- The Washington Times - Wednesday, August 21, 2002

The U.S. trade deficit dipped slightly to $37.2 billion in June as a big jump in sales of American exports of everything from corn to computer chips helped offset record demand by American consumers for foreign-made products, the government reported yesterday.
Even with the improvement, the Commerce Department said the June deficit was still the second-largest in history, down just 1.8 percent from the all-time high of $37.8 billion set in May.
Still, many analysts saw reason for optimism that the country may be finally turning the corner on trade. They noted that June marked the fourth straight month that American exports have risen, helped by a 7 percent drop in the value of the dollar this year since February, making U.S. goods cheaper and thus more competitive in overseas markets.
This would be particularly good news for America's manufacturing companies, the hardest-hit sector of the economy during last year's recession.
Jerry Jasinowski, president of the National Association of Manufacturers, said that the combination of a weaker dollar and stronger growth overseas "should boost export prospects for American manufacturers and aid the ongoing but still sluggish industrial recovery."
For June, U.S. exports led by big gains in sales of corn and other farm products and manufactured goods, such as semiconductors and airplanes rose by 1.7 percent to $82 billion.
Imports were also up, but by a smaller 0.5 percent to $119.2 billion. Imports of consumer products everything from clothing to toys hit a record $26.2 billion in June, an increase economists attributed to stronger demand after the recession.
"The trade deficit may be outrageously wide, but the rise in both exports and imports point to continued economic growth both in the United States and around the world," said Joel Naroff, head of an economic forecasting firm in Holland, Pa.
But many analysts cautioned that the turnaround in the deficit they expect to occur in the second half of the year is not likely to be fast enough to keep this year's deficit from worsening from last year's imbalance of $358.3 billion. Through the first six months of this year, the deficit is running at an annual rate of $412 billion.
The rise in the trade deficit subtracted 1.8 percentage points from economic growth during the April-June quarter, when the economy slowed to a 1.1 percent growth rate, down from the 5 percent surge in the first quarter.
Analysts said this deterioration was worsened by a rush by importers to ship goods into the country ahead of a threatened West Coast dock strike.
America recorded its biggest deficit in June with China, an imbalance of $8.5 billion that occurred even though U.S. exports to China hit a record $2.2 billion.
The Bush administration is counting on China to stand by commitments it made before joining the World Trade Organization to create big opportunities for American exporters.
The U.S. deficit with Japan was up 9 percent to $5.3 billion in June, while the deficit with Canada, America's biggest trading partner, narrowed by 18.9 percent to $3.4 billion. The deficit with Mexico, the other partner in the North American Free Trade Agreement, fell by 5 percent to $3.2 billion.
Imports of foreign oil were down 5.5 percent in June to $8.77 billion, reflecting a drop in the quantity and price of crude oil. Crude petroleum shipments dipped to 9.2 million barrels per day in June while the average price per barrel fell to $23.30, down from $23.76 in May.

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