United States saw its deficit narrow to 26 billion US dollars in May, its lowest level in more than nine years, according to figures from the Commerce Department. Imports continued to fall while exports increased, pushing the deficit to its lowest level since November 1999.
The deficit, which is the difference between what the US exports and imports was 9.8% lower in May compared to April.
The deficit in 2009 to date is running at a yearly rate of 350 billion, around half what it was for the whole of 2008.
I think this was a very positive report and consistent with the idea that the US recession will come to an end in the next few months, said Mark Zandi, economist for rating agency Moody's. But separate figures on Friday showed consumers were increasingly negative in early July.
Worries about a prolonged downturn and job security were key concerns hitting sentiment, the Reuters/University of Michigan survey suggested.
The preliminary reading for July dropped to 64.6 from June's final reading of 70.8.
The trade deficit between the US and its single biggest trading partner, Canada fell to its lowest level in 15 years at 628 million.
And the US deficit with Japan dropped its lowest level in more than 20 years, at 1.9 billion. The deficit with China meanwhile added 4.4% to 17.5 billion, though this is below the level seen in 2008.
Figures from China recently showed a fall in exports and imports for June - though less than predicted. Fewer cars, auto-parts, civilian aircraft and computers were imported to the US in June.