WASHINGTON (AP) The U.S. trade deficit plunged unexpectedly in February as the recession pushed imports down for a seventh straight month while exports rebounded a bit. Analysts said the smaller trade gap is fresh evidence the economy's downward spiral may be easing.

The Commerce Department said Thursday the deficit dropped 28.3 percent to $25.97 billion, the smallest gap since November 1999.

Economists, who had expected the deficit to widen slightly in February, said the smaller imbalance was one of many recent indicators signaling that a steep plunge in U.S. economic activity may be leveling off.

Some said the better-than-expected trade performance, along with stronger consumer spending, could lead to a decline in the overall economy of less than 5 percent in the first quarter. That would be an improvement from the 6.3 percent plunge in the gross domestic product recorded in the fourth quarter, the steepest drop since 1982.

"Things are still bad, but less bad than before, which is good in this environment," said Sal Guatieri, senior economist BMO Capital Markets.

Stronger sales for consumer goods including pharmaceutical products, autos, food and beverages led the strength in exports, which posted the first increase after six straight declines. But analysts cautioned against reading too much into the gain, which they said likely was a blip given sustained weakness in the global economy.

"The rebound in exports will be temporary because we are still struggling with the fact that the dollar is stronger than it used to be and the world is weaker than it used to be. Both of those factors are going to hurt exports," said David Wyss, chief economist at Standard & Poor's in New York.

"The U.S. recovery will not be export led," said Nigel Gault, chief U.S. economist at IHS Global Insight. "Given the weak state of overseas economies, it is too early to be thinking about a sustained export rebound."

The politically sensitive deficit with China dropped 31 percent to $18.9 billion in February, but remains the largest trade gap with any country. America's deficit with Japan fell to $2.2 billion, the lowest level since December 1984. The deficit with Canada, America's biggest trading partner, dropped to $1.82 billion, the lowest level since December 1998.

For the first two months of this year, the deficit is running at an annual rate of $373 billion, about half of the $681.1 billion imbalance recorded in 2009, according to the Commerce Department.

Economists expect the trade gap could remain at low levels for the rest of 2009. That's based on forecasts that the recession will not end until late this year and any rebound will be muted, further depressing consumer demand.

For February, imports of goods and services fell 5.1 percent to $152.7 billion, the seventh consecutive monthly drop. A 16.3 percent plunge in imports of crude oil to $10 billion, the smallest monthly total since April 2004, led the overall decline. The average price of a barrel of crude fell to $39.22.

Imports of consumer goods, from autos to toys and games, furniture, clothing and televisions, all dropped sharply in February.

But exports of goods and services posted an unexpected rebound in February, rising 1.6 percent to $126.76 billion. Even with the slight increase, exports are 16.9 percent below year-ago levels as American manufacturers struggle with slumping demand at home and overseas.

Stronger sales of farm products, manufactured goods and autos in February helped offset a big drop in shipments of commercial aircraft.

Big exporters such as Boeing Co. and Caterpillar Inc. have been forced to slash jobs because of the weak global economy. More than 75 percent of Boeing's orders last year came from outside North America while 60 percent of Caterpillar's heavy machinery sales are overseas.

President Barack Obama and other leaders of the Group of 20 nations, meeting in London last week, agreed to increase the resources of global lending institutions to help bolster the finances of poorer nations so they can continue to import products.

The G-20 nations also pledged again to refrain from erecting protectionist barriers, a promise they hope will prevent the current global downturn from following the path of the Great Depression, when countries worsened the slump by shutting down global trade.

The pledge was a repeat of a similar commitment the G-20 leaders made after their first summit meeting last November. Since that time, 17 of the countries, including the U.S., have raised trade barriers.

WASHINGTON (AP) New jobless claims fell more than expected last week but are stuck at elevated levels, while the number of people continuing to receive unemployment insurance approached 6 million, setting a record for the 11th straight week.The latest government data bolster recent projections from the Federal Reserve and private economists that the nation's job market will remain weak into next year as companies purge thousands more workers.The Labor Department said Thursday the tally of initial jobless claims fell to a seasonally adjusted 654,000, down from a revised 674,000 the previous week. Analysts expected claims to drop to 660,000.But the total number of laid-off Americans receiving unemployment rose to 5.84 million, from 5.75 million. That was the most on records dating from 1967 and higher than analysts expected.The four-week average of claims, which smooths out fluctuations, fell slightly to 657,250, the first drop after 11 straight increases.Still, the declines are from very high levels. The 674,000 figure was the highest number of initial claims in the current recession and the most in 26 years, though the labor market has grown by half since then.Initial claims reflect the pace of layoffs by companies and are considered a timely, if volatile, measure of the economy. A year ago, claims stood at 358,000.The 5.84 million continuing claims lag the initial claims data by a week and doesn't include 1.54 million Americans that received benefits under an extended unemployment compensation program approved by Congress last year. That adds 20 to 33 weeks of benefits on top of the typical 26 weeks provided by states.The high level of continuing claims is a sign that many laid-off workers are having difficulty finding new jobs.The Fed expects the unemployment rate now at a quarter-century high of 8.5 percent will probably "rise more steeply into early next year before flattening out at a high level over the rest of the year," according to minutes from the central bank's March meeting released Wednesday. Many private economists expect the rate will hit 10 percent by year's end.The U.S. has lost a net total of 5.1 million jobs since the recession began in December 2007, almost two-thirds of them in the past five months, according to Labor Department data released last week.Among the states, Kentucky saw the largest jump in claims for the week ending March 28, an increase of more than 5,000 due to layoffs in the auto and manufacturing industries. Michigan, Illinois, Ohio and Tennessee reported the next largest increases.California had the biggest drop in recipients of more than 7,000, which it said was due to fewer layoffs in the service and manufacturing industries. Pennsylvania, Missouri, Kansas and Minnesota had the next largest drops.More job losses were announced this week. Pulte Homes Inc. on Wednesday said it's buying Centex Corp. for $1.3 billion in stock in a deal that will create the nation's largest homebuilder and include an unspecified number of job cuts.Elsewhere, newspaper publisher A.H. Belo Corp., which owns the Dallas Morning News, said it would eliminate 500 positions, or 14 percent of its work force; Goodyear Tire & Rubber said it will cut 5,000 jobs, or about 7 percent of its employees, this year; and equipment maker Deere & Co. said 160 employees at its plant near Des Moines, Iowa, will be laid off later this month due to reduced demand.