October trade gap widens, November import prices jump

NEW YORK Wed Dec 12, 2007 11:47am EST

An aerial view of new oil platforms P-52 for the oil company Petrobas at Campos basin in Rio de Janeiro, 28 November, 2007. The U.S. trade deficit widened slightly more than expected in October, as a record high price for imported oil over-powered the export-spurring benefits of a weaker dollar, a Commerce Department report showed on Wednesday. REUTERS/Bruno Domingos

An aerial view of new oil platforms P-52 for the oil company Petrobas at Campos basin in Rio de Janeiro, 28 November, 2007. The U.S. trade deficit widened slightly more than expected in October, as a record high price for imported oil over-powered the export-spurring benefits of a weaker dollar, a Commerce Department report showed on Wednesday.

Credit: Reuters/Bruno Domingos

NEW YORK (Reuters) - The U.S. trade deficit widened slightly more than expected in October as a record price for imported oil outweighed the export-spurring benefits of a weaker dollar, a Commerce Department report showed on Wednesday.

The deficit increased to $57.8 billion in October from a revised estimated of $57.1 billion for September, as the average monthly price for imported oil jumped nearly 6 percent to $72.49 per barrel.

Wall Street analysts had pegged the October trade deficit at $57.2 billion, up from Commerce Department's initial September estimate of $56.5 billion.

Excluding petroleum products, the trade deficit actually shrank in October to $38.5 billion, the lowest since March 2004.

The closely watched U.S. trade deficit with China widened to a record $25.9 billion.

China's share of the U.S. trade deficit is rising. While the overall trade gap is expected to narrow from last year's record, the deficit with China totaled $213.5 billion through October, on pace to surpass the 2006 record of $234 billion.

Overall U.S. imports of goods and services totaled a record $199.5 billion, including a record oil import bill of $29.6 billion. The U.S. trade deficit in petroleum products also swelled to a record $26.3 billion.

The report was more proof that a weak dollar and stronger growth overseas are boosting U.S. exports of goods and services, which rose for an eighth consecutive month to a record $141.7 billion.

During October, the trade-weighted dollar .DXY dollar fell 1.54 percent.

Financial markets showed little reaction to the data.

NOVEMBER EXPORT-IMPORT PRICES

For November, U.S. import prices rose at the fastest pace in 17 years due to surging oil costs, a separate report from the Labor Department showed on Wednesday.

It said rising oil costs helped drive import prices a higher-than-expected 2.7 percent in November, the sharpest gain since October 1990 import prices rose 2.9 percent.

November's sharp import price increase exceeded the Wall Street outlook for a 2 percent rise from October. The Labor Department downwardly revised the October price figure to 1.4 percent from a first-reported 1.8 percent gain.

The report also showed that export prices increased a larger-than-expected 0.9 percent, the biggest rise since April 1995 when they measured 1 percent. Economists had forecast a 0.5 percent increase.

In a separate Wednesday report from the Mortgage Bankers Association, U.S. mortgage applications rose last week to the highest level since July 2005 despite a jump in borrowing costs.

The trade group's index continues to be skewed by borrowers filing numerous applications in the hopes of getting one approved as lenders tighten standards, analysts contend.

(Editing by Tom Hals)

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