The U.S. trade deficit continued to expand in January after setting a new annual record in 2005, a government report showed Thursday. The nation's trade gap widened 5.3% to a new monthly record of $68.5 billion, the Commerce Department said. The previous record was $67.84 billion in October. Both exports and imports hit new records in January, although imports outpaced goods shipped overseas. Analysts surveyed by MarketWatch had expected the deficit to increase to $66.4 billion. Economists say global economic fundamentals are driving the deficit to new heights. "The trade deficit seems to only get bigger and never recede," said Robert Brusca, chief economist at FAO Economics. "The reasons are clear, oil prices are up, foreign growth is still relatively weak and U.S. growth is strong. There is no reason to forecast a lower deficit," he said. The Commerce Department lowered its estimate of the December trade deficit slightly to $65.1 billion from the initial estimate of $65.7 billion. The deficit for 2005 was revised down to a record of $723.6 billion from the previous estimate of $725.8 billion. In December, imports rose faster than exports. Imports increased 3.5% to $182.9 billion. December exports rose 2.5% to $114.4 billion. Imports of goods alone rose 3.9% to a record $155.1 billion, with large increases coming in industrial supplies including oil, capital goods, auto and auto parts and consumer goods. Meanwhile, exports of goods alone rose 3.3% to $81.7 billion. The United States exported a record amount of industrial supplies, capital goods and autos. Exports of civilian aircraft, primarily from Boeing Co increased in January. The petroleum deficit widened 3.3% to $22.6 billion in January.