(Reuters) - India's trade deficit widened to an 18-month high in November as demand for machinery and transport equipment soared, bolstering hopes of a sustained recovery in Asia's third-largest economy.

Higher gold imports during the month also helped swell the trade shortfall to $16.86 billion last month, its highest level since May 2013. Gold imports jumped 34 percent from October to $5.61 billion.

Imports of machinery and transport equipment grew about 40 percent month-on-month. That augurs well for an economy which is trying to break out of the slowest phase of growth since the 1980s amid a dearth of investment and slack consumer demand.

It will also be welcome news for Prime Minister Narendra Modi who swept to power six months ago on election promises to oversee an economic revival.

Growth slowed to 5.3 percent in the July-September quarter from a 2-1/2-year high of 5.7 percent in the previous quarter, both well short of the 8 percent level needed to create enough jobs to employ a rapidly expanding workforce.

Also boosting the economic outlook, merchandise exports recovered to post a 7.27 percent annual growth in November. India's exports contribute about 25 percent to its gross domestic product.