Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, September 17, 1993                   TAG: 9309170071
SECTION: BUSINESS                    PAGE: A-11   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

MORE HINTS WE'RE OUT OF THE FUNK

The merchandise deficit shrank 14 percent in July to a seasonally adjusted $10.3 billion, down from a five-year high of $12.1 billion a month earlier, the Commerce Department said.

And the Federal Reserve said production at factories, mines and utilities rose 0.2 percent in August, a small increase but the third straight in a sector that has been struggling most of the year.

Neither the trade nor the production numbers were considered a sign of robust economic activity, but some analysts were mildly encouraged.

"I'm getting the sense that the economy, which has been in a funk for the past three or four months, now is building up to stronger growth," said economist Mark Zandi of Regional Financial Associates in West Chester, Pa.

For the first seven months of the year, the trade deficit was running at an annual rate of $114.8 billion, compared with $84.5 billion for all of last year. If this year's trade performance finishes at the same pace, the gap would be the worst since 1988.

It would be a sharp turnaround from the recession years of 1990 and 1991, when trade was about the only bright spot in the economy.

Recessions in Western Europe and Japan are hurting U.S. export sales and the modest U.S. recovery has increased Americans' appetite for foreign goods.

There was a 4.6 percent drop in imports in July, to $47.4 billion, which more than offset a 1.5 percent drop in exports to $37.1 billion.

The import drop reflected lower crude oil prices and fewer purchases of automobiles, television sets and VCRs, stereo equipment, clothing, computers and civilian aircraft. The decrease in exports reflected lower sales of autos, civilian aircraft, corn, coal, telecommunications equipment and diamonds.

The improvement overall came despite a deterioration in the trade balance with Japan to $4.7 billion from $4.3 billion in June.

The United States racked up a $1.8 billion deficit with Western Europe, up from $1.7 billion in June. Until recently, America enjoyed a trade surplus with Europe.

The 0.2 percent increase in August industrial production followed advances of 0.4 percent in July and 0.2 percent in June. Increased output of business equipment helped offset drops in the production of defense and consumer goods, including a 1.1 percent decline in auto and truck output.