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The U.S. trade deficit shrank dramatically to $6.94 billion in April, the second lowest level in the past six years, the government reported Friday.

The Commerce Department said the 17 percent improvement from a March deficit of $8.36 billion came entirely from a big drop in imports, which offset a smaller decline in U.S. export sales.Imports totaled $39.25 billion in April, 6.2 percent lower than March, with the decline attributed primarily to lower demand for foreign oil and a big drop in auto imports.

Exports fell by 3.5 percent to $32.3 billion. But this was considered only a small drop off an all-time high of $33.5 billion set in March.

America's trade performance has been a pleasant surprise so far this year, with the deficit showing a much larger improvement than many analysts thought possible.

Through the first four months, the deficit has been running at an annual rate of $92.16 billion, compared to a deficit for all of 1989 of $108.99 billion.

Many analysts are now forecasting that the 1990 deficit will drop below $100 billion for the first time since 1983 as export growth remains strong enough to offset a growing dependence on foreign oil.

That would spell good news for the Bush administration, which is counting on a strong trade performance to keep the economy out of a recession. Over the past three years, fully one-third of overall U.S. economic growth has been supplied by surging export sales.

The April deficit of $6.94 billion was the smallest since a February imbalance of $6.10 billion.