US current account deficit shrinks in the second quarter, as expected

The US current account deficit shrank over the three months to June as the surpluses on the country's primary income and services balances expanded, while the deficit on the secondary income balance declined.

America's total shortfall in its current transactions with the rest of the world fell from $131.8bn in the first three months of 2016 to $119.9bn for the second quarter, according to the Department of Commerce.

Economists had forecast a total current account deficit of $119.8bn.

The surplus on the primary income balance increased by $8.9bn to $42.9bn, while the surplus in in America's trade in services grew by $0.4bn to $61.5bn.

A country's primary income balance measures the difference between income obtained on investments abroad and payments made to foreigners for their holdings on the country's assets.

The secondary income balance on the other hand tracks items such as current transfers from the US government.

In parallel, the deficit on the secondary income balance declined by $3.1bn to reach $37.6bn.

The balance for trade in goods registered a $0.5bn increase in its deficit to reach $186.7bn.

As a percentage of gross domestic product, the total US current account deficit fell from 2.9% in the first quarter to 2.6% in the second.

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