WASHINGTON (Reuters) - The U.S. current account deficit narrowed sharply in the second quarter as increases in portfolio investment income boosted the primary income surplus, government data showed on Thursday.
The Commerce Department said the current account deficit, which measures the flow of goods, services and investments into and out of the country, dropped 5.9% to $128.2 billion last quarter. Data for the first quarter was revised to show the deficit down to $136.2 billion, instead of the previously reported $130.4 billion.
Economists polled by Reuters had forecast the current account deficit tightening to $127.8 billion in the second quarter.
The current account gap represented 2.4% of gross domestic product in the April-June quarter. That was the smallest in a year and was down from 2.6% in the first quarter. The deficit on the current account has dropped from a peak of 6.3% of GDP in the fourth quarter of 2005.
The United States has increased oil production, which has reduced its dependence on foreign crude and helped to curb the import bill. In the second quarter, exports of goods fell 1.1% to $414.6 billion. Imports of goods rose 0.3% to $637.9 billion.
A year-long trade war between the United States and China has caused wild swings in the trade data, with exporters and importers trying to stay ahead of the tariff fight between the two economic giants.
Primary income receipts increased $7.1 billon to $285.2 billion, reflecting increases in portfolio investment income, mainly dividends on equities, and in direct investment income.
The surplus on primary income increased to $67.6 billion in the second quarter from $56.9 billion in the prior quarter.
Dividends were $88.3 billion in the second quarter, remaining elevated since last year’s overhaul of the tax code, which slashed the corporate tax rate to 21% from 35% and generally eliminated taxes on repatriated earnings.
Reporting by Lucia Mutikani; Editing by Andrea Ricci