Newspaper article THE JOURNAL RECORD

Record Exports Cut Trade Deficit

Newspaper article THE JOURNAL RECORD

Record Exports Cut Trade Deficit

Article excerpt

WASHINGTON (AP) _ Record exports helped trim America's trade deficit slightly in June, despite the biggest monthly purchase of foreign oil. But the improvement did little to change predictions of the second worst merchandise trade gap ever this year.

Exports, led by sales of aircraft and telecommunications equipment, were up 3.6 percent from May, to $58.17 billion, the Commerce Department reported Thursday. Imports rose 2.8 percent, to $67.5 billion, with nearly half the increase due to crude oil purchases.

The result was a 1.6 percent dip in the overall deficit in goods and services, to $9.37 billion, after an 11.6 percent jump in May.

But the merchandise trade gap itself was down just 0.8 percent, to $14.16 billion, while the surplus in services increased 0.9 percent, to $4.8 billion. The United States historically runs a surplus in services _ but not enough to erase the merchandise deficit.

For the first six months of this year, the United States was running an annual merchandise deficit of $141.2 billion, which would be the worst showing since an all-time record of $152.1 billion in 1987.

In a second report Thursday, the Labor Department said the number of Americans filing new claims for unemployment insurance rose a modest 3,000 last week, to a seasonally adjusted 327,000.

Observers attributed the second straight weekly gain to slower hiring in the late summer after substantial job gains early in the year.

Analysts said still-sluggish economies in Europe and Japan will keep export growth from reaching its potential this year, while the improving U.S. economy provides Americans the funds to buy more foreign products.

But Evelina Tainer of Prime Economic Consulting of Chicago said the deficit should begin to narrow again over the next 18 months.

"Recoveries are beginning to emerge in Japan and Europe," she explained, while "demand from other countries in the Asian Pacific and Mexico will be importing from the United States. …

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