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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (523892)	1/14/2004 3:30:34 PM
From: Hope Praytochange	Read Replies (1) \| Respond to of 769667

Trade Gap Narrows Unexpectedly By REUTERS Filed at 9:07 a.m. ET WASHINGTON (Reuters) - The U.S. trade deficit narrowed unexpectedly in November while wholesale prices rose last month on a sharp rise in energy costs, government reports showed on Wednesday. The trade gap shrank to $38.0 billion from $41.6 billion in October, as civilian aircraft sales pushed exports to their highest level in three years, the Commerce Department said. In a separate report, the Labor Department said the Producer Price Index, which measures prices paid to farms, factories and refineries, rose 0.3 percent last month. But stripping out volatile food and energy prices, the index fell 0.1 percent. Energy prices climbed 1.8 percent last month, their biggest gain since June. The trade gap was well below the $42.0 billion analysts had expected. As for wholesale prices, economists had looked for a 0.2 percent rise overall, but the drop in the so-called core rate came as a surprise. The dollar, which had reached record lows against the euro earlier this week, strengthened on the trade report, while prices for U.S. Treasury securities rose on the view inflation would remain well contained. ``The dip by the core PPI brings attention to how inflation is not an issue in the credit market and it's the least of the Federal Reserve's worries,'' said John Lonski, chief economist at Moody's Investors Service in New York. The Fed, which has held overnight interest rates at a 45-year low of 1 percent since June, has said low inflation and lots of slack in the economy mean rates could likely stay low for a ``considerable period.'' EXPORTS RISING Exports rose 2.9 percent in November, while imports retreated slightly from October's record high. The rise in exports was led by a $1.2 billion jump in civilian aircraft shipments. Exports of other capital goods, such as industrial and aircraft engines, also showed healthy gains. U.S. exports have risen steadily over the past year, aided by the weaker dollar. ``It's an across-the-board improvement in the U.S. trade gap,'' said Patrick Fearon, an economist at A.G. Edwards & Sons in St. Louis. ``The U.S. had a smaller trade deficit with every region including China. Perhaps that is in part reflecting the dollar's decline against the euro.'' A number of European policy-makers have expressed concern that the dollar's drop, which has come mostly against the euro, could snuff out an export-led recovery in Europe. But officials in Washington have voiced little concern about the dollar's fall. ``Inflation, the typical symptom of a weak currency, appears quiescent,'' Federal Reserve Board Chairman Alan Greenspan said on Tuesday. Despite the unexpected narrowing in November, cumulative figures show the trade deficit has already set an annual record. The gap totaled $446.8 billion for the first 11 months of 2003, surpassing the record of $418.0 billion in 2002. The burgeoning U.S. trade deficit has become a political issue, with Democrats tying the loss of U.S. manufacturing jobs to rising imports. GASOLINE PRICES RISING The rise in energy prices in December reflected a 5.1 percent increase in gasoline prices. Food prices, which had fallen 0.3 percent in November, gained 0.2 percent last month as the cost of vegetables spiked up 20.7 percent. That gain, and a sharp rise in the price of fruit, more than offset a 5.6 percent plunge in beef and veal prices and a 2.3 percent decline in pork prices. For the year as a whole, producer prices rose 4 percent -- the biggest gain for any calendar year since 1990. But excluding food and energy costs, wholesale prices were up just 1 percent. The report showed price pressures building further back in the production pipeline, although those gains have yet to show much spillover to finished wholesale goods or consumer prices. Some economists have warned sharp increases in commodity prices are offering an inflation warning sign. But in a speech last week, Fed Governor Ben Bernanke said those concerns were misplaced. ``Rising commodity prices are a better signal of strengthening economic activity than of inflation at the consumer level,'' he said.