Oct. 13 (Bloomberg) -- The U.S. trade deficit widened to $59 billion in August as record crude oil prices caused imports to rise, keeping the nation dependent on foreign investors to fund the shortfall.

The gap in goods and services trade was the third-largest on record and followed a $58 billion deficit in July, the Commerce Department said today in Washington. Both imports and exports were at all-time highs during the month, and the gap with China widened to a record.

Soaring fuel costs and an expanding economy will cause imports to rise faster than exports in coming months, keeping the trade deficit wide, economists said. The price of imported crude oil rose to a record $52.65 a barrel in August, even before Hurricanes Katrina and Rita disrupted production last month and sent prices even higher.

``The economy in the third quarter had a fair amount of momentum and oil prices were skyrocketing,'' said Jay Bryson, global economist for Wachovia Corp. in Charlotte, North Carolina, before the report. ``You are going to see some $60 billion trade figures if for no other reason than the price of oil.''

Economists expected the deficit to widen to $59.5 billion for the month compared with a previously reported $57.9 billion gap in July, according to the median of 64 forecasts in a Bloomberg News survey. The estimates ranged from $55.5 billion to $63 billion.

Excluding petroleum, the U.S. trade deficit narrowed to $38.4 billion, the smallest since March. Adjusted for inflation, which the government uses to calculate gross domestic product, the total trade gap shrank to $53.9 billion, the smallest since September 2004. The narrower price-adjusted deficit suggests trade contributed to economic growth last quarter.

Imports

Imports rose 1.8 percent for the month to $167.2 billion. Beside crude oil, the rise reflected greater demand for automobiles, generators and industrial equipment.

The value of U.S. oil imports rose in August to an all-time high of $17.2 billion from $15.3 billion the previous month. The nation imported 325.8 million barrels for the month compared with 312 million barrels in July.

Imports of autos and parts rose 5.9 percent in August. Nissan Motor Co., Japan's second-largest automaker, said last month it will exceed its plan of boosting annual sales by 1 million units in the 12 months ended in September because of strong demand in the U.S. The automaker sold an additional 440,000 units in the U.S. during that time, outstripping a 360,000 gain in Europe.

China

Demand for foreign goods is a reflection of an economy that is growing faster than that of its biggest trading partners, economists said. The U.S. economy will expand 3.5 percent this year, almost three times faster than the 1.3 percent gain projected for the countries that use the euro as their currency, according to this month's Blue Chip Economic Indicators median forecast. Japan's economy is expected to grow 2 percent.

The U.S. trade deficit reached a record $18.5 billion with China. U.S. Treasury Secretary John Snow yesterday during a tour of the Shanghai Stock Exchange urged China to press ahead with development of its financial markets, including a more flexible exchange-rate system. The U.S. government is seeking to boost opportunities for American companies and stem the threat of protectionist legislation from Congress.

Because the U.S. imports about 50 percent more goods and services than it exports, exports have to grow about twice as fast just to stabilize the trade deficit, economists said.

Exports increased 1.7 percent to $108.2 billion in August. Exports of civilian aircraft, drilling equipment and semiconductors led to a 3.8 percent rise in capital goods shipments.

U.S. Dollar

Boeing Co., the world's second-biggest airplane maker, shipped 25 planes to foreign buyers in August, the most since May 2000, compared with 17 a month earlier.

Growth in other countries ``has been reasonably strong and this is driving a broad-based gain in export volume,'' said David Hensley, an economist at JPMorgan Chase Bank in New York, before the report. ``The cheaper dollar is also doing its part.''

The dollar lost 17 percent of its value against a trade- weighted basket of currencies from the nation's biggest trading partners from a high reached in February 2002 until it started to rebound in March, according to Federal Reserve figures. Since then, it's gained 3 percent.

Demand for U.S. computers and electronics is also growing in China and other parts of Asia.

Regions

``There are certainly very high-growth markets outside the U.S.,'' said Michael Dell, chairman of Dell Inc., the world's largest personal computer maker, in an Oct. 6 interview. ``China is the fourth-largest market in the world for Dell to sell its products and we're growing fast there.''

By region, the Commerce Department reported that the trade deficit with Japan held at $6.6 billion. The trade gap with China widened from $17.7 billion. The deficit with the Organization of Petroleum Exporting Countries rose to $9 billion from $8.9 billion.

The deficit with Canada, the largest U.S. trading partner, widened to $6.7 billion from $6 billion. The gap with Mexico widened to $4.2 billion from $3.5 billion. The deficit with the European Union increased to a record $11.3 billion from $11.2 billion. While the deficit with South and Central America rose in August, the gap may have narrowed last month because of Hurricane Katrina, economists said.

More imports than exports typically go through the ports in the devastated region around New Orleans that were closed for weeks following Katrina, Joseph Abate, a senior economist at Lehman Brothers.

To contact the reporters on this story: Carlos Torres in Washington ctorres2@bloomberg.net

Last Updated: October 13, 2005 08:30 EDT