The U.S. trade deficit improved slightly in November but was still the third highest on record as imports of foreign cars hit an all-time high and America's foreign oil bill remained near record levels. The politically sensitive deficit with China narrowed modestly as shipments of Chinese toys, clothing and other consumer products fell.

The Commerce Department reported Thursday that the deficit declined by 5.7 percent in November to $64.2 billion after hitting a record of $68.1 billion in October.

But even with the improvement, the trade deficit for the first 11 months of 2005 totaled $661.8 billion, surpassing the previous annual record of $617.6 billion set in 2004. Economists believe that when December figures are included, the final deficit for 2005 will top $710 billion.

The soaring trade deficits are being used by Democrats as evidence that President Bush's policies of striking free trade agreements around the world have failed to protect American workers from unfair competition from low-wage countries such as China. They blame the loss of 3 million U.S. manufacturing jobs since mid-2000 on trade liberalization policies that have allowed U.S. companies to move factories overseas.

For November, the U.S. deficit with China declined by 9.9 percent to $18.5 billion after rising for seven consecutive months. Even with the improvement, the deficit with China was the third highest on record and the 11-month deficit total with China rose to $185.3, surpassing last year's record of $162 billion mark with one month left in 2005.

The overall improvement in November's deficit reflected a 1.8 percent increase in U.S. exports of goods and services, which rose to a record $109.3 billion in November. Shipments of American cars, consumer goods and capital goods all set records.

Imports fell by 1.1 percent to $173.5 billion, still the second highest level on record. The decline was led by a fall in imports of petroleum products, which dropped by 3.1 percent to $24.6 billion, still the second highest level on record. Petroleum imports had surged to record levels in September and October as oil companies scrambled to replace lost domestic production with foreign supplies following the Gulf Coast hurricanes.