By Jeannine Aversa
The Associated Press
WASHINGTON - A pickup in foreign demand for American industrial supplies, household appliances and cosmetics helped to narrow the U.S. trade deficit to $41.1 billion in January.
Even with the improvement, however, the trade gap was the second biggest monthly deficit on record, the Commerce Department reported Wednesday.
"The trade deficit narrowed in January. Whoopee!" said economist Joel Naroff, president of Naroff Economic Advisors. "The decline in the trade deficit may look nice, but the level is so outrageous that it's hard to get excited."
The deficit slimmed 8.4 percent in January from December's record $44.9 billion. The gap narrowed as U.S. exports rose, helped out by a weaker U.S. dollar; and imports fell, reflecting the more cautious mood of American consumers and businesses.
Exports of goods and services went up by 1.6 percent, to $81.9 billion in January.
Exports of industrial supplies, including chemicals and steel, increased to $14 billion, the highest level since April 2001. Overseas sales of U.S.-made consumer products - a broad category that includes household appliances, cosmetics and furniture - rose to $7.4 billion, the best showing since May 2001.
The dollar has lost altitude in the past year, a good development for U.S. exporters because it makes their products more competitive on foreign markets and less expensive for overseas buyers.
"Certain fundamentals are beginning to move in a positive direction, including the 12 percent decline of the dollar over the past year," National Association of Manufacturers President Jerry Jasinowski said.
But weak economic growth overseas, especially in Europe, means that export growth probably won't really pick up until the second half of this year - assuming the geopolitical situation stabilizes, he added.
The narrowing of the trade deficit came even as the average price of imported crude oil jumped to $27.73 a barrel in January, the highest price since November 2000.
January's per barrel price was $3.58 higher than December's, marking the largest one-month gain since September-October 1990. Fears about a possible war with Iraq are contributing to higher energy prices.
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