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US trade deficit shrinks to $38.8 bn in March

A cargo ship is loaded with containers at Baltimore harbor, on September 20, 2010
A cargo ship is loaded with containers at Baltimore harbor, on September 20, 2010. The US trade deficit shrank 11% in March from February as oil and consumer goods imports fell, according to the Commerce Department.

The US trade deficit shrank 11 percent in March from February as consumer goods imports fell, government data released Thursday showed.

The Commerce Department reported the trade gap narrowed to $38.8 billion, from a revised $43.6 billion in February, the second month in a row that the deficit narrowed.

A sharp drop in imports reduced the gap in March as consumer spending declined, a further sign of a slowdown in the economy. Imports totaled $223.1 billion, down from $229.6 in February.

Exports also declined, but by a lesser amount, to $184.3 billion from $186.0 billion the prior month.

The country's trade balance in goods and services with the rest of the world was better than most analysts expected. The average estimate was for a $43.0 billion deficit.

"This improvement is expected to lead to an upward revision to first-quarter GDP growth when the second estimate is released," said Patrick O'Hare of Briefing.com.

The government initially reported first-quarter gross domestic product growth of 2.5 percent; the second estimate is scheduled on May 30.

Imports of consumer goods, including clothing and appliances, dropped 7.5 percent in March to $41.8 billion.

Crude oil imports, which account for nearly 10 percent of the goods imported into the United States, fell 8.4 percent to $21.6 billion in March.

The volume of imported crude oil fell to 7.0 million barrels a day, the lowest level since March 1996.

The three-month moving average for the deficit rose marginally, to $42.3 billion from $42.1 billion.

The closely watched US trade gap with China shrank a hefty 24 percent from February to $17.9 billion, its lowest level since March 2010, according to country data that is not seasonally adjusted.

The US gap with its top trade partner Canada narrowed 11 percent to $2.3 billion.

With Mexico, its other big North America partner, the deficit increased 24 percent to $5.3 billion.

The trade deficit with the 17-nation eurozone rose 2.8 percent to $8.3 billion.

The weaker export data "is worrisome as it reflects continued weak demand in Europe where the recession may persist for longer than expected," said Tu Packard of Moody's Analytics.

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