U.S.Trade Deficit Plunges to Lowest Level in 3 Years : Exports Hit $29-Billion Record High

WASHINGTON — Record exports of nearly $29 billion sent the U.S. trade deficit for March plunging to $9.7 billion, the lowest level in three years and far below expectations, the government reported today.

The March trade deficit was $4 billion lower than February’s figure and the lowest since March, 1985, when the gap shrank to $8.1 billion, the Commerce Department said.

American exports shot up 23% to an all-time high of $28.97 billion in March while imports were up 3.6% to $38.72 billion, the department said.

The March improvement was a major surprise and sent the dollar soaring on foreign exchange markets. In European trading, the dollar climbed against the British pound and the Japanese yen.

“That is a genuine export boom,” Robert Ortner, undersecretary of Commerce for economic affairs, said after the trade figures were released.

He said he was surprised by the low trade deficit of $9.7 billion. Analysts had generally forecast that the deficit would shrink to about $12.5 billion from the February figure of $13.83 billion.

Stock Market Unmoved

The big drop in the trade deficit failed to generate much excitement today in the stock market, where a rally quickly faded in another sign of post-crash investor apathy and growing fear of inflation.

Jay Goldinger, an analyst with Capital Insight, a Los Angeles investment firm, predicted that the trade improvement in March will strengthen President Reagan’s position and make it more difficult for Congress to override his promised veto of the omnibus trade bill.

Indeed, the White House seized upon the report as new support for the veto.

“We have said for some time that there is no good time for bad trade legislation, but today’s report demonstrates that this is the worst time,” spokesman Marlin Fitzwater said. “This is no time to shoot ourselves in the foot and . . . stymie job creation.”

But the House Speaker Jim Wright (D-Tex.), said today’s report does not lessen the need for the trade bill to become law.

“The trade deficit is five times as high as it was when President Reagan came into office . . . ,” Wright said. “By the end of 1987, the United States had amassed the highest trade deficit for any nation at any time in history.”

Industry Output Up

In a second report today, the Federal Reserve said that American industry operated at 82.7% of capacity in April, up 0.3 percentage point from March. It was the highest operating level in more than eight years and was further evidence, analysts said, that American manufacturers are benefiting from the boom in export sales.

All the good news was in sharp contrast to the jolt financial markets received a month ago when the February trade report was issued. The unexpected widening of the deficit had sent the dollar reeling and pushed the Dow Jones average down by 101 points, its fifth-worst loss ever.

The $28.97 billion in March exports represented a $5.4-billion increase from the February level, reflecting gains in sales of U.S. machinery, computers, aircraft, chemicals and telecommunications equipment. In addition, $600 million of the increase came in gold sales to Taiwan.

The $1.3-billion rise in imports to $38.72 billion reflected a small rise in imports of manufactured goods, which offset a decline in oil imports, which fell 15.2%.

For the first three months of the year, the trade deficit has totaled $36.01 billion, which translates into an annual deficit of $144 billion. If that pattern holds for the entire year, it will represent a substantial improvement from the record 1987 trade deficit of $171.22 billion.