The U.S. current account deficit unexpectedly narrowed in the second quarter, as a pickup in income from overseas investments offset a widening trade gap
. The broad measure of U.S. international transactions-including trade and capital flows--registered a shortfall of $118.0 billion during April through June, the Commerce Department said Thursday. The first-quarter deficit was revised up to $119.6 billion from an initial estimate of $119.3 billion.
Economists surveyed by Dow Jones Newswires had forecast the current account gap, which is mostly made up of trade in goods and services but also includes transfer payments and investment income, would increase to $123.0 billion last quarter.
The second-quarter deficit was 3.1% of gross domestic product, down from 3.2% in the first quarter.
The large trade deficit, which underwent a modest correction during the recession as demand for imports fell, has resumed its expansion as U.S. consumers and businesses boost purchases from abroad. The trade gap last quarter widened to $145.0 billion from $140.0 billion in the first quarter.
Helping to offset that, the surplus on income from U.S.-owned assets abroad rose to $61.1 billion in the second quarter from $52.7 billion, in part due to receipts from foreign direct investment.
Still, the International Monetary Fund warned Wednesday that budget cuts agreed to by Congress as part of a deal to raise the debt ceiling last month will likely do little to bring down the current account deficit, given that trading partners in Europe and elsewhere are also tightening their fiscal belts.
Due to the ballooning trade deficit, the U.S. must attract large amounts of financing from abroad, or the dollar will lose its value. Treasury data released last month showed that net foreign capital outflows continued in June as the debt-ceiling standoff intensified, with private foreigners investors slashing their Treasury holdings by an unprecedented amount. Still, the country's top foreign creditor, China, remained a net buyer of Treasuries.
Thursday's report showed that net financial inflows to the U.S. were down sharply last quarter, to $25.7 billion from $156.1 billion in the first quarter. Commerce attributed that to a "steep reduction" in the growth of foreign-owned assets in the U.S.
Foreigners sold a net $63.8 billion of U.S. Treasury securities in the second quarter. Foreigners were also net sellers of corporate bonds and agency debt, though remained net buyers of stock.
Foreign direct investment in the U.S. increased to $47.7 billion in the second quarter from $28.5 billion in the previous quarter.
Unilateral current transfers, which includes foreign aid from the U.S. to other countries and money from foreign workers to families living abroad, rose to $34.2 billion from $32.3 billion in the first quarter.
Breaking down trade flows, the deficit in goods increased to $190.4 billion from $182.2 billion in the first quarter. Imports of goods rose to $563.5 billion, while sales abroad increased to $373.1 billion.
Meanwhile, the U.S. posted a surplus in services of $45.4 billion in the second quarter, up from $42.3 billion the previous quarter.
0 comments:
Post a Comment