WASHINGTON (Bloomberg) — The US trade deficit widened to a record for a fifth straight year in 2006 as American purchases of Chinese goods and imported oil overwhelmed an increase in exports.The gap between imports and exports expanded 6.5 percent to $763.6 billion last year, the Commerce Department said yesterday in Washington. The shortfall increased to $61.2 billion in December from a month earlier, more than economists forecast.

China replaced Mexico as America’s second-largest trading partner behind Canada during the year, intensifying complaints from lawmakers that the nation is keeping its currency weak to spur exports. The deficit was also swollen by rising crude oil prices, masking record US shipments abroad.

“The big picture is exports are growing, but in ‘06 imports grew faster, particularly consumer goods from China,” said Chris Low, chief economist at FTN Financial in New York. “The crude oil rise was entirely from price increases.”

Imports of goods and services rose 2.1 percent in December, to $186.7 billion. Shipments of consumer goods to the US increased to a record $40 billion, and purchases of foreign autos and parts surged to $22.6 billion, also an all-time high.

For the year, imports increased to an unprecedented $2.2 trillion from $1.99 trillion in 2005. Exports rose to a record $1.44 trillion, from $1.28 trillion in 2005.

“In the long run, I expect the deficit to gradually shrink,” said Nigel Gault, director of US research at Global Insight Inc. in Lexington, Massachusetts. “We expect growth in exports combined with slower import growth. The 2007 annual deficit should be substantially below the 2006 figure.”

The dollar stayed lower against the euro and yen after the report.

Oil imports rose to $23.2 billion from November’s $21.5 billion, which was the lowest since July 2005. America’s oil import bill increased to $302.5 billion last year from almost $252 billion in 2005.

Crude oil prices probably will continue to be a cause of fluctuation in trade figures over the next couple of months. While the average price of a barrel of crude on the New York Mercantile Exchange rose to $62.09 in December, it has since receded and closed yesterday at $57.81.

Imports may be limited as US companies try to reduce inventories. Inventories subtracted 0.71 percentage point from economic growth in the fourth quarter as companies worked off stockpiles built up in the middle of last year.

In December, exports rose 0.6 percent to $125.5 billion, reflecting higher sales of autos, food and consumer goods.

Caterpillar Inc., the world’s largest maker of earthmoving equipment, said on January 26 that increased sales in China and India helped boost fourth-quarter profit by 4.3 percent.

“We are increasingly encouraged by the strength of real economic growth outside North America,” Caterpillar chief executive officer James Owens said on a conference call. “Despite the headwinds in North America we expect our sales and revenue to be up at least modestly in 2007.”

Economic expansion abroad, along with the drop in value of the dollar against other currencies, will support US exports this year, Federal Reserve Bank of Philadelphia president Charles Plosser said last week.

“While there is no guarantee these trends will carry over into 2007, the signs are encouraging,” Plosser said in a speech to the Philadelphia Chamber of Commerce on February 7. The narrowing trade balance will be one element supporting “solid growth” of about 3 percent this year.

The dollar last year fell 3.8 percent against a trade-weighted basket of currencies of its biggest trading partners. While it has risen in January and February, it remains below year-ago levels.

The politically charged trade gap with China shrank to $19 billion, from $22.9 billion in November. For all of last year, the deficit surged to $232.5 billion from $201.5 billion in 2005.

China’s central bank said on February 9 that it is seeking a “reasonable” value for the yuan to help reduce the nation’s record trade surplus and slow its economy. That may help limit the deficit with the US in coming months.

Treasury Secretary Henry Paulson told the Senate Budget Committee on February 8 that the US is working with China to seek more flexibility in the Chinese currency’s value.

“They’ve been moving it more quickly, but it’s not moving quickly enough,” Paulson said. “We’re working on some benchmarks, and the kind of programs, intermediate-term and long-term programmes, of structural change that would help them open up their economy.”

The trade gap with Japan narrowed to $7.5 billion in December, from $7.9 billion in November. For all of last year it expanded to $88.4 billion from $82.5 billion.

The deficit with the European Union narrowed to $9 billion from $9.5 billion. The gap with Canada, the US’s biggest trading partner, widened to $5.6 billion, from $5.2 billion. The deficit with Mexico narrowed to $5 billion from $5.4 billion.