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US goods trade deficit narrows sharply in boost to first-quarter GDP

A container ship docked at the Port of Oakland, in Oakland, Calif.
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A container ship docked at the Port of Oakland, in Oakland, Calif.

The U.S. goods trade deficit narrowed sharply in March as imports tumbled, suggesting economic growth in the first-quarter was probably not as weak as currently anticipated.

The Commerce Department said in its advance report on Wednesday that the goods trade gap fell to $56.90 billion last month from $63.44 billion in February.

March's comprehensive trade report, which includes services, will be released next Wednesday.

Goods imports fell 4.4 percent to $173.6 million last month, outpacing a 1.2 percent drop in exports.

The small goods deficit suggested there could be an upside surprise in gross domestic product growth for the first quarter. Economists polled by Reuters have forecast gross domestic product (GDP) rising at a 0.7 percent annualized rate in the first three months of the year.

"It suggests that first-quarter GDP growth will be much stronger than we previously believed," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

"We now estimate that first-quarter GDP growth was 1.4 percent annualized, whereas we previously thought it would be only 0.8 percent."

The government is scheduled to publish its advance first-quarter GDP growth estimate on Thursday.