Trade Gap Narrows More than Expected in March

The U.S. trade deficit narrowed more than expected in March on a record plunge in the value of imports, even as average oil prices surged to a new record, a Commerce Department report on Friday showed.

David Maung / AP

The trade gap shrank to $58.2 billion in March, down 5.7 percent from a revised estimate of $61.7 billion in February, previously reported as $62.3 billion. Wall Street analysts had expected the March gap to narrow to $61.3 billion.

A $6.1 billion drop in the value of imports to $206.7 billion was the biggest on record. It was also the biggest percentage drop since December 2001, only months after the attacks on the United States and when the U.S. economy was in a downturn.

In a sign the current U.S. economic slowdown is taking a toll on consumer and business demand, major import categories like autos and auto parts, industrial supplies and materials, consumer goods and capital goods all showed declines in March.

Average oil prices jumped more than $5 per barrel in March to $89.85. As prices have moved skyward, the volume of oil imports fell in March to 8.99 million barrels a day - the lowest since February 2003 and well below the 2007 average of 10.1 million.

U.S. exports retreated in March, but were still the second highest on record at $148.5 billion. Auto exports showed the biggest decline, followed by industrial supplies and materials and consumer goods.

Before the March decline, U.S. exports had set records in 12 consecutive months - helping to keep the U.S. economy afloat during a time of turmoil brought on by a housing slump and spreading liquidity crisis.

The closely-watched U.S. trade deficit with China narrowed to $16.1 billion in March, the lowest in two years as U.S. exports to that country grew 10 percent to their second highest on record.

U.S. exports to the European Union and Central and South America set a record in March. Imports from Canada also set a record during the month.

Copyright 2008 Reuters. Click for restrictions.