The US trade deficit unexpectedly narrowed during March despite a huge run-up in oil prices, and analysts say the report suggests the overall economy grew faster earlier this year than first thought.

The US deficit in international trade of goods and services shrank to $54.99 billion from a revised $60.57 billion in February, the Commerce Department said last week.

Imports fell amid weakened consumer and business spending in the US and exports rose to a record high. The 9.2% decline was the biggest monthly drop since the trade gap fell by 10.3% in December 2001 and came even as the US economy outperforms the economies of key trading partners, including Japan and European nations.

Economists say the data indicate first-quarter gross domestic product was higher than originally believed.

“The March result will lead to a massive upward revision to first-quarter GDP,” RBS Greenwich Capital Markets economist Steve Stanley said in prepared analysis.

Economists estimate the lower-than-expected trade deficit figure issued Wednesday implies first-quarter GDP was anywhere from 0.6 percentage points to 0.9 percentage points above the 3.1% rate reported by the government two weeks ago.

GDP is a measure of all goods and services produced in the economy. The nation’s imports and exports are considered by government numbers-crunchers who figure GDP; other components are consumer spending and business outlays and inventories. The initial first-quarter GDP estimate of 3.1% was based on incomplete source data subject to revision. To calculate GDP, the government was required to make assumptions about March trade data. On May 26, the Commerce Department will issue its first revision to first-quarter GDP. Aside from trade, possible changes to other components of GDP also could play a part in that revision.

The May 11 trade report surprised Wall Street. The median forecast of 23 economists surveyed by Dow Jones Newswires and CNBC was for a deficit of $61.50 billion.

Lehman Brothers economist Drew Matus said the $54.99 billion trade gap should help boost GDP overall, but he doesn’t think the level of deficit is sustainable. “This is a one-time, nice blip,” he said.

Imports fell 2.5% to $157.19 billion in March, as purchases of foreign-made industrial supplies, capital goods autos and consumer goods tumbled.

A reason GDP slowed to 3.1% in the first quarter from the fourth-quarter’s 3.8% was rising energy prices, seen by analysts as slowing spending by consumers and businesses. At the same time, business inventory accumulation soared.

Ken Mayland, president of ClearView Economics in Pepper Pike, Ohio, said US companies wary of rising stockpiles may have lowered their orders of goods produced domestically as well as abroad.

“In the last month of the first quarter, companies may have been acting to stem the inventory run-up,” Mayland said.

While overall imports fell in March, the value of crude oil imports climbed - sharply. In fact, oil purchases rose to $13.41 billion from February’s $10.94 billion. The average price per barrel surged by $4.29 to $41.14, the largest month-to-month increase since October 1990’s $4.45 jump.

US exports advanced 1.5% to a record $102.21 billion in March. Capital goods sales climbed $927 million as civilian aircraft and telecommunications equipment rose. Food exports were up $309 million.

Mayland said overseas sales of US products would run higher - resulting in smaller trade deficits - if Japan and nations in Europe could generate more economic growth.

“If these countries grew at their potential, our trade deficit would be considerably lower,” Mayland said.

The US trade shortfall with Japan rose to $7.83 billion from $6.87 billion in February, and its deficit with the euro area increased to $6.93 billion from $6.52 billion. The US trade gap with China narrowed in March, shrinking to $12.90 billion from February’s $13.87 billion. (Dow Jones Newswires)