While the improvement in the trade balance appeared positive at face value, analysts noted the Commerce Department data revealed the troubles in economies around the world reeling from the most severe economic crisis since the 1930s.

"The key takeaway from January's trade report is not that the deficit narrowed but that world trade activity continues to plunge," said Nigel Gault at IHS Global Insight.

The still-expanding US trade chasm with China, by far its largest deficit, fired up critics who say Beijing keeps its yuan currency undervalued to make its exports unfairly cheap.

The Commerce Department reported the country's trade deficit shrank for the sixth consecutive month to a seasonally adjusted 36.0 billion dollars, down 9.7 percent from 39.9 billion in December.

That was the narrowest monthly trade gap since October 2002, mainly due to falling oil prices. It was smaller than analysts' consensus forecast of a 37.5 billion dollar deficit.

Exports dropped 5.7 percent to 124.9 billion dollars, led by autos and auto parts and other capital goods, such as aircraft and semiconductors.

Imports fell more sharply, down 6.7 percent at 160.9 billion dollars, notably because of declining oil imports as the struggling US economy entered its second year of recession.

Gault said the US economy can no longer count on exports to support growth.

"Many foreign economies have been hit even harder by the recession than the US and we are seeing severe consequences for US exporters," he said.

On a 12-month basis, the trade deficit was down 39 percent from January 2008, when it totaled 59.2 billion dollars.

The world's largest energy consumer saw its deficit in petroleum products, notably crude oil, narrow 21.7 percent from December to 14.7 billion dollars, its lowest level since September 2004.

When oil prices were at all-time peaks last July, the gap was 66 percent higher. The price of imported oil has plunged 68 percent since then to 39.81 dollars a barrel in January.

By region in data not seasonally adjusted, the trade gap with Canada, the country's largest trading partner, continued to shrink, to 2.5 billion dollars, its weakest level since May 1999.

The politically sensitive massive gap with number-two trading partner China rose to 20.6 billion dollars in January from 19.9 billion dollars in December.

Peter Morici, an economist at the University of Maryland, accused President Barack Obama of putting a US economic recovery at risk by ignoring the trade problem and China's role in it.

"The economy's most fundamental structural problems are the destructive consequences of Chinese protectionism and the president's failure either to see this threat or his lack of will to address it," Morici said.

The deficit with Japan fell to its lowest level since January 1998, at 4.3 billion dollars, and Japanese imports were the weakest since May 1993.

With the 16-nation eurozone, the US gap contracted a staggering 40.6 percent in January from the previous month, to 3.4 billion dollars. Trade volume dropped 18.4 percent.

Last month the Commerce Department announced the trade gap shrank in December for the third straight month. But it has revised the 2008 data and found the deficit has been shrinking steadily since August.

The US trade deficit for the full-year 2008 was revised upward to 681.1 billion dollars.

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