WASHINGTON (AP) _ America's trade deficit posted a dramatic decline in October, falling to the lowest level in 14 months as the price of crude oil plunged by a record amount.
But America's deficit with China hit an all-time high, reflecting a surge in shipments of toys, televisions and computers as retailers stocked their shelves for holiday shoppers.
The Commerce Department reported Tuesday that the deficit fell to $58.9 billion in October, down 8.4 percent from September. The percentage drop was the biggest since December 2001. It pushed the monthly deficit down to the lowest level since August 2005. The total was far lower than economists had been expecting and was substantially below the all-time monthly high of $68.5 billion in August.
The sharp decline reflected a record drop in oil prices which sent America's foreign oil bill down by 17.1 percent to $21.8 billion, the lowest monthly oil total since July 2005.
However, America's deficit with China rose by 6.1 percent to $24.4 billion, reflecting big increases in shipments of toys, games, sporting goods, televisions and computers in preparation for Christmas shopping.
It was the third straight month that the deficit with China has set a record. It is running at an annual rate of $229 billion, far above last year's $202 billion deficit, which had been an all-time high for any country.
Seven members of President Bush's Cabinet and Federal Reserve Chairman Ben Bernanke are headed to China for talks that will be led by Treasury Secretary Henry Paulson as the administration seeks to make progress on a number of contentious trade issues which American manufacturers blame for the soaring deficit.
The administration is facing increased pressure to make progress in lowering America's trade deficit now that Democrats are set to take control of both the House and Senate next year. In the November elections, Democrats attacked Bush's trade policies, charging that American workers have been battered by unfair overseas competition which has contributed to the loss of nearly 3 million manufacturing jobs since Bush took office.
Even with the big improvement in October, the trade deficit this year is running at an annual rate of $772.1 billion, putting the country on track to post a fifth consecutive record imbalance.
For October, exports of goods and services rose by 0.2 percent to an all-time high of $123.6 billion, as exports of farm products, computers and airplane parts all posted gains.
Imports fell by 2.7 percent to $182.5 billion, reflecting the big drop in oil. The average price of imported crude fell by a record $7.05 per barrel to $55.47. The volume of petroleum imports was also down following several months this summer when the oil bill surged as global prices hit all-time highs.
After China, America recorded an $8.3 billion deficit with Japan, the second highest imbalance ever with Japan.
The trade deficit with Canada fell by 4.8 percent to $5.4 billion while the deficit with Mexico dropped 11.3 percent to $5.2 billion, reflecting a record level of U.S. exports to Mexico.
The deficit with the 25-nation European Union shot up 34.3 percent to $9.5 billion.