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UPDATE 1-US trade gap narrows for record sixth month

Published 03/13/2009, 08:51 AM
Updated 03/13/2009, 08:56 AM
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(Adds more detail from report, quote from economist)

WASHINGTON, March 13 (Reuters) - The U.S. trade deficit narrowed 9.7 percent in January to its smallest since October 2002, as both imports and exports tumbled for the sixth consecutive month in the face of shrinking global demand, a U.S. government report showed on Friday.

The monthly trade gap totaled $36.0 billion, below a Wall Street consensus estimate of $38.0 billion. The deficit has now narrowed for a record six consecutive months, the longest previous run being from April through August 2007.

U.S. exports of goods and services fell 5.7 percent from December to the lowest since September 2006 and imports tumbled 6.7 percent to lowest since March 2005.

"The narrowing reflects the ongoing economic downturn. U.S. consumers are pulling back and that's resulting in fewer imports while exports are falling," said Mark Zandi, chief economist at Moody's Economy.com in West Chester, Pennsylvania. "It reflects how bad economic conditions are everywhere."

Total world trade is expected to fall this year for the first time since 1982 as businesses and consumers cut back on spending in response to a weakening global economy and international financial crisis.

Earlier this week, China reported that its exports plunged 25.7 percent in February from a year earlier while imports declined 24.1 percent.

On a year-to-year basis, U.S. exports were down 16.4 percent in January while imports were 22.8 percent lower, the Commerce report showed. The monthly trade deficit has narrowed 39.1 percent over the same period.

In a sign of the bleak conditions facing the world's automakers, both U.S. imports and exports of autos and auto parts were the lowest since July 1998.

U.S. exports of food, feeds and beverages were slightly higher in January, but other major categories such as consumer goods, capital goods and industrial supplies and material all declined.

On the import side, all major categories were lower with another drop in monthly oil prices to $39.81 per barrel cutting the value of U.S. crude oil imports to $11.9 billion, the lowest since February 2005.

The bilateral U.S. trade deficit with China swelled 3.5 percent in January as U.S. exports to China fell much faster than U.S. imports from that country. (Reporting by Doug Palmer; Editing by Tom Hals)

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