U.S. Trade Gap Widens in September

The U.S. trade deficit (search) widened in September to $41.3 billion, as the strengthening U.S. economy propelled imports from China and the rest of the world to record levels, the government said on Thursday.

The trade gap was slightly larger than the mid-point estimate of $40.5 billion from analysts surveyed before the report. The deficit widened for the first time in six months as surging imports outstripped the biggest increase in exports in over three years, the Commerce Department (search) said.

Imports of goods and services totaled $127.4 billion. The 3.3 percent jump was led by higher imports of cars, auto parts and capital goods, including computer accessories and civilian aircraft. Imports of services set a record at $21.1 billion.

Although overshadowed by the record imports, exports jumped to $86.2 billion in September, the highest level since May 2001. The 2.8 percent month-to-month gain was the highest since June 2000. Services exports set a record at $26.3 billion.

The U.S. economy grew at sizzling 7.2 percent annual rate in the third quarter, but the larger-than-expected trade deficit in September could trim that estimate a tad.

Tim Mazanec, currency strategist at Investors Bank and Trust Co., said the trade data was "not much of a surprise. But it will have a slightly negative impact" on gross domestic product.

The trade gap totaled nearly $366 billion in the January-September period, on track to beat the 2002 record of $418 billion.

Meanwhile, the politically sensitive U.S. trade deficit with China set a record in September at $12.7 billion, as imports from the Asian giant hit $14.8 billion, also a record.

The trade deficit with China totaled $89.7 billion for the first nine months of the year, on track to surpass the record of $103 billion set in 2002.

The Bush administration has been under pressure from Congress to narrow the trade gap with China. U.S. manufacturers, and many lawmakers, complain China's pegged exchange rate gives it an unfair trade advantage by artificially depressing the price of its exports.

Since August, China has been buying large amounts of U.S. soybeans and cotton. On Wednesday, China signed a $1.7 billion deal to purchase 30 commercial jets from Boeing (BA), along with jet engines from General Electric (GE).

Detroit's Big Three automakers (search), General Motors, Ford Motor Co. and DaimlerChrysler AG, said on Wednesday they will export thousands of vehicles to China over the next two years, substantially boosting the number of cars and trucks shipped to the world's fastest growing automotive market.