The US trade deficit fell more than expected in February as exports increased to a two-year high and slowing domestic demand weighed on imports.
The US Commerce Department said the trade gap declined 9.6% to $43.6 billion. January's trade deficit was revised slightly down to $48.2 billion from $48.5 billion.
Economists polled by Reuters had forecast the trade gap falling to $44.8 billion in February.
When adjusted for inflation, the deficit decreased to $59.7 billion, with exports of goods the highest on record as an earlier drag from a strong dollar fades. The real trade deficit was $65.1 billion in January.
Most economists expect trade will likely be a small drag on gross domestic product in the first quarter after subtracting 1.82 percentage points from fourth-quarter growth.
In addition to trade, weak consumer spending also likely constrained the economy in the first three months of the year.
The Atlanta Federal Reserve is forecasting GDP rising at a 1.2% rate in the first quarter, a deceleration from the 2.1% pace seen in the three months from October to December.
The Trump administration is eyeing trade as a vehicle to lift annual economic growth to 4% and boost the manufacturing sector.
President Donald Trump last Friday ordered a study into the causes of US trade deficits and a clamp-down on import duty evasion.
Trump also wants to renegotiate the North American Free Trade Agreement (NAFTA), which was signed in 1994 by the US, Canada and Mexico.
In February, exports of US goods and services increased 0.2% to $192.9 billion, the highest level since December 2014. Exports were lifted by gains in the shipments of cars and parts, which were the highest since July 2014.
Exports of industrial supplies and materials were the highest since December 2015.
There was an 8% jump in exports to the European Union, with goods shipped to Germany surging 8.6%.
Exports to the UK soared 17.3% and Japan also bought more goods from the US.
However, exports to China fell 2.7% and Mexico saw a 7.1% drop in goods shipped from the US.
Imports of goods and services fell 1.8% to $236.4 billion amid declines in imports of mobile phones and motor vehicles.
Imports had risen in recent months, partly due to higher oil prices. There was a drop in crude oil imports in February.
Some of the decline in imports in February likely reflects slower consumer spending.
US data last week showed real consumer spending decreased for a second month in a row in February, the first back-to-back monthly decline since April 2009.
But food imports hit a record high in February and imports of capital goods were the highest in nearly two years.
Imports of goods from China tumbled a record $8.6 billion to $32.8 billion in February, a 20.8% drop from January.
The US also saw a decline in goods shipped from the European Union, Canada and Japan.
As a result, the politically sensitive US-China trade deficit dropped 26.6% to $23 billion in February.
The trade deficit with Germany was the smallest since January 2013. The trade gap with Mexico jumped 46%to $5.8 billion.
