September’s Trade Deficit $7.9 Billion, Smallest in 5 Years
The U.S. merchandise trade deficit tumbled from its 1989 high to an imbalance of $7.9 billion in September--its lowest level in almost five years--as imports dropped sharply from August’s record level, the government reported today.
The Commerce Department said the September shortfall in the trade balance represented a huge 21.4% drop from a revised August deficit of $10.1 billion, which was the widest gap so far this year.
Commerce Secretary Robert A. Mosbacher said the deficit for the first three quarters of 1989, at an annualized $107.2 billion, was “in line with our expectations of moderate improvement to the $105-billion to $110-billion range.”
Mosbacher said the August record was an “aberration,” but added that September’s figure was significantly below the 1989 monthly average of $8.9 billion and “must also be viewed cautiously.”
The narrowing imbalance resulted from a 3.9% decline in imports to $39.1 billion and a 1.9% increase in exports to $31.1 billion. The deficit is the difference between the two.
The September deficit was the narrowest since a $6.8-billion imbalance in December, 1984.
Preliminary estimates had put the September imbalance at about $9 billion.
Imports had jumped a revised 5% to a record $40.7 billion in August, while exports increased a revised 0.3% to $30.6 billion.
Allen Sinai, chief economist for the Boston Co., said the drop in imports in the September report would be the consequence of a slowing economy due to the Federal Reserve’s tight rein on credit as it strives to contain inflation.
The stock markets were unenthusiastic about the report. Observers said the decline in imports could be interpreted as evidence of weakening consumer spending at a time when many investors are worried about the outlook for corporate profits.
At the same time, chief economist Robert G. Dederick of the Northern Trust Co. of Chicago, said the relatively stable exports are the result of firm overseas markets despite the rising value of the dollar, which makes U.S. products abroad more expensive.
For the first nine months of the year, exports increased 1.9% while imports decreased 3.9%.
The deficit for the year on an annual basis was $107.2 billion, compared with a $118.5-billion imbalance for all of 1988.
Exports were led in September by a 72.8% improvement in aircraft shipments to $1.97 billion. Aircraft exports had fallen 16.1% in August, contributing to the increase in that month’s deficit.
Export improvements also included office equipment and machinery, automobiles, telecommunications equipment and industrial machinery.
Contributing to the decrease in imports were industrial supplies and big-ticket capital goods, consumer goods and food.
The nation’s foreign oil bill fell 7.6% to $4 billion in September. The amount of imported oil dropped to 8.2 million barrels a day from 8.7 million in August, while the price per barrel rose to $16.38 from $16.14.
As usual, the largest trade deficit in September was with Japan, an imbalance of $4.1 billion, up from $4 billion in August. The deficit was $1.3 billion with Taiwan, $700 million with Canada, $500 million with South Korea and $700 million with China.
Economist Sinai had said a deficit below $9.5 billion would be encouraging.
More to Read
Inside the business of entertainment
The Wide Shot brings you news, analysis and insights on everything from streaming wars to production — and what it all means for the future.
You may occasionally receive promotional content from the Los Angeles Times.