The US trade deficit narrowed in 2023 to the smallest in three years, government data showed on Wednesday, while the country imported more goods from Mexico than China for the first time in about two decades.

The latest figures add to a series of positive economic news for President Joe Biden, who has been working to boost sentiment on his handling of the economy as his November reelection campaign picks up pace.

For all of 2023, the overall trade gap was US$773.4 billion, down 18.7 percent from the US$951.2 billion figure in the prior year, US Commerce Department figures showed.

In 2022, the country saw the biggest deficit in government data dating back to 1960.

But the latest numbers showed a fall in the goods deficit last year, with imports of products dropping more than exports.

Purchases of supplies like crude oil and fuel oil fell, while Americans bought less consumer goods like clothing and cell phones as well.

This was partly due to the unravelling of consumption patterns during the Covid-19 pandemic, during which people cooped up at home spent on items like electronics as they worked remotely.

Meanwhile, exports of services increased last year, particularly in the travel sector, and the services surplus widened.

Surprisingly resilient consumption last year has helped to support the US economy, but analysts expect higher interest rates to slow consumer spending and add pressure on imports.

In December, the deficit grew slightly from November to US$62.2 billion, the new data showed.

This was up from November's revised US$61.9 billion level.

With imports and exports both growing in the final month last year, analysts considered the report an encouraging sign for global trade.

"The trade deficit in real terms contributed positively to growth in the quarter," said Matthew Martin, US economist at Oxford Economics. (AFP)