U.S. Markets

U.S. current account deficit narrows in fourth quarter

Semi trucks line up to pick up shipping containers at the Port of Long Beach October 27, 2014. REUTERS/Bob Riha Jr.

WASHINGTON, March 17 (Reuters) - The U.S. current account deficit narrowed in the fourth quarter, but the improvement is unlikely to be sustained as a strong dollar continues to undercut exports of goods.

The Commerce Department said on Thursday the current account deficit, which measures the flow of goods, services and investments into and out of the country, fell 3.6 percent to $125.3 billion. The third-quarter deficit was revised up to $129.9 billion from $124.1 billion.

Economists polled by Reuters had forecast the current account deficit falling to $118.9 billion in the fourth quarter. For 2015, it totaled $484.1 billion, the largest since 2008.

The fourth-quarter current account deficit represented 2.8 percent of gross domestic product, down from 2.9 percent in the July-September quarter. The deficit represented 2.7 percent of GDP for 2015, the largest since 2012 and up from 2.2 percent in 2014.

The current account deficit has declined from a record high of 6.3 percent of GDP in the fourth quarter of 2005, as rising domestic oil production and lower international oil prices keep the import bill in check.

The dollar gained 20 percent versus the currencies of the United States’ main trading partners between June 2014 and December 2015, undermining exports. Goods exports fell 3.4 percent to $366.7 billion in the fourth quarter.

Reporting by Lucia Mutikani; Editing by Paul Simao