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To: Jim Willie CB who wrote (4881)	8/20/2002 10:11:24 AM
From: 4figureau	Read Replies (1) \| Respond to of 89467

U.S. June Trade Gap Narrows to $37.2 Bln as Exports Rise By Carlos Torres Washington, Aug. 20 (Bloomberg) -- The U.S. trade deficit narrowed in June as American companies shipped more products abroad, a government report showed. The $37.2 billion gap in goods and services trade followed a record $37.8 billion deficit in May, the Commerce Department said. Exports rose for a fourth straight month, and shipments to China were the highest on record. A drop in the value of the dollar since the start of the year is making American-made goods less expensive and leading to improved profits at companies such as United Technologies Corp. Exports may help underpin the U.S. economy. ``The weaker dollar is the principal reason we expect the U.S. trade position to stabilize and start improving by year- end,'' said John Shin, an economist at Lehman Brothers Inc. in New York, before the report. That ``will contribute to growth in the second half of the year.'' Economists had expected a $37.4 billion deficit, little changed from May's previously reported gap of $37.6 billion, according to the median estimate of 49 forecasts in a Bloomberg News survey. Exports rose 1.7 percent in June to $82 billion, led by shipments of aircraft, semiconductors and other capital goods, and by consumer goods including pharmaceuticals. Imports rose 0.5 percent for the month to $119.2 billion. A 2.2 percent increase in shipments of consumer goods from other countries was tempered by a drop in oil imports. Little Effect on GDP Revisions The threat of a July strike by dockworkers on the West Coast may have added to import growth in June as companies stocked up on goods, economists said. The Western ports handle about 42 percent of U.S. waterborne trade. The Commerce Department last month estimated the June trade deficit would be about $37.5 billion when it issued its preliminary report on gross domestic product for the second quarter, economists said. Because the trade gap is close to that estimate, it may have little effect on the revised GDP report next week. The economy grew 1.1 percent at an annual pace in the second quarter, down from 5 percent in the first three months of the year. The falling value of the dollar may lead to expanded exports in the second half of the year, economists said. The dollar is down about 4 percent against a trade-weighted basket of currencies from the 37 largest trading partners since reaching a peak on January 28. It's down 10 percent against the euro and the yen so far this year. While the deteriorating trade gap subtracted 1.8 percentage points from preliminary estimates of second-quarter growth, a narrowing deficit may add 2/10 of a percentage point to GDP in the second half of the year, said Shin at Lehman Brothers. Consumer Goods Exports Exports of consumer goods rose 3.7 percent in June to $7.1 billion, the highest since August 2001. Foreign shipments of capital goods also rose 3.7 percent, again for the highest since August 2001. United Technologies Corp., the maker of Pratt & Whitney jet engines, said last month that second-quarter earnings rose and full-year profit will be better than expected in part because a cheaper dollar is benefiting sales. The company gets more than half its sales from outside the U.S. ``Our extensive global diversity is a unique benefit in these times,'' said David FitzPatrick, the company's chief financial officer in a conference call with investors. ``The euro is no longer a headwind.'' Profit will improve by 5 cents a share this year as long as the exchange value of the dollar against the euro remains steady for the rest of the year, FitzPatrick said. The lower dollar added about 1 cent to earnings in the second quarter, he said. Auto, Oil Imports Fall Imports of autos and parts fell 3 percent in June after rising 3.8 percent the previous month, today's report showed. Imports of capital goods rose 1.2 percent, the sixth consecutive increase, led by civilian aircraft, computers and telecommunications equipment. The value of imported crude oil fell to $6.4 billion in June from $6.9 billion in May. The U.S. imported 9.2 million barrels in June, less than the 9.3 million imported a month earlier. The price per barrel fell to $23.30 from $23.76. Oil prices headed back up last month and may contribute to import gains, economists said. Imported petroleum prices rose 4.9 percent last month, according to figures from the Labor Department. Prices are even higher in August. The cost of oil futures on the New York Mercantile Exchange for September delivery rose to an 11-month high of $29.58 yesterday. Escalating Middle East tensions have sent oil futures up 48 percent this year amid concerns over supply disruptions. China, OPEC The trade gap with China widened to $8.5 billion, the biggest deficit since October 2001 and the largest for any country. While exports to China rose to a record $2.2 billion, imports of $10.7 billion were the second highest on record. Even with a decline in oil imports, the trade gap with the Organization of Petroleum Exporting Countries widened to $2.9 billion from $2.4 billion. The deficit with Canada, the largest U.S. trading partner, narrowed to $3.4 billion from $4.2 billion. The gap with Mexico narrowed to $3.2 billion from $3.3 billion. The deficit with Western Europe narrowed to $7.1 billion from $8.4 billion as imports fell. Elsewhere, the trade deficit with Asia's newly industrialized countries narrowed to $1 billion from $1.9 billion, led by a surge in U.S. exports. quote.bloomberg.com