The U.S. trade gap with the rest of the world increased in March for the first time in eight months as exports declined faster than imports, the Commerce Department reported Tuesday. Led by a big decline in capital goods sales, exports of goods and services fell 2.4% to a seasonally adjusted $123.6 billion in March, the lowest level since August 2006. Nominal exports were down 17% in the past year. Meanwhile, imports of goods and services fell 1% to $151.2 billion, led by declining purchases of natural gas, clothing and industrial engines. Imports were at the lowest level since September 2004 and were down 27% in the past year. The trade deficit - the difference between exports and imports - increased by 5.5% to $27.6 billion in March from $26.1 billion in February as the global recession tightened in major U.S. trading partners in North America, Europe and Asia. The deficit with Canada fell to an 11-year low. By some accounts, global trade is contracting even faster now than it did in the early 1930s during the global Great Depression. The March deficit was smaller than the $28.5 billion that was forecast by economists surveyed by MarketWatch. See Economic Preview. The decline in exports and imports was due to falling prices as well as falling volumes. In real terms (that is, inflation-adjusted), exports of goods dropped 1.8% while imports of goods fell 1%. Real imports were at the lowest level since September 2003. In the past 12 months, real exports are down 14% while real imports are down 18%. Nominal exports had risen 1.5% in February, sparking some hopes that global demand had firmed after six months of declines. However, exports turned lower again in March. The average price of imported crude oil rose to $41.36 per barrel from $39.22, the first increase in eight months. Details of trade report Exports of services fell 1.2% to $41.7 billion. Exports of capital goods fell 5.2% to $31.5 billion, led by civilian aircraft, telecom equipment and semiconductors. Capital-goods exports were the lowest in 2 1/2 years. Exports of industrial supplies rose 0.3% to $22.2 billion, led by nuclear fuels, gold and coal. Exports of consumer goods fell 4.2% to $12.2 billion, led by drugs and toys. Exports of foods and feeds rose 2.5% to $7.5 billion, led by corn and wheat. Exports of autos and auto parts fell 4% to $5.8 billion. Imports of industrial supplies fell 2.1% to $34 billion, led by natural gas and steel, to the lowest level in nearly five years. Imports of consumer goods rose 0.8% to $34.7 billion, led by toys, drugs and appliances. Imports of services fell 1% to $30.9 billion. Imports of capital goods fell 1.7% to $29.3 billion, led by industrial engines and machines, to the lowest level in nearly five years. Imports of autos and auto parts rose 0.2% to $10.6 billion. Imports of foods and feeds rose 0.5% to $6.7 billion, led by alcohol.

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