Business Watch

Recently, trade officials of 34 countries from North and South America endorsed the rules and regulations they will follow in creating a single trade zone for the Americas by the year 2005. The trade officials, which met in Denver, set up seven working groups to start on the 10-year effort. Their goal is to strengthen and broaden economic integration begun by the five trade groups currently active in the Americas, including the largest, the North American Free Trade Alliance.

In terms of trade with the United States, Canada is still the largest trading partner, as total trade between the two countries reached $243 billion in 1994. Canada also accounts for about 21 percent of all U.S. exports; Japan 9 percent; Mexico 7 percent; U.K. 6 percent; and Germany about 4 percent. All other countries make up the remainder 53 percent.

Exports are projected to remain strong as U.S. goods remain competitive due to a strong and steady economy, flat wholesale prices and a weak dollar. However, recessions in all of the nation’s top five trading partners are stalling any major leap in exports.

INDEX OF LEADING INDICATORS IS DOWN

Yet another sign that the economy has cooled is the U.S. Commerce Department’s Index of Leading Indicators which fell 0.6 percent in April. The index is a method for economic forecasters to chart the economy’s future. There are 11 indicators, five which are tied to manufacturing. The drop was followed by a decline in service and manufacturing jobs which lost more than 100,000 jobs in May.

Factory orders of durable goods also plunged 4 percent in April, according to the Commerce Dept. It was the largest monthly decline in more than three years. Nearly half of the drop was attributed to a decline in auto sales. For the last half of 1994, durable goods orders was on a steady climb, then began leveling off in the first quarter of this year, before taking a dive in April. Most of the cause for the decline, though, may be because of the slow economic recovery in Japan and the monetary crisis in Mexico which are affecting exports.

Tempering the cooldown of the economy, however, are steady, and even decreasing interest rates in some areas, as well as a low inflation rate. According to the Bureau of Labor Statistics, Washington, wholesale prices fell 0.1 percent in June.