June 8 (Bloomberg) -- The U.S. trade deficit narrowed more than forecast in April as exports rose to a record and imports dropped.

The gap in goods and services trade fell 6.2 percent, the most in six months, to $58.5 billion, from a revised $62.4 billion in March. The gap narrowed even as the deficit with China jumped.

Expanding economies overseas and a cheaper dollar are boosting demand for American-made goods, helping to spur a rebound in manufacturing that will sustain the expansion. A wider trade gap last quarter contributed to the slowest pace of growth in four years.

``The export number had another solid month,'' Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts, said before the report. ``We're looking for export growth to rebound and that's the main reason we're looking for trade to be a plus'' for the economy.

Economists forecast the trade balance would narrow to $63.5 billion, from an originally reported $63.9 billion in March, according to the median of 74 projections in a Bloomberg News survey. Estimates ranged from $60.2 billion to $66 billion.

In April, exports rose 0.2 percent to a record $129.5 billion, as sales of foods, plastics and consumer goods such as jewelry improved.

Imports of goods and services dropped 1.9 percent in April, to $188 billion from $191.6 billion. Demand for consumer goods from abroad slumped to $38.9 billion, from March's $40.4 billion. Eighty percent of the drop reflected a decrease in pharmaceuticals, a category that economists say has shown much volatility in the last few months.

Petroleum Imports

Oil imports fell to $24.9 billion, from $25 billion a month earlier, as a drop in volume offset higher prices.

The cost of imported oil rose to $57.28 a barrel, the highest since September. This figure probably will remain elevated as reports show the U.S. is importing more oil, economists said.

U.S. crude oil imports increased 2.22 percent last week, the Department of Energy reported on June 6. Imports have increased six of the last eight weeks.

Adjusted for changes in prices, figures the government uses in its calculation of gross domestic product, the U.S. trade deficit dropped in April to $54.9 billion, the lowest since September 2004, from $59.6 billion.

``Since the petroleum gap is a price thing, in real terms things will have improved and that will add to second-quarter GDP growth,'' Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report.

Economic Growth

The economy grew at an annual pace of 0.6 percent in the first quarter, the slowest in four years, revised government figures last week showed. Growth was previously estimated at a 1.3 percent pace.

A larger-than-forecast trade deficit in March was partly responsible for the downgrade. Trade subtracted 1 percentage point from economic growth last quarter, double the amount initially estimated.

An improvement in the trade deficit is one reason why economists project growth will accelerate to a 2.6 percent annual pace this quarter, according to the median estimate of economists surveyed this month by Bloomberg News.

Economies overseas are faring better. Gross domestic product in the 13 countries that use the euro rose 3 percent in the year ended March, compared with 1.9 percent in the U.S.

A weaker dollar, which makes American goods cheaper abroad, is also boosting exports. The dollar is down 6.4 percent since the beginning of last year against a trade-weighted basket of currencies of major U.S. trading partners.

Boeing

Chicago-based Boeing Co., the world's second-biggest airplane maker, had a record order backlog of $262 billion in the first quarter, driven largely by Asian airline customers, Chief Executive Officer Jim McNerney said last month during a conference call with analysts. Twenty of the 35 aircraft it delivered in April went to foreign buyers.

An index of factory exports rose last month to the highest level since December 2004, according to a report from the Tempe, Arizona-based Institute for Supply Management last week.

The trade gap with China widened to $19.4 billion, the highest since January, from $17.2 billion in March. So far this year, the gap is up 19 percent compared with 2006. The deficit with China reached a record last year for a fifth straight time. Some U.S. lawmakers say an undervalued Chinese currency is to blame for the gap.

Meetings last month between U.S. and Chinese officials produced agreements on financial services and aviation but not on exchange rates.

Paulson

``Americans are impatient to see real change,'' Treasury Secretary Henry Paulson said in a speech this week. ``A large section of the American public doesn't believe that the benefits of trade are being shared equally between or within the two countries.''

Paulson also warned against growing protectionism in both countries and said China could help him head off such legislation in Congress by making progress in opening its markets.

Federal Reserve Chairman Ben S. Bernanke has also called on China to allow its currency to move more freely. Bernanke this week also reiterated concern about the magnitude of the U.S. trade gap.

``It would be important to bring greater balance to the world financial flows,'' Bernanke told a bankers conference in Cape Town, South Africa on June 5. ``But, it is something we can do gradually over a number of years.''

To contact the reporters on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

Last Updated: June 8, 2007 08:30 EDT