US current account deficit shrinks in Q4; lowest level in over a year

US current account deficit shrinks in Q4; lowest level in over a year

International News

The US current account deficit unexpectedly fell in the fourth quarter (Q4), hitting its lowest level in more than a year, as an increase in the primary income surplus offset a soybean-driven drop in exports. The Commerce Department said on Tuesday the current account deficit (CAD), which measures the flow of goods, services and investments into and out of the country, fell 3.1 per cent to $112.4 billion, the lowest since the Q2 of 2015. The current account deficit for the third quarter was revised up to $116.0 billion from the previously reported $113.0 billion. Economists polled by Reuters had forecast the deficit rising to $128.2 billion in Q4. The fourth-quarter current account deficit represented 2.4 per cent of gross domestic product (GDP), down from 2.5 per cent in the third quarter. For all of 2016 the current account deficit totalled $481.2 billion, a 3.9 per cent increase from 2015. That represented 2.6 per cent of GDP, unchanged from 2015. The current account deficit has dropped from a record high of 6.3 per cent of GDP in the fourth quarter of 2005 as rising domestic oil production and lower global oil prices curbed the import bill. Goods exports fell $3.4 billion to $371.7 billion in the fourth quarter. That reflected an $8.4 billion decrease in the export of food, mainly soybeans. Exports were also crimped by the dollar, which gained more than 5 per cent against the currencies of the United States’ main trading partners in the fourth quarter.