WASHINGTON (AP) — The U.S. federal budget deficit grew more slowly in March, keeping the annual spending shortfall on pace to finish below $1 trillion for the first time in five years.

The Treasury Department says the deficit grew by $106.5 billion in March, well below the $203.5 billion added in February.

Through the first six months of the year, the deficit has grown to $600 billion. That's smaller than last year's six-month pace of $779 billion in 2012. The budget year began on Oct. 1.

The Congressional Budget Office projects the annual deficit will be $845 billion this year. The fiscal picture is benefiting from higher taxes and lower expected costs from the 2008 financial bailouts.