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WASHINGTON—The trade deficit narrowed in March as imports fell faster than exports, underscoring slow growth at home and abroad in the opening months of the year.

The trade gap decreased 13.9% from February to a seasonally adjusted $40.44 billion, the Commerce Department said Wednesday. Exports of goods and services fell 0.9% while imports dropped 3.6%.

Economists surveyed by The Wall Street Journal had expected a deficit of $41 billion in March. February's trade deficit was revised to $46.96 billion from a previously estimated $47.06 billion.

While the smaller March deficit is welcome and may point to less of a drag from the strong dollar, it also highlights weak global demand for goods and services during the first quarter. For the January to March period, U.S. exports are down 5.4% and imports are down 4.5%.

The trade deficit took a toll on U.S. economic growth during the opening months of the year. Trade subtracted an estimated 0.34 percentage point from gross domestic product in the first quarter, Commerce said in a separate report last week. Overall, GDP advanced at a scant 0.5% seasonally adjusted annual rate, the worst performance in two years.

In March, imports of goods and services were the lowest since February 2011, led by a fall in shipments of consumer goods such as toys and textiles, as well as another decline for petroleum. March petroleum imports were the lowest since September 2002.

March exports of foods, feeds and beverages were the lowest since September 2010, industrial supplies were the lowest since February 2010 and consumer goods the lowest since March 2013.

Slow global growth has curbed demand for American-made products, while the dollar's rise in value against other currencies over the past year-and-a-half has made exports more expensive for foreign buyers, imports cheaper in the U.S. and depressed earnings of American companies with significant overseas business.

More recently, currencies have changed direction, with the euro, yen and others firming against the dollar. That's offered some relief for U.S. firms.

Glass-bottle manufacturer Owens-Illinois Inc. said the strong dollar translated into $62 million hit for net sales during its first quarter. But the Perrysburg, Ohio, company has been encouraged by the recent currency shifts.

"With the recent reversal of the dollar at the end of the first quarter, we believe some of the dramatic currency headwinds that O-I has experienced over the past 18 months could be easing somewhat," Jan Bertsch, senior vice president and chief financial officer of Owens-Illinois, told investors on Tuesday.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com and Harriet Torry at harriet.torry@wsj.com

(END) Dow Jones Newswires

May 04, 2016 08:55 ET (12:55 GMT)

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