US current account deficit improves slightly in fourth quarter of 2015

A measure of the shortfall in America’s current account transactions with the rest of the world improved slightly at the end of 2015, mainly as a result of fewer oil imports, albeit by less than economists had expected.

The current account deficit fell from $129.9bn in the third quarter to $125.3bn in the fourth quarter, according to the Bureau of Economic Analysis.

Analysts had penciled in a deficit of $118.0bn.

As a percentage of gross domestic product that meant a reduction from the equivalent of 2.9% of GDP to 2.8%.

In the absence of offsetting capital inflows current account deficits tend to be associated with weaker currencies.

Total exports of goods and imports fell from $555.3 to $544.4bn while imports declined from $693.9bn to $678bn.

That resulted in a smaller deficit in goods and services from $138.6bn in the third quarter to $133.7bn in the final quarter of 2015, mostly as a result of goods imports falling by more than exports as fewer purchases were made of petroleum and its derivatives from overseas.

Imports of goods decreased from $570.0bn to $553.9bn and exports from $379.4bn to $366.7bn, while exports of services picked up from $175.9bn to $177.7bn, as did imports.

The surplus on the primary income balance fell from $45.4bn to $42.8bn as investment income obtained by US residents on financial assets held abroad fell back from $195.7bn to $190.0bn.

The secondary income balance, previously known as current transfers, on the other hand improved slightly, registering a deficit of $34.3bn in the last three months of the year versus $36.7bn in the preceding quarter.