Trade gap at 6-year low

NEW YORK (CNNMoney.com) -- The nation's trade deficit narrowed 9.7% in January, shrinking to its smallest gap in 6 years, according to government data released Friday.

The Department of Commerce reported that imports exceeded exports by $36 billion in January, down from a revised $39.9 billion in December.

The trade gap has not been this narrow since October 2002, when it was $35.2 billion. It was also well below the consensus forecast of $38 billion, according to a survey of economists by Briefing.com

January imports fell $11.5 billion, or 6.6%, to $160.9 billion, while exports declined $7.6 billion, or 5.7%, to $124.9 billion.

The decline was due largely to a drop in oil imports, which drove the deficit down by $4.1 billion, according to Ian Sheperdson, an economist at High Frequency Economics.

"Gross trade volumes continue to drop at an astonishing pace," Sheperdson wrote in a research note. "Given the size and unpredictability of these movements, our working assumption is that trade is neutral for first quarter GDP growth."

U.S. gross domestic product, the broadest measure of the nation's economic activity, fell at an annual rate of 6.2% in the last three months of 2008. Most economists expect GDP to shrink further in the first half of 2009.

Prior to the past two years of narrowing annual trade gaps, the trade deficit had been on a 16-year upward trend, starting in 1991, when the annual trade deficit was only $31.2 billion.

During that time, the trade deficit declined only in 2001, a recession year, when the downturn in the economy trimmed the appetite for exports.