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NEW YORK (CNN/Money) -
The U.S. trade deficit shrank a surprising 9.2 percent in March as big declines in Americans' purchases of imported cars and clothing more than offset a jump in oil imports, the government reported Wednesday.
The decline came as imports of goods and services fell at the fastest rate in four years and exports rose to record levels.
U.S. imports outstripped exports by $55 billion in March, down from a revised record of $60.6 billion in February, the Commerce Department said. Economists surveyed by Briefing.com had forecast that the gap would rise to $62 billion.
After being essentially flat for three months, U.S. exports rose 1.5 percent to a record $102.2 billion. But what really drove the deficit down was a 3 percent drop in imports, the biggest decline since February 2001.
The drop came despite a sharp $3 billion, or 20 percent, rise in the value of energy imports, to nearly $17 billion.
The drop in imports other than oil came in a number of categories, but two of the largest were consumer goods, which fell $2.4 billion, and imports of autos and parts, down $1.3 billion.
The numbers reflect "a little bit of the unwinding of consumer spending," said Oscar Gonzalez, economist with John Hancock Financial in Boston. "It's not all of that was unexpected, given the (weak) figures we had on retail sales."
Another part of the smaller trade gap was a narrower gap with China, which boosted imports from and reduced exports to the United States. The deficit with Beijing sank nearly $1 billion to $12.9 billion. But that was still by far the largest imbalance with any trading partner, even with the improvement.
Imports of clothing, textiles and related goods from China tumbled 21.2 percent in March after rising 9.8 percent in February and soaring in January when quota restrictions on textile imports expired.
Steven Wieting, senior economist at Citigroup, said part of the drop in those Chinese goods seen in March came after the big jumps the prior two months.
"There's a lot of month-to-month volatility in these numbers," said Wieting. "You had a tremendous amount of widening in February and then a snap back in March."
Wieting and other economists said one result of the unexpected drop in the trade gap in this report is that the nation's gross domestic product, the broad measure of the nation's economic activity, is likely to be revised higher. Exports add to the nation's GDP, while imports reduce it.
The initial first quarter GDP reading of growth at a 3.1 percent rate is now likely to be raised to 3.5 or 3.6 percent, economists said, with the smaller trade gap offset somewhat by other readings that came in weaker than expected.
The initial reading of just 3.1 percent growth after 3.8 percent growth in the fourth quarter had raised concerns among economists and investors of a so-called "soft patch" in the economy due to rising oil prices and interest rates.
"The soft patch was highly overrated," said Wieting.
But Wieting and other economists said they didn't expect the trade gap to keep narrowing.
While the monthly trade gap sank in March, it still would have been a record deficit as recently as May 2004. And the total trade gap for the first quarter was $174.1 billion, up almost 2 percent from the fourth quarter.
"The overall trend is still pretty dismal in terms of imbalances between imports and exports," said Gonzalez.
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