US trade deficit at six-year low

The US is consuming fewer goods from abroad

The US trade deficit fell to its lowest level in almost six years in December, as the slowdown in the economy put the brake on imports.

The monthly deficit, the difference between what the US exports and imports, narrowed 4% to $39.9bn (£27.7bn) from November's $41.6bn.

For 2008 as a whole, the deficit shrank 3.3% to $677bn, as the US slowdown intensified throughout the year.

Meanwhile, Canada posted its first trade deficit in almost 33 years.

Canada recorded a deficit of C$460m ($368m; £256m) for December.

Canadian Trade Minister Stockwell Day said the news was predictable, but added that he was concerned by a reduction in exports.

Job fears

Official figures released last week showed that the US unemployment rate reached 7.6% in January, the highest rate since 1992.

There is a lot of credit crunch impact on global trade Pierre Ellis, Decision Economics

With more people out of work, and others concerned about their job security, US consumers have been cut 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.

As a result, imports into the US fell 5.5% to $173.7bn in December. Imports from China were down 11.3%.

At the same time, US exports also declined, falling 6% to $133.8bn.

"There is a lot of credit crunch impact on global trade," said Pierre Ellis, senior global economist with Decision Economics in New York.

"Obviously, this is bad news for the economy, the export weakness is intensifying."