WASHINGTON--The U.S. trade deficit narrowed sharply in March as demand for imports fell by the largest amount since the last recession was ending.

The Commerce Department reported Friday that the deficit totaled $58.2 billion, down 5.6% from February, a larger improvement than had been expected.

The smaller deficit reflected spreading weakness in the U.S. economy, which cut demand for imports by 2.9%, the largest one-month decline since December 2001, one month after the last recession ended.

The decline, which pushed imports down to $206.7 billion, was led by a 5.9% decrease in America's foreign oil bill. The amount of petroleum fell as the average price for crude oil jumped to an all-time high. Imports of autos and a wide variety of other consumer goods from furniture to toys and clothing also fell, reflecting the hard economic times facing U.S. consumers.

Exports, which have been one of the few strong points in this period of weakness, suffered a setback in March, falling to $148.5 billion, still the second highest level on record but down 1.7% from the all-time high set in February. Sales of commercial airliners, cars, computers and machinery were all down.

The politically sensitive deficit with China dropped by 12.4% to $16.1 billion, the smallest level in two years, as U.S. exports to China climbed to the second highest level on record, led by sales of medical testing equipment and computer chips. At the same time, imports of Chinese products dropped sharply, reflecting lower demand for cloths, textiles and toys.

Trade has become a key debating point in this year's election campaigns. Republicans including Sen. John McCain contend that President Bush's free trade policies have expanded opportunities for U.S. exports while Democrats contend that Bush has not done enough to protect American workers from unfair foreign competition.

The president last month sent Congress a free trade agreement with Colombia but its consideration has been blocked by House Speaker Nancy Pelosi who says the deal cannot be approved until the administration reaches agreement with Democrats on policies to soften the economic blows being suffered by Americans.

For the first two three months of this year, the trade deficit is running at an annual rate of $715.5 billion, up slightly from last year's imbalance of $708.5 billion, which had been the first decline after the deficit set records for five consecutive years.

Economists believe that the deficit will decline this year and that exports will continue to benefit from a weaker dollar and imports will fall, reflecting the weak U.S. economy, which many analysts believe has already fallen into a recession.

For March, the deficit with Canada, America's biggest trading partner, edged up 0.4% to $6.5 billion, while the deficit with the European Union rose by 9.1% to $7.5 billion even though U.S. exports to the EU edged up 1.2%  to a record $24.1 billion. This reflected the boost that American products have gotten as the U.S. dollar fell to a record low against the euro.

The deficit with Japan rose 8.9% to $7.5 billion while the imbalance with the Organization of Petroleum Exporting Countries totaled $14.1 billion, an increase of 6.8% from February.