US trade deficit narrows to $58.2 bln

Fri May 9, 9:11 AM ET

WASHINGTON (AFP) - The US trade deficit shrank to 58.2 billion dollars in March from a revised 61.7 billion a month earlier, as the weak dollar fueled a surge in exports, the Commerce Department said Friday.

The trade deficit narrowed by more than expected in March as most economists had forecast it would shrink to 61.3 billion dollars.

The improvement in the US trade picture was largely tied to the ailing dollar which has dropped sharply in value against other world currencies and made US-made goods much more affordable.

February's trade deficit was revised lower to 61.7 billion dollars from an original estimate of 62.3 billion.

Although the value of US exports slipped marginally in March from the prior month by 1.7 percent to 148.5 billion dollars, the volume of exports remained at historical highs.

Imports declined a heavier 2.9 percent during the month to 206.7 billion dollars, suggesting Americans cut back on foreign purchases which have become more costly due to the weak dollar.

The combination of robust exports and falling imports helped to narrow the overall trade deficit in March.

Exports of US-made goods marked their second-highest peak in March, following a record high in February of 151.1 billion dollars.

A reduction in the petroleum deficit in the world's largest oil importer also helped trim the overall deficit.

The petroleum deficit narrowed to 30.4 billion dollars in March compared with 32.2 billion in February. The price of imported oil meanwhile struck a record 89.85 dollars a barrel.

Although the weak dollar has helped reduce the US trade deficit, rocketing world oil prices are pressuring the US economy and particularly companies that rely on fuel supplies.

The politically sensitive US trade deficit with China narrowed a hefty 12.4 percent to 16.1 percent in March, shrinking to its weakest level since March 2006.

America's trade gap with the European Union grew 9.1 percent to 7.5 billion dollars during the month and increased slighly with its northern neighbor Canada to 6.5 billion.