the first quarter. More than one-half of this increase was attributed to a rise in civilian aircraft shipments after the end of the Boeing strike.
Exports of farm products were up 7 percent to $11 billion with increases recorded in overseas sales of wheat, vegetables, fruits and nuts. Corn exports were down, reflecting sharply lower shipments to the Soviet Union.
Average prices of corn and cotton increased 2 percent while prices of other commodities changed little, the government said.
Imports of petroleum surged 17 percent in the first quarter to $15.6 billion, with the average number of barrels imported daily climbing to 8.9 million, the highest level since the third quarter of 1977.
The average price per barrel increased to $19.47, the highest since the first quarter of 1986, when the price per barrel was $17.65.
America's deficits declined with several countries, including Japan, down $1.9 billion to $10.4 billion for the first quarter.
by CNB