March 9 (Bloomberg) -- The U.S. trade deficit widened to a record $68.5 billion in January as the oil-import bill rose and Americans bought more Chinese goods.

The deficit in goods and services trade was larger than forecast and followed December's $65.1 billion shortfall, the Commerce Department's report showed in Washington. An increase in imports in January exceeded a rise in exports.

Improvement in the trade balance may prove difficult in coming months as growth in the U.S. outpaces the economies of most of its trading partners, economists said. Americans' appetite for clothing from China, electronics from Japan and cars and parts from Canada and Mexico may keep the deficit close to a record through the first half of 2006, economists said.

``It's a reflection of strong U.S. demand,'' said Jim O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. His $68 billion forecast was among the most accurate in a Bloomberg News survey. ``Growth in Europe and Japan is certainly going to help, but until domestic demand slows, we're not going to see a big turnaround in the trade deficit.''

Economists expected the January deficit to widen to $66.5 billion from a previously reported $65.7 billion in December, based on the median of 68 estimates in the Bloomberg survey.

A stronger labor market is giving consumers the means to spend, and a report tomorrow from the Labor Department is forecast to show employers added 210,000 jobs in February, the most in three months. Today, the government said first-time jobless claims rose by 8,000 to 303,000 last week, a level that still signals strength in employment.

Imports

The dollar rose to a two-week high against the yen on expectations tomorrow's jobs report will increase the odds of an interest-rate increase by the Federal Reserve. The dollar rose to 118.19 yen at 2:22 p.m. in New York from 117.86 late yesterday after earlier falling by the most in a week after the Bank of Japan took a step toward lifting interest rates from zero percent.

Imports in January rose 3.5 percent to $182.9 billion, boosted by record shipments of consumer goods, autos, business equipment, and industrial supplies such as petroleum. Exports increased 2.5 percent to $114.4 billion. American companies exported record amounts of industrial supplies, vehicles and capital goods including aircraft. The values of imports and exports were the highest on record.

January imports of consumer goods, including televisions, furniture and clothing, rose to $36.2 billion. Automobile shipments into the U.S. increased to $22.7 billion. Imports of capital goods rose to $34.1 billion. Retailers brought in more merchandise to satisfy increasing consumer demand.

Retail Sales

Retail sales in January rose by the most since May 2004, a government report last month showed, a fifth straight gain and evidence that spending will be stronger this quarter than last.

Pioneer Corp., Japan's third-biggest plasma television maker, will probably beat its full-year earnings forecast because of higher-than-expected sales of plasma televisions outside of Japan, President Tamihiko Sudo said.

``Plasma television sales are selling well in the U.S. and Europe,'' Sudo said in a March 7 interview.

The value of petroleum imports, which include crude oil and refined products, rose to a seasonally adjusted $24.6 billion from $23.6 billion even as refiners bought fewer barrels of crude oil. The price of a barrel of crude oil averaged $51.93 in January compared with $49.76 in December. The U.S. imported 302.8 million barrels of crude oil in January, less than the 311.5 million imported a month earlier.

U.S. exports of capital goods, which include civilian aircraft, rose to $33.2 billion from $32.3 billion in December. Exports of industrial supplies, such as chemicals and fuel oil, increased to $21.1 billion from $20 billion.

Aircraft Exports

Boeing Co., the world's second-largest maker of commercial jets, said it shipped 16 planes to foreign customers in January, compared with 11 in December. The value of exports of civilian aircraft rose to $3.1 billion in January from $2.2 billion the previous month.

The U.S. deficit with China, which accounted for more than a quarter of America's total 2005, rose 9.9 percent to $17.9 billion in January from a month earlier. Last year's record $202 billion deficit with China, the most for any country, brought a firestorm of criticism by U.S. lawmakers and manufacturers, who claim Chinese currency policies give them an unfair advantage. By not allowing for larger fluctuations of its currency, the yuan, Chinese-made goods are cheaper than they would otherwise be, they say.

China

China on July 21 revalued the yuan at 8.11 per dollar, 2.1 percent stronger than the pegged level it had been held at since 1995, and started managing it against a group of currencies including the dollar, euro and yen.

That hasn't been enough to satisfy many U.S. lawmakers. Senators Lindsey Graham and Charles Schumer have sponsored legislation that would slap tariffs of 27.5 percent on all Chinese imports unless the yuan is allowed to gain more rapidly.

The dollar's 3.5 percent gain against a basket of major trading partners' currencies last year may also have limited demand for U.S. exports. The dollar's strength, after three years of declines, also helped make imports cheaper for American companies and consumers.

The U.S. trade deficit subtracted 1.4 percentage points from the nation's economic growth in the final three months of 2005, the most in three years, the Commerce Department said in its report last month on gross domestic product.

Europe

Still, accelerating growth in Europe and Japan may help narrow the U.S. trade gap later this year.

Japan's economy will probably grow at its fastest pace this year since 1991, according to a Bloomberg survey of economists last month.

The euro-region economy will expand about 0.7 percent in each of the first three quarters of 2006, the most since 2000, the European Commission said March 3.

International sales will be ``the growth engine'' for Dell Inc., the world's largest computer maker, the next three to five years, said Kevin Rollins, the company's chief executive officer, in an interview March 7.

The Commerce Department reported that the trade deficit with Japan narrowed 5.1 percent from December to $6.5 billion. The deficit with the Organization of Petroleum Exporting Countries widened 11.6 percent to $8.4 billion.

Elsewhere, the deficit with Canada, the largest U.S. trading partner, widened 11.1 percent to a record $8.9 billion and the gap with Mexico grew 8.8 percent to $4.6 billion. The deficit with the European Union narrowed 3.8 percent to $9.7 billion, the lowest since April 2005.

To contact the reporters on this story: Joe Richter in Washington jrichter1@bloomberg.net

Last Updated: March 9, 2006 14:32 EST