WASHINGTON – The U.S. trade deficit narrowed in February to $40.3 billion as prewar jitters crimped Americans' demand for foreign-made goods, especially computers, machinery, toys and jewelry. Exports edged up.
The Commerce Department reported Thursday that the trade gap tightened by 2.2 percent in February from January's deficit of $41.2 billion.
The narrowing of the trade deficit came even as the average price of imported crude oil jumped to $30.46 a barrel in February, a 20-year high. Economists were forecasting a widening of the deficit in February to around $42 billion, given the run-up in energy prices before the war in Iraq broke out.
However, even with the improvement in the trade deficit picture, February's trade gap marked the third biggest monthly deficit on record.
In another report, new claims for unemployment benefits last week fell by a seasonally adjusted 38,000 to 405,000, the Labor Department said. Even with the bigger-than-expected drop, however, the level of claims still pointed to a sluggish job market.
Imports of goods and services nudged down by 0.4 percent in February to $122.8 billion, reflecting Americans' weaker demand for a variety of foreign-made items amid the muddled economic climate at home.
Much of the weakness came from sales of foreign-made capital goods, including computers, airplanes and machinery, to the United States, which dropped by 4.3 percent in February to $23.4 billion. Exports of foods and feeds fell by $72 million to $4.5 billion. Exports of toys and games, jewelry, furniture and stereo equipment also registered declines in February.
However, exports of automobiles rose by $48 million to $16.9 billion in February and exports of industrial supplies climbed to $25.8 billion, the highest level since January 2001.
Exports of goods and services, meanwhile, edged up by 0.5 percent to $82.4 billion in February. U.S. sales of foods, feeds and beverages to other countries were up by $109 million to $4.5 billion in February, the highest level since November 1996.
Exports of capitl goods, including airplanes and telecommunications equipment gained ground in February, as did exports of automobiles and parts. But exports of consumers goods, such as TV, toys and clothes, dropped by $532 million to $6.9 billion in February. Exports of industrial supplies and materials also fell.
The dollar has lost altitude over the past year, a good development for U.S. exporters because it makes their products more competitive on foreign markets and less expensive for overseas buyers.
But weak economic growth abroad, especially in Europe, means that export growth probably won't pick up until the second half of this year -- assuming the geopolitical situation stabilizes, economists say.
To combat the trade deficit, the Bush administration says the United States should seek to boost American exports by attacking foreign trade barriers, rather than raising barriers to imports coming into the country.
The United States has free trade agreements with Mexico and Canada, its partners in the North American Free Trade Agreement, and with Israel and Jordan, deals that were struck in an effort to promote economic development in the Mideast.
The administration has said it hopes recent deals with Singapore and Chile will be just the first in a string of agreements with countries in Africa, Central America and Australia. Its biggest goal is creation of a free trade zone covering 34 nations in the Western Hemisphere.
Trade critics, including labor unions, say the swollen deficit is evidence that President Bush's free-trade policies are not working and are contributing to steady job losses in manufacturing.
The United States' trade deficit with Mexico rose to a record monthly high of $3.9 billion in February. The deficit with Japan widened to $5.3 billion in February from $5.2 billion in January. But the United State's political sensitive trade deficit with China narrowed to $7.6 billion in February -- the lowest level since April 2002 -- from $9.4 billion in January.