The U.S. trade deficit narrowed by 9.7% to $36.0 billion in January on an across-the-board decline in demand for imported goods, the Commerce Department estimated Friday.
The drop was helped by a continued drop in the average price for a barrel of oil.
Economists have been stunned by the swift deterioration in global trade. Reasons for this are unclear. It seems consumers and businesses around the world are pulling back as the credit crunch sinks its teeth into the newly-globalized economy.
"The numbers have been wild since the summer of last year, before the bankruptcy of Lehman Brothers, when a combination of falling demand - and we surmise - much tighter trade credit, began to squeeze both exports and imports," wrote Ian Shepherdson, chief economist at High Frequency Economics, prior to the release of the January data.
In part because of the fall-off in trade, the World Bank now predicts that global GDP will contract in 2009.
The improvement in the U.S. trade balance has been startling. The U.S. trade deficit was $59.16 billion in the same month last year.
This is the sixth straight monthly drop in the U.S. trade gap, the longest string since the latest data series was started in 1992.
The nominal deficit was in line with estimates of economists surveyed by MarketWatch.
Exports fell 5.7% in January to $124.9 billion, the lowest level since September 2006. The nation's exports to China, Japan were the lowest in years.
Meanwhile, the month's imports fell 6.7% to $160.9 billion, in part because of an average price per barrel of oil of $39.81, the lowest since February 2005.
The figures are seasonally adjusted but are not adjusted for price changes.
Despite the reduction in the trade deficit, the gap with China, unadjusted for seasonal factors, was essentially unchanged at $20.57 billion in January, compared with $20.31 billion in the same month last year.
Exports to China fell to $4.2 billion, the lowest level since February 2006.
Details
U.S. exports of goods decreased 7.6% to $124.9 billion in January, the government's data showed
Exports of industrial supplies, capital goods, autos and consumer goods were at multi-year lows.
Meanwhile, imports of goods fell 7.8% to $129.2 billion, the lowest level since September 2004.
Auto imports were the lowest in more than ten years in January.
Imports of industrial supplies, capital goods and consumer gods were also the lowest in years.
The United States imported, on average, 9.7 million barrels of crude oil each day in January, down from 10.3 million in December.
After hitting a record high in July of $124.66 per barrel, oil prices have plunged to $39.81 in January.
Imports of crude oil totaled $11.9 billion in January, the lowest since February 2005.
The monthly deficit with the Organization of Petroleum Exporting Countries fell to $3.90 billion, the lowest since November 2003.
