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WASHINGTON -- The U.S. current account deficit, the broadest gauge of the nation's global trade, unexpectedly narrowed in the fourth quarter, while U.S. business inventories posted their fifth straight monthly gain in January.
A separate report from the University of Michigan showed a slight decline in consumer confidence in March.
The trade gap, which measures goods, services and financial transactions, narrowed to $127.5 billion from October through December, the Commerce Department said Friday.
For all of 2003, the current account deficit expanded to a record $541.8 billion, up from 2002's $480.9 billion.
The narrower fourth-quarter deficit surprised economists. A Dow Jones Newswires-CNBC survey of 12 economists had predicted a deficit of $136.0 billion.
The third-quarter deficit was revised to $135.3 billion, a bit higher than the previously reported $135 billion.
The Bush administration has said the best way to handle the mushrooming deficits is to get other countries to remove trade barriers and open their markets to U.S. companies. But Democrats and other critics point to the deficits as evidence that the president's free-trade policies aren't working and are contributing to the loss of U.S. jobs.
A $122.9 billion shortfall in goods and services trade during the fourth quarter -- wider than the $121.6 billion gap in the third period -- made up the bulk of the fourth-quarter current-account deficit.
Foreign transfers, such as foreign-aid payments to international organizations, contributed $17.2 billion to the fourth quarter's current-account deficit, slightly more than the previous quarter. But the balance on investment income recorded a $13.8 billion surplus as Americans earned more on their overseas investments than foreigners did on their U.S. investments.
Inventory Growth Slows
The 0.1% increase in U.S. business inventories was smaller than expected, as sales rose. The Commerce Department said inventories edged up to a seasonally adjusted level of $1.194 trillion, after an advance of 0.3% in December.
The January increase was smaller than what was expected on Wall Street. Economists had projected an advance of 0.3%.
Rising demand for goods combined with caution by companies has caused liquidation of supplies, and inventory-to-sales ratios remain at abnormally low levels. The risk is that company supplies could fail to satisfy consumer demand, which is key to gross-domestic-product growth. But businesses have started building inventories and analysts expect further accumulation.
The report Friday showed business sales rose 0.4% in January, after climbing 1.4% the previous month.
The inventory-to-sales ratio was 1.33, unchanged from December's downwardly revised level. The inventory-to-sales ratio, an indicator of how well firms are matching supply with demand, measures how many months it would take for a firm to sell all of its current inventory.
Retail inventories inched up 0.1% in January, after rising 0.3% the month before. Auto inventories rose 0.3%. Excluding the auto component, retail inventories would have been flat.
General merchandise stores rose by 0.2%. Food store inventories went up 0.3%. Stockpiles at furniture stores fell by 0.5%, while inventories at building materials, garden equipment and supplies stores increased 0.7%. There was a 0.6% decline in clothing inventories.
Consumer Confidence Ebbs
Shortly after the U.S. markets opened, the University of Michigan released its preliminary survey of consumer confidence for March. The index showed a slight drop to a reading of 94.1, compared with the 94.4 notched at the end of February and January's 103.8, said those who had seen the report, which is released only to subscribers.
The mid-March level was a hair better than analysts' forecasts. Economists surveyed by Dow Jones Newswires had expected to see a modest softening in the index to 93.8.
Within the overall index, the index of sentiment regarding current conditions, which describes consumer attitudes about where the economy is now, rose to 105.7 in March, from 103.6 in February.
The subindex of consumer expectations, which seeks to divine consumers' view of where things are heading over coming months, fell to 86.6 in March from 88.5 in February.
Any drop in the indexes indicates a decline in confidence. The preliminary survey is based on a smaller sample than the revised, full-month survey released at the end of the month.
A separate report from the University of Michigan showed a slight decline in consumer confidence in March.
The trade gap, which measures goods, services and financial transactions, narrowed to $127.5 billion from October through December, the Commerce Department said Friday.
For all of 2003, the current account deficit expanded to a record $541.8 billion, up from 2002's $480.9 billion.
The narrower fourth-quarter deficit surprised economists. A Dow Jones Newswires-CNBC survey of 12 economists had predicted a deficit of $136.0 billion.
The third-quarter deficit was revised to $135.3 billion, a bit higher than the previously reported $135 billion.
The Bush administration has said the best way to handle the mushrooming deficits is to get other countries to remove trade barriers and open their markets to U.S. companies. But Democrats and other critics point to the deficits as evidence that the president's free-trade policies aren't working and are contributing to the loss of U.S. jobs.
A $122.9 billion shortfall in goods and services trade during the fourth quarter -- wider than the $121.6 billion gap in the third period -- made up the bulk of the fourth-quarter current-account deficit.
Foreign transfers, such as foreign-aid payments to international organizations, contributed $17.2 billion to the fourth quarter's current-account deficit, slightly more than the previous quarter. But the balance on investment income recorded a $13.8 billion surplus as Americans earned more on their overseas investments than foreigners did on their U.S. investments.
Inventory Growth Slows
The 0.1% increase in U.S. business inventories was smaller than expected, as sales rose. The Commerce Department said inventories edged up to a seasonally adjusted level of $1.194 trillion, after an advance of 0.3% in December.
The January increase was smaller than what was expected on Wall Street. Economists had projected an advance of 0.3%.
Rising demand for goods combined with caution by companies has caused liquidation of supplies, and inventory-to-sales ratios remain at abnormally low levels. The risk is that company supplies could fail to satisfy consumer demand, which is key to gross-domestic-product growth. But businesses have started building inventories and analysts expect further accumulation.
The report Friday showed business sales rose 0.4% in January, after climbing 1.4% the previous month.
The inventory-to-sales ratio was 1.33, unchanged from December's downwardly revised level. The inventory-to-sales ratio, an indicator of how well firms are matching supply with demand, measures how many months it would take for a firm to sell all of its current inventory.
Retail inventories inched up 0.1% in January, after rising 0.3% the month before. Auto inventories rose 0.3%. Excluding the auto component, retail inventories would have been flat.
General merchandise stores rose by 0.2%. Food store inventories went up 0.3%. Stockpiles at furniture stores fell by 0.5%, while inventories at building materials, garden equipment and supplies stores increased 0.7%. There was a 0.6% decline in clothing inventories.
Consumer Confidence Ebbs
Shortly after the U.S. markets opened, the University of Michigan released its preliminary survey of consumer confidence for March. The index showed a slight drop to a reading of 94.1, compared with the 94.4 notched at the end of February and January's 103.8, said those who had seen the report, which is released only to subscribers.
The mid-March level was a hair better than analysts' forecasts. Economists surveyed by Dow Jones Newswires had expected to see a modest softening in the index to 93.8.
Within the overall index, the index of sentiment regarding current conditions, which describes consumer attitudes about where the economy is now, rose to 105.7 in March, from 103.6 in February.
The subindex of consumer expectations, which seeks to divine consumers' view of where things are heading over coming months, fell to 86.6 in March from 88.5 in February.
Any drop in the indexes indicates a decline in confidence. The preliminary survey is based on a smaller sample than the revised, full-month survey released at the end of the month.