WASHINGTON (Reuters) - The U.S. current account deficit shrank more than expected in the second quarter as the country boosted exports and cut back on imports, while income earned on U.S. assets abroad increased.
The deficit on the current account, which measures the flow of goods, services and investments into and out of the United States, narrowed to $117.4 billion, the Commerce Department said on Tuesday.
The deficit was equivalent to 3.0 percent of gross domestic product and was the narrowest since the third quarter of 2011.
The United States’ persistent current account deficit is widely seen as a problem for the global economy, although it has narrowed substantially in recent years from a record high 6.5 percent of GDP in the fourth quarter of 2005.
However, the recent rise in oil prices could work against any further narrowing in the deficit. America imports much of the oil it consumes.
“The more recent rebound in oil prices will push the deficit wider in the third quarter,” said Paul Dales, an economist at Capital Economics in London.
He also noted that recent trade data has shown exports are being hurt by a cooling global economy, which will also work against any further narrowing of the current account deficit.
At the same time, a bond buying plan unveiled last week by the U.S. Federal Reserve could put downward pressure on the value of the dollar, which historically has helped U.S. exports.
Most of the narrowing in the second quarter came from a drop in the U.S. deficit on goods and an increase in the surplus on income, the Commerce Department said.
Imports of goods fell 0.5 percent during the quarter to $579.9 billion. Exports of goods rose 1.4 percent to $394.1 billion.
The surplus on income increased to $55.5 billion as income receipts on U.S.-owned assets abroad rose to $184.6 billion.
Analysts surveyed before the report had expected the current account gap to narrow to $125.5 billion.
The Commerce Department revised its estimate of the first-quarter current account deficit to $133.6 billion, from $137.3 billion previously.
Reporting by Jason Lange; Editing by Andrea Ricci