WRAPUP 2-U.S. trade data points to Q1 economic contraction
* Trade deficit widens to $51.4 billion in March
* Imports jump 7.7 percent, exports rise 0.9 percent
* Capital and consumer goods imports highest on record
* Services sector activity hits five-month high in April
By Lucia Mutikani
WASHINGTON, May 5 (Reuters) - A surge in imports lifted the U.S. trade deficit in March to its highest level in nearly 6-1/2 years, suggesting the economy contracted in the first quarter.
Growth, however, is regaining momentum as other data on Tuesday showed activity in the services sector, which accounts for more than two-thirds of the economy, accelerated to a five-month high in April.
"It looks like we are going to have negative GDP for the first quarter, just based on trade, but we expect a robust rebound in the second quarter. A lot of the headwinds we saw in the first quarter have unwound," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.
The Commerce Department said the trade deficit jumped 43.1 percent to $51.4 billion in March, the largest since October 2008. The percent rise was the biggest since December 1996. The surge came as imports snapped back after being held down by a now-settled labor dispute at key West Coast ports. Continued...