The American trade deficit shrank to $51.6 billion in September, an improvement brought about as exports posted their best month on record.

The latest snapshot of trade activity, reported by the Commerce Department yesterday, came after the deficit had swelled to $53.5 billion in August – the second-highest level ever registered. September’s trade deficit represented a 3.7% reduction from August.

The size of the deficit in September turned out to be smaller than the roughly $53 billion or $54 billion deficit that some economists had forecasted.

The narrowing in the trade gap in September came as exports rose and imports fell.

Exports of goods and services grew to a record $97.5 billion in September, a 0.8% increase from the previous month. Exports were helped by a weaker dollar, which makes American goods cheaper to foreign buyers, and improving foreign demand.

Imports, meanwhile, dipped by 0.8% in September from August to $149 billion. Even with the drop, imports of goods and services were still the second-best on record, a testimony to Americans’ solid appetite for foreign made items.

In other economic developments, new claims for jobless benefits rose last week by 2,000 to 333,000 the Labor Department said. Even with the increase, the level of claims pointed to a recovery in the jobs market, analysts said.

President Bush, who last week was re-elected to a second term, says the best way to handle the trade deficit is to get other countries to remove trade barriers and open their markets.

But critics, including Democrats and trade unions, argue that the president’s free-trade policies aren’t working and have contributed to job losses. People in this camp have called for having future trade deals include stronger labor and environmental protections.

Mr. Bush and his former Democratic rival for the White House, John Kerry, sparred often over trade matters, especially trade relations with China.

In September, America’s trade deficit with China hit a record $15.5 billion as imports from the country also hit an all-time high. American manufacturers claim that China’s currency policies give Chinese companies a competitive advantage. The Bush administration has been pressing Beijing to let its currency, the yuan, be set in open markets.

The American trade deficit, however, narrowed with Japan in September to $6.1 billion and with Canada to $5.3 billion.

The value of the American dollar compared with other major currencies has been moving downward, meanwhile. Earlier this week, the euro – the currency used by 12 countries – surged to an all-time high against the dollar.

Although the Bush administration publicly espouses a “strong dollar” policy, officials haven’t taken specific action to stem the dollar’s decline. Private economists believe that’s because the administration is privately Okay with what so far has been a relatively orderly decline of the American dollar.

In September, American exports of industrial supplies and consumer goods each hit a record of $17.5 billion and $8.8 billion, respectively. Exports of automobiles, parts, and engines dipped to $7.7 billion in September, second only to August’s record high.

On the imports side, sales of foreign made foods, industrial supplies, and consumer goods dipped in September from August. But sales of foreign-made autos, parts, and engines totaled a record $19.4 billion. Imports of capital goods, such as drilling equipment, came to $29.5 billion in September, the highest since December 2000.

The average price of an imported barrel of crude oil, meanwhile, rose in September to a record $37.62, up from $36.37 a barrel in August.