Helped by falling oil prices, America's trade deficit showed a sharp improvement in September, narrowing by the largest amount in more than five years.

However, the politically sensitive deficit with China rose to a new record of $23 billion, pushed higher by a flood of Chinese-made televisions, cell phones and toys being imported to stock American store shelves for Christmas.

The overall deficit declined 6.8 percent to $64.3 billion in September after it had hit an all-time high of $69 billion in August. The drop of $4.7 billion was the biggest one-month decline since February 2001.

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In other news, the number of Americans filing new claims for unemployment benefits fell by 20,000 to 308,000 last week.

The big improvement in September's trade deficit reflected a $3.1 billion fall in America's foreign oil bill, which declined 10.5 percent, to $26.3 billion. The price of imported oil, which had set a record in August, dropped by $3.60 per barrel to an average for imported crude of $62.52 in September.

That decline helped to push total imports down by 2.1 percent to $187.5 billion in September while U.S. exports edged up 0.5 percent to an all-time high of $123.2 billion.

Even with the improvement, the deficit is on track to set a record for a fifth consecutive year. Through September, the deficit is running at an annual rate of $781.6 billion, surpassing last year's all-time high of $716.7 billion.

Democrats, who took control of Congress in Tuesday's elections, sought to make President Bush's trade policies an issue in the campaign, arguing that the administration had failed to do enough to protect American workers against unfair foreign competition.

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