The U.S. trade gap shrank during the third quarter by 5.5 percent to $178.5 billion in the July-September period, the Commerce Department reported.
The deficit in goods shrank by 2.2 percent to $199.7 billion as record levels of export sales helped offset a rising foreign oil bill.
Including services and foreign investment, the current deficit accounted for 5.1 percent of the country's total economic output, down from 5.5 percent in the second quarter, the lowest level since 2004.
Last week, Commerce reported that the monthly deficit in goods and services rose in October to $57.8 billion, reflecting record oil prices and a record deficit with China. U.S. exports rose by 0.2 percent in October to $123.6 billion, buoyed by increasing demand for computers, drilling equipment and medicines. U.S. imports of goods and services dropped by 2.7 percent in October to $182.5 billion, the biggest monthly drop since December, 2001.