BUSINESS

US current account trade deficit drops to $98.9 billion in spring quarter, lowest since 2009

09/19/2013 09:27 EDT | Updated 11/19/2013 05:12 EST
WASHINGTON - The U.S. current account trade deficit narrowed in the April-June quarter to the lowest level in nearly three years.

The imbalance fell to $98.9 billion in the second quarter, a drop of 5.7 per cent from the first-quarter deficit of $104.9 billion, the Commerce Department reported Thursday.

The spring deficit was the lowest since a $93.8 billion imbalance in the third quarter of 2009, a period when the Great Recession had cut into demand for foreign goods.

The current account is the country's broadest measure of trade. It tracks not only the sale of goods and services but also investment flows.

The improvement in the second quarter represented a drop in the deficit for goods and increases in the surpluses in services and investment income.

The sharp narrowing in the deficit in the second quarter was a major factor boosting the overall economy during that period. The economy grew at an annual rate of 2.5 per cent in the second quarter, up from a growth rate of 1.1 per cent in the January-March period.

A smaller trade deficit usually means that U.S. companies are producing more to meet domestic and overseas demand.

The smaller goods deficit reflected gains in exports of American-made airplanes and other capital goods. Imports were also up with the biggest gain in shipments of foreign-made autos and auto parts. However, oil imports fell during the second quarter.

The second quarter deficit was the equivalent of 2.4 per cent of the total economy, down from 2.5 per cent in the first quarter.