TRADE DEFICIT SWELLED AGAIN IN FEBRUARY

TRADE DEFICIT SWELLED AGAIN IN FEBRUARY

The United States incurred a setback in February in its quest for a substantially reduced merchandise trade deficit this year.

The February deficit - $13.8 billion - was up 11 percent from January and represented the second successive month of increase. Compared with February 1987, the deficit was up $2.5 billion.Most trade experts, however, termed the higher February deficit an apparent aberration. Both industry and business analysts said they still expect the U.S. deficit to decline this year from last year's record $172 billion.

Stocks, bonds and the dollar all fell sharply in unison in reaction to the disappointing report. Analysts said the rise in imports raised fears the Federal Reserve Board will tighten credit further to slow the economy and prop the dollar. The U.S. unit plunged despite dollar-buying intervention by many central banks. (Story, Page 11A.)

But the February figures suggested anew that the U.S. deficit will decline only slowly, and a consensus seems to be shaping that the deficit will be around $150 billion.

Jerry Jasinowski, chief economist of the National Association of Manufacturers, said following Thursday's report that he believes the deficit will fall by about $20 billion to $25 billion from last year.

Analysts from both the U.S. government and the International Monetary Fund project similar estimates.

Robert Ortner, the Commerce Department's top economist, said he is looking for a trade deficit this year of about $145 billion.

Commerce Secretary C. William Verity called the February deficit disappointing, but he maintained that the underlying fundamentals are still favorable.

Since February last year, he said, exports were up 27 percent, mainly on greater volume, while imports rose 15.6 percent, largely because of higher prices.

U.S. exports in February were $23.5 billion, another strong showing, analysts said, although they were down from November-December levels. The Commerce Department reported that exports of manufactured goods, at $16 billion, were close to a record high, after a dip in January.

Among the larger February export advances were aircraft, electrical

machinery, scientific instruments and passenger cars.

Imports, however, rose by 8 percent from January to nearly $37.4 billion, the highest total since the record $39.3 billion of last October.

Manufactured goods, up almost $2.3 billion to $28.8 billion, a near record, led the gains. Substantial advances came in office equipment, telecommunications gear and a wide range of machinery.

Adding to the deficit was a rise in oil imports to $3.8 billion, despite a small drop in oil prices from January to an average $16.42 a barrel. Oil import volume averaged 8 million barrels a day in February, up nearly 20 percent from February last year.

These import numbers, analysts said, indicate why the U.S. trade deficit will decline only slowly over the months ahead.

The U.S. economy is growing relatively strongly, and that will keep drawing in imports. Much of that growth is investment-related, which suggests that U.S. companies will be buying more foreign-made capital goods.

Moreover, as U.S. exports expand, so will imports. You don't make more computers here without buying more computer parts from abroad, one analyst said.

Generally, said Mr. Jasinowski, U.S. firms seem to have become dependent on imports as a major source of supply, since the period of the strong dollar of a few years ago.

Meanwhile, Dr. Ortner noted, U.S. import data continue to be inflated by still rapidly rising foreign prices.

U.S. exports are still regarded as almost certain to grow much more rapidly this year than imports.

The International Monetary Fund's staff, in its latest economic forecast, predicted U.S. exports, after adjusting for inflation, will expand 35 percent in 1988-89, compared with a 12 percent rise last year.

Imports, in real terms, will increase by about 9 percent in 1988-89, about the same rate as last year.

The IMF staff raised a warning signal, however - a chance that the U.S. economy may start to incur production bottlenecks. If this occurs, U.S. progress in paring the trade deficit could be slowed further.

Mr. Jasinowski said he is hearing more and more from manufacturing of a fairly tight production environment. Dr. Ortner said, however, that he sees capacity problems now only in the paper, chemical and textiles industries.