The U.S. goods and services trade deficit declined moderately in June to $14.1 billion, the first month-to-month reduction since January. But more big deficits are coming, analysts warned Tuesday.
''We expect a continued deterioration in our trade balance with Asia,'' said Lee Price, the Commerce Department's chief economist. Many countries in the region remain in recession with their financial markets disrupted, he said.In first half 1998, the U.S. merchandise trade deficit soared by more than $23 billion from a year earlier, and nearly all of that, Commerce data show, came in trade with Asia-Pacific Rim countries - primarily South Korea, Japan and China.
Overall, the goods and services trade deficit in the period from January to June totaled $78.8 billion, up more than 40 percent from a year earlier. Such figures strongly suggest that the deficit this year will reach a new high.
Still, Mr. Price said, the trade deficit is not hurting the U.S. economy as much as it did in the mid-1980s. It now represents 2.1 percent of the U.S. gross domestic product, compared with more than 3 percent in the mid-1980s.
Sharply lower U.S. exports to the Asia-Pacific Rim region are the biggest single factor in the deficit. By contrast, imports from Asia have risen only modestly, despite depreciated currencies through much of the region.
The modestly lower U.S. worldwide deficit in June came as imports fell more than exports. Exports, Commerce said, were off by about $400 million from May - the third successive month of export decline. But imports were down $1.8 billion, the lowest monthly total since February. In the January through June period, U.S. exports rose only 1 percent from a year earlier, while imports increased by 6 percent. By far, the biggest export declines came in trade with South Korea and Japan. Merchandise shipments to South Korea were almost halved from a year earlier to $7.3 billion, while exports to Japan plunged by 12 percent or about $4 billion.
Exports were down 53 percent to Indonesia, 28 percent to Thailand and 11 percent to Hong Kong and Singapore. There were smaller declines in deliveries to Malaysia and the Philippines, while exports to China were up nearly 10 percent. A worrisome element in the June figures was a deficit in food, possibly for the first time in this century. The seasonally unadjusted figures showed ''food, feed and beverages'' with exports of $3.559 billion and imports of $3.604 billion.
The traditional U.S. food surplus includes a highly cyclical grain component, currently doing poorly. Meanwhile, the level of food imports has been climbing steadily in recent years. Adjusted for seasonal factors, however, the food balance still showed a small surplus in June.
The Census Bureau, checking its records back to January 1989, found no food-deficit month before June 1998. For prior years, the huge size of annual food surpluses makes a month-by-month check unnecessary. Outside of Asia, U.S. exporters are faring reasonably well, their shipments in January-June up 7 percent from a year earlier.
''Our trade picture with our (Western Hemisphere) partners is very healthy,'' Mr. Price said. The deficit with Canada, Mexico and the rest of Latin America, he noted, is falling.
The merchandise deficit with the 15-nation European Union, however, nearly doubled in January-June to $8.7 billion, as imports from Europe rose almost twice as fast as U.S. exports to the EU. The import advance was spread over a wide range of goods and largely reflected price changes, Mr. Price said.
The Asian economic crisis, Commerce data reveal, still has exerted relatively little impact on U.S. imports from the region. Goods imports in January-June were up only about 5 percent in dollar terms from a year earlier. The volume of shipments, however, is reported to have grown substantially more, given the lower prices Asians are charging on their products.
Despite the slack Asian markets, U.S. consumer goods exports worldwide in June hit a record $6.8 billion, Commerce reported. Pharmaceuticals and electronic devices paced the advance. Capital goods exports, led by civil aircraft, computers and telecommunications gear, also posted gains over May levels. Foodstuff exports rose slightly, but shipments of automotive products and industrial supplies - primarily chemicals and precious metals - were down from May.
Although food and feed imports in June set a new high, imports of industrial supplies, capital goods and automotive products tumbled from May levels. Some of the biggest declines were in organic chemicals, computer accessories and semiconductors.
Thanks to lower prices, the nation's crude oil import bill again fell, totaling $3.1 billion, the smallest since February.