U.S. Trade Gap Narrows on a Drop in Imports
WASHINGTON -- The U.S. trade deficit narrowed in June from May's record level, thanks mainly to a drop in imports. But most analysts believe the improvement will be short-lived.</br></br>Inflation, meantime, remains in check, the Labor Department says. The Consumer Price Index for July rose a modest 0.2%, seasonally adjusted, over June.</br></br>The Commerce Department said the trade deficit narrowed to a seasonally adjusted $14.15 billion in June from $15.54 billion the month before. Imports fell to an adjusted $90.32 billion in June from $92.12 billion in May. Exports in June slipped to $54.61 billion from $54.72 billion.</br></br>Underlying these figures is an across-the-board weakness in U.S. exports stemming from the impact of economic turmoil in Asia and some price cutting by U.S. companies acting to remain competitive. U.S. shipments to the Pacific Rim countries, for example, fell to $13.59 billion in June from $17 billion in June 1997. That continued a recent downward trend in exports to the region. The year-over-year numbers are the most accurate measure of the trend, as these figures aren't seasonally adjusted.</br></br>But U.S. export weakness spreads beyond Asia, says David Levy, director of forecasting at the Jerome Levy Economic Institute, Mt. Kisco, N.Y. Based on a 12-month moving average, he calculates U.S. exports to Europe essentially have been flat since March. Mr. Levy blames the strong U.S. dollar, which makes U.S. exports more expensive, and intense competition from Asian exporters.