(Adds analyst comments, paragraphs 4, 10-11; context)
By Lucia Mutikani
WASHINGTON, June 18 The U.S. current account
deficit increased to its widest point in 1-1/2 years in the
first quarter, but was likely to resume its downward trend as
The Commerce Department said on Wednesday the current
account gap, which measures the flow of goods, services and
investments into and out of the country, widened to $111.2
billion from a revised $87.3 billion deficit in the fourth
The largest shortfall since the third quarter of 2012, was
driven by a decline in goods exports and a fall in the primary
income surplus. It represented 2.6 percent of gross domestic
product, the largest share since the third quarter of 2012 and
up from 2.0 percent in the October-December period.
"We expect the trend of a gradual narrowing in the current
account balance as a share of GDP to resume as the recent
volatility in the trade balance subsides," said Cooper Howes, an
economist at Barclays Capital in New York.
The current account deficit has been narrowing, hitting a 14
year low in the fourth quarter of 2013, helped in part declining
petroleum imports as the nation reduces its dependency on
In the first quarter, goods exports fell 1.8 percent to
$399.7 billion. In contrast, goods imports rose 1 percent to
$582 billion. The drop in exports has been blamed on an
unusually cold winter, which caused goods to pile up at ports.
The surplus on primary income fell to $46.7 billion in the
first quarter from $54.6 billion in the fourth quarter. A large
equity disinvestment resulted in an outflow $112.3 billion,
which the government described as an "atypical" occurrence.
It was only the second time that this has happened since the
start of the series in 1982.
The current account's primary income component includes
direct investment and portfolio income as well as income from
the central bank's foreign exchange reserves.
"To put this in perspective, the FDI (foreign direct
investment) net repayment is as large as the first quarter
current account deficit, and in theory could have been a
material factor holding the dollar back," said Alan Ruskin,
global head of G10 FX strategy at Deutsche Bank in New York.
"The good news for the dollar is that this is very likely to
be only a one-off negative event."
It was unclear in which industry the disinvestment was, but
Ruskin said an analysis of the data showed it was not in
manufacturing, wholesale trade or finance and insurance.
The government revised the series going back to the first
quarter of 1999. With the revisions, changes in estimation
methods, definitions and classifications were also effected.
(Reporting by Lucia Mutikani Editing by W Simon)