June 20, 2003	Friday	Rabi-us-Sani 19, 1424

WASHINGTON, June 19: The US shortfall in trade and investment income bulged to a record $136.1 billion in the first quarter of 2003, the government said on Thursday.

The current account deficit, which compared to a gap of $128.6 billion in the last quarter of 2002, was still somewhat narrower than had been expected by Wall Street economists.

The current account tracks foreign trade, investment income and one-way transfers such as foreign aid.

In trade of goods and services, the deficit in the first three months of this year widened to $121.6 billion from $116.1 billion in the last quarter of 2002.

A surplus on income from investments declined to $2.6 billion from $3.0 billion the fourth quarter of last year.

One-way transfers led to net outflows of $17.1 billion in the quarter, up from an outflow of $15.4 billion in the previous three months.

In 2002 overall, the current account deficit amounted to a record $480.86 dollars, slightly less than the earlier estimate of a 503-billion-dollar gap.

The capital account showed net outflows of about $300 million, barely changed from the previous quarter.

Financial inflows — the net value of US assets acquired by foreigners less foreign assets bought by US residents — declined to $112.8 billion from $152.5 billion in the last quarter of 2002.

Foreign purchases of US securities other than government bonds declined to $50.9 billion in the first quarter of 2003 from $67.0 billion in the previous quarter.

Foreigners sold a net $3.3 billion in US stocks, partially reversing net purchases of $11.9 billion in the last quarter of 2002.

Instead, overseas investors ploughed into US company bonds. Foreign purchases of US corporate bonds soared to $60.1 billion from $39.7 billion. Foreign purchases of US government bonds edged up to $13.5 billion from $12.7 billion.

Meanwhile, the private Conference Board’s index of leading economic indicators, which aims at predicting activity in the coming months, rose 1.0 per cent in May after edging up 0.1 per cent in April.

It shows that the US economy is finally set for a long-awaited post-war rebound, a closely watched barometer showed on Thursday, but nervous firms still menaced the outlook.

“The leading economic index finally points to a recovery, almost a year and a half after the end of the recession,” Conference Board economist Ken Goldstein said.

US producer prices, a measure of wholesale inflation, fell 0.3 per cent in May when compared to April but consumer prices, the prices charged in the stores, were unchanged, government figures showed.—AFP