Trade gap widens amid oil surge

Record exports couldn't keep the U.S. trade gap from rising more than expected in October.

NEW YORK (CNNMoney.com) -- The U.S. trade deficit widened in October, coming in above Wall Street's expectations, as higher oil prices and a continued increase in Chinese imports fueled the gap, according to the government's latest reading.

The Commerce Department said Wednesday imports exceeded exports by $57.8 billion, even as a weak dollar helped to lift exports to record levels. That is up from a gap of $57.2 billion in September, which was revised higher, although it's below the $58.2 billion figure in October 2006.

Economists had forecast that the gap would come in at $57 billion, which would have been a slight increase from the initial September reading.

U.S. exports rose just under 1 percent to $141.7 billion, marking the ninth straight month that key measure set a record. The exports of both goods and services rose in the period, with civilian aircraft, industrial engines and nonferrous metals being among the categories posting the biggest gains.

A weaker U.S. dollar in recent months has made goods made here less expensive in foreign markets. At the same time, it's caused the price of imports to rise here.

"Robust growth in the rest of the world and the weak dollar are helping to boost exports," said Jay Bryson, international economist with Wachovia.

A separate report released Wednesday by the Labor Department suggests that trend is likely to continue in the November trade report. The November reading for import prices was up 2.7 percent, nearly double the 1.4 percent rise in October. Most of that was due to nearly a 10 percent increase in oil prices. Imports were up only 0.7 percent outside of oil.

Meanwhile U.S. exporters were able to raise their prices 0.9 percent in the month, up from a 0.8 percent rise in October. Agricultural export prices were up 1.4 percent, far less than the 3.8 percent rise in October, while non-agricultural prices rose 0.8 percent.

The higher prices for imports means the value of those imports rose slightly faster than exports. There was nearly a 6 percent jump in the average price of a barrel of imported oil, which hit a record $72.49 in the month. But the higher price didn't cut down on the consumption of imported oil, which also rose.

That resulted in an 8.7 percent jump to $26.3 billion in the part of the trade gap attributed to oil imports, even as the part of the trade gap from goods other than oil fell 3 percent to $38.5 billion.

A wave of increasing safety concerns about products made in China didn't dampen Americans' appetites for goods from that country. The China-U.S. trade gap hit $25.9 billion in October, according to the latest report, up from $23.8 billion in September. The year-to-date gap with the largest source of U.S. imports now stands at $213.5 billion, up about 12 percent from the same period a year ago.

The trade report comes amid the start of high-level trade talks between the U.S. and China. Speaking at the start of the meeting outside Beijing early Wednesday, Treasury Secretary Henry Paulson warned that "short-term, politically expedient" protectionist measures would harm U.S. prosperity.