- The Washington Times - Wednesday, June 11, 2008

Masking another month of stellar performance by U.S. exporters, the surging cost of imported oil helped to widen the nation’s trade deficit 8 percent in April to $60.9 billion, the Commerce Department reported Tuesday.

April exports of goods and services increased $5 billion over March - one of the highest monthly jumps on record, said David Huether, chief economist for the National Association of Manufacturers (NAM).

However, the cost of imported oil soared more than $5 billion in April.

U.S. exports were 18 percent higher during the first four months of 2008 compared to a year earlier. Foreign buyers have been splurging on U.S. farm products (soybeans, wheat and corn), industrial supplies (plastics, chemicals and even iron and steel mill products) and capital goods (civilian aircraft, medicinal machinery and telecommunications equipment).

The export boom includes services as well, where the United States enjoys a huge comparative advantage. A $119 billion surplus in service exports (tourism, finance, licensing) last year partly offset a $819 billion deficit in goods.

Oil-market developments have camouflaged the full extent of the export surge in recent years, according to Mr. Huether of NAM. “Outside of petroleum, the U.S. trade deficit has improved significantly, thanks to a more competitive dollar and solid growth abroad,” he said.

U.S. exporters have been on a roll for several years now. After declining in both 2001 and 2002, inflation-adjusted exports of goods and services have increased an average of 8.3 percent during the last four years.

“The untold story is that rising exports saved the economy from falling into a recession,” said Daniel Ikenson, associate director of the Center for Trade Policy Studies at the Cato Institute.

Norbert Ore, who heads the Institute for Supply Management, a nonprofit association that publishes monthly reports on trends in manufacturing and service industries, said his organization has detected a “slow contraction recently” in the manufacturing sector. “Were it not for exports remaining strong,” he said, “the contraction would be much greater.”

If exports had remained flat during the fourth quarter, the U.S. economy would have declined, according to the Commerce Department data. During the first quarter of this year, the agency reported, the trade sector generated nearly 90 percent of U.S. economic growth.

“Exports continue to be strong due to the weak dollar - without the weak dollar the story would be much more negative in manufacturing,” he said.

China emerged last year as the third-biggest market for U.S. products after Canada and Mexico. A generation of annual double-digit economic growth in China has produced a middle class that can afford to buy American products, Mr. Ikenson said.

“There is now a critical mass” in China and in other fast-growing emerging markets,” which should brighten long-term prospects for U.S. exports, he said.

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