The U.S. trade deficit in January dropped sharply as both exports and imports fell.
The Commerce Department said Friday that the deficit fell 8.3 percent to $41.8 billion in January from $45.6 billion in December. The shrinking trade gap reflected a drop in exports, which fell $5.6 billion to $189.4 billion. Imports fell $9.4 billion to $231.1 billion.
Much of the dip in imports likely came from lower oil prices and a labor dispute that disrupted shipping at West Coast ports. At the same time, the strong dollar that has made American-made goods less affordable abroad is weighing down exports.
The trade deficit reached $505 billion last year, up 6 percent from the 2013 deficit of $476.4 billion. It was the largest imbalance since 2012. Economists expect the deficit to widen further in 2015 as stable growth in the United States drives imports and tepid growth overseas paired with a strong dollar depresses exports.
The deficit with China was $29.3 billion in January, down from $30.4 billion in December.
A domestic energy boom has also kept the deficit in check.
Not only have oil costs plunged since June, but the U.S. production made possible by fracking has reduced dependence on foreign oil. Between December and January, petroleum imports fell 23 percent to $17.7 billion.
This story is compiled with information from The Associated Press.