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Largely reflecting a steep drop in the value of imports, the Commerce Department released a report on Wednesday showing the U.S. trade deficit narrowed by much more than anticipated in the month of January.
The Commerce Department said the trade deficit narrowed to $51.1 billion in January from a revised $59.9 billion in December.
Economists had expected the deficit to shrink to $57.0 billion from the $59.8 billion originally reported for the previous month.
In the previous month, the trade deficit increased to its highest level since reaching $60.2 billion in October of 2008.
The narrower than expected deficit came as the value of imports tumbled by 2.6 percent to $258.5 billion in January after jumping by 2.1 percent to $265.3 billion in December.
The value of crude oil imports showed a notable decrease along with imports of capital goods such as computer accessories, semiconductors, and civilian aircraft.
Michael Pearce, Senior U.S. Economist at Capital Economics, noted the steep drop in the value of imports is "hardly a positive sign for the economy."
"Nonetheless, with imports now likely to have been flat, or fallen slightly, in the first quarter overall, net trade is likely to be a positive for economic growth in the first quarter," Pearce said.
He added, "We now expect first quarter GDP growth to come in around 2.0% annualized, up from our previous estimate of 1.5%."
Meanwhile, the report said the value of exports climbed by 0.9 percent to $207.3 billion in January after slumping by 1.9 percent to $205.4 billion in December.
Significant increases in exports of soybeans and passenger cars more than offset a steep drop in exports of civilian aircraft.
The Commerce Department also said the goods deficit narrowed to $73.3 billion in January from $81.5 billion in December, while the services surplus rose to $22.1 billion from $21.6 billion.
