U.S. Trade Deficit Up Slightly in November

WASHINGTON — The nation’s trade deficit edged up slightly to $8.4 billion in November, but the imbalance with China fell for the first time in seven months and American farm exports hit an all-time high.

Separately, industrial production jumped a strong 0.8% in December with gains reported at auto plants, airplane manufacturers and a number of other industries.

Financial markets brushed aside inflation concerns that often come with strong economic news to soar through another milestone Friday.

Treasury Secretary Robert E. Rubin said the economic reports underscored the administration’s view that “the economy is on very solid footing both with respect to growth and inflation.”

Both the trade deficit and the industrial production figures came in better than expected, and private economists rushed to revise upward their forecasts for growth in the final three months of 1996. Many now believe the economy was probably expanding at an annual rate of 3.5% to 4% in the fourth quarter, compared with 2.2% in the third.

“The numbers have been amazingly strong,” said David Wyss, chief financial economist at DRI-McGraw Hill Inc. in Lexington, Mass. “When you have growth this fast, the worry becomes, is the economy growing too fast for long-term stability?”

But Wyss and other analysts said they did not expect the Federal Reserve Board to move at its Feb. 4-5 meeting to begin raising interest rates but said a rate increase could come as soon as March unless there are signs of slower growth in the new year.

The Commerce Department’s trade report said the deficit for November was up 4.9% from an October imbalance of $8 billion but still down substantially from the $11.8-billion high set in July.

The deficit with China fell 39% to $3 billion as U.S. exports hit an all-time high of $1.6 billion. Much of the gain reflected a big Chinese purchase of American soybeans.

The deficit with Japan was down 13% to $4.3 billion, and for the first 11 months of the year totaled $43.4 billion, the lowest level since 1971.

Despite the improvement with Japan, the overall deficit for 1996 is running at an annual rate of $112 billion, up from a deficit of $105 billion in 1995.

Overall, U.S. exports of goods and services rose 0.3% to a record $71.97 billion. Imports were up 0.8% to $80.37 billion. The trade deficit is the difference between those two figures.

The strength in exports was led by a 12% jump in sales of farm products, which rose to an all-time high of $5.05 billion. Sales of soybeans and corn led the increases.

The 0.8% rise in industrial production in December matched the November gain. Manufacturing output was up 1.1% as auto makers continued to increase production following strike-related shutdowns in October. A big 1.2% rise at aerospace companies reflected a continued pickup in orders for new aircraft.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

U.S. Trade Deficit

Monthly changes in the overall U.S. trade deficit, in billions of dollars:

(please see newspaper for full chart information)

November: -$8.40

Source: Commerce Department