Trade Deficit Off 24% From January Peak : New Figures Should ‘Signal Start of Steady Decline,’ Speakes Says

WASHINGTON — The nation’s foreign trade deficit, aided by falling petroleum prices, totaled $12.5 billion in February, 24% below the record deficit set in January, the government reported today.

At the White House, presidential spokesman Larry Speakes said the new figures “should signal the start of a fairly steady decline in the trade deficit . . . at least through 1986.”

The Commerce Department said imports of petroleum products plunged 28%. The decline in imported oil reflected cuts in both the amount purchased and the price of oil.

An average of 5.4 million barrels of oil was purchased daily, down from 6.2 million barrels a day in January, while the price fell to $24.85 per barrel, down $2.29 from the January level. This was the lowest oil price since November, 1979.

Long-Term Contracts

The price of oil on the spot market has fallen more than $10 per barrel since November. But most oil is purchased under long-term contracts that do not change as quickly as the spot market price.

Still, experts believe that one of the major positive factors that will help the country’s trading performance this year will be lower oil prices.

Economists also believe that the sharp decline in the value of the dollar will help boost exports while reducing Americans’ appetite for foreign goods.

The dollar has fallen 30% since it peaked in March of 1985, but experts say it normally takes from 12 to 18 months for a currency decline to show up in more favorable trade numbers.

The improvement in the trade deficit last month came from a 9.7% drop in imports, which still totaled $30.2 billion, and a 4.3% rise in exports. This gain put exports at $17.7 billion, the highest monthly level since last June.

Farm Exports Off 3.6%

The export rise included a 6.9% increase in exports of domestic manufactured products, which totaled $12.2 billion last month. American agricultural exports, however, fell 3.6% to $1.9 billion. American farmers have been particularly hurt by the strength of the dollar as well as increased foreign competition.

The drop in imports came primarily from the decline in oil imports. However, imports of Japanese cars also fell a sharp 21% last month to $1.39 billion.

Even with the big improvement in the trade deficit in February, many analysts believe that the deficit for the entire year will be even higher than last year’s record $148.5-billion shortfall.

The Reagan Administration is forecasting a lower deficit this year based on a belief that the falling dollar will start to boost export sales and restrict imports in the second half of the year.