US trade deficit narrows further

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The US trade deficit has narrowed to a new-year low in February, the seventh month in a row it has shrunk.

The deficit, the difference between what the US exports and imports, narrowed by 28% to $26.3bn (£17.9bn) from January's revised $36.2bn.

The global slowdown and the stronger US currency has cut demand for imports.

The Commerce Department figures had surprised most economists, most of whom had been expecting the deficit to be about $10bn narrower.

With more people out of work and companies cutting back their spending, this has had the knock-on effect of reducing exports to the US from China and other nations with extensive production bases.

The deficit with China, which often causes tensions between the two nations, dropped to $14.2bn from $20.6bn in January, the lowest level since February 2006.

The deficit with Japan, the second-largest economy after the US, fell to a 25-year low of $2.2bn.