- The Washington Times - Friday, January 17, 2003

WASHINGTON, Jan. 17 (UPI) — The Commerce Department said Friday surging imports drove the nation's trade deficit during November up to a seasonally adjusted record of $40.1 billion from a revised $35.2 billion shortfall in October.

Economists on Wall Street were expecting the trade gap to widen to $36.4 billion during the month from the government's originally reported October gap of $35.1 billion, which was the narrowest gap in seven months.

The government agency said the wider gap in goods and services reflected a record inflow of holiday and other consumer merchandise.

Experts noted imports had fallen sharply during October, when ports in California, Oregon and Washington closed early in the month after shippers locked out union dockworkers in a labor dispute.

The international trade measures the difference between imports and exports of both tangible goods and services. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade.

Changes in the level of imports and exports, along with the difference between the two are a valuable gauge of economic trends here and abroad. Imports indicate demand for foreign goods and services in the United States. Exports show the demand for U.S. goods in overseas countries.

The dollar can be particularly sensitive to changes in the chronic trade deficit run by the United States, since this trade imbalance creates greater demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation.

Economists watch for the report not only to gauge U.S. and overseas demand but also to calculate gross domestic product. Imports are subtracted from economic growth, because they presumably replace U.S.-produced goods, while exports add to growth estimates.

The latest report from the Commerce Department showed all imports jumped fell to $123.3 billion from $117.5 billion during the previous month while exports rose 1.1 percent to $83.2 billion from $82.3 billion in October.

The value of imported crude oil fell to $7.2 billion in November from $8 billion in October. The United States imported 296.1 million barrels of crude oil and other petroleum products in November, down from 307.5 million a month earlier. The average price per barrel of crude fell to $24.36 from $26.17.

Exports of consumer goods rose 0.6 percent in November after falling 1 percent during the previous month.

By region, the Commerce Department said the trade deficit with Japan held steady at $6.5 billion. The trade gap with China widened to $10.5 billion from $9.5 billion and the deficit with the Organization of Petroleum Exporting Countries narrowed to $2.9 billion from $3.6 billion.

The trade deficit with Asia's newly industrialized countries widened to $2.8 billion from $1.8 billion while the deficit with Canada, the largest U.S. trading partner, narrowed to $3.7 billion from $4.3 billion.

The government said the nation's trade gap with Mexico narrowed to $2.9 billion from $3.5 billion while the deficit with the European Union narrowed to $7.1 billion from $7.9 billion.

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