U.S. Trade Deficit Falls; Import, Export Prices Rise

ByJohn S. McClenahen An increase in exports of capital goods helped reduce the U.S. trade deficit in February, although the red ink again topped $40 billion. The U.S. imported $122.77 billion worth of goods and services in February while exporting $82.45 billion worth of goods and services, the latest U.S. Commerce data show. The resulting $40.32 billion U.S. trade deficit with the rest of the world was $910 million less than the $41.23 billion deficit registered in January of this year. Because U.S. exports dropped in four of the final five months of 2002, the Commerce Department report showing that exports increased for the second consecutive months in February "is good news for [a] manufacturing sector that remains mired in the most anemic economic recovery since World War I," asserts Jerry J. Jasinowski, president of the Washington, D.C.-based National Association of Manufacturers. "This [increase in exports] mainly reflects a modest increase in economic growth abroad in areas like Canada and Asia/Pacific. . . . We can hope that gradual correction of the dollar back toward a market level will begin to improve export prospects late this year and in 2004." Meanwhile, March data from the U.S. Labor Department show both its import and export price indexes rising, although less than in February. The import price index increased 0.5% in March, less than one-third of the 1.7% rate in February, as rising prices for natural gas and other nonpetroleum imports more than offset a small decline in petroleum prices. Indeed, March's 0.9% increase in prices for nonpetroleum imports was the largest monthly rise since 1988, when the Labor Department first began monthly publication of the data. On the export side of the ledger, prices for U.S. goods rose 0.3%, less than February's 0.5% and the same as January's rate. With prices for agricultural products unchanged, price increases for nonagricultural goods, led by a 1.5% month-to-month increase in prices for exports of industrial supplies and materials, accounted for March's overall increase in export prices.