US current account shrinks in Q1 on weak imports

WASHINGTON: The US current account deficit narrowed sharply in the first quarter as imports of goods declined, while US companies continued to repatriate foreign earnings following the overhaul of the tax code in 2018.

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 9.4% to $130.4 billion.

Data for the fourth quarter was revised to show the deficit widening to $143.9 billion, instead of the previously reported $134.4 billion. The government revised current account data from 2016 through the fourth quarter of 2018.

Economists polled by Reuters had forecast the current account deficit shrinking to $124.6 billion in the first quarter. The current account gap represented 2.5% of gross domestic product in the January-March quarter, down from 2.8% in the fourth quarter.

The deficit on the current account has shrunk from a peak of 6.2 percent of GDP in the fourth quarter of 2005, in part because of a significant increase in the volume of oil exports.

In the first quarter, exports of goods rose 0.6% to $419.3 billion, while imports dropped 2.1% to $635.9 billion.

The flow of foreign profits repatriated by US companies slowed to $100.2 billion in the first quarter from an upwardly revised $146.6 billion in the prior period, reflecting a waning boost from the corporate tax overhaul in January 2018.

That was still well above pre-tax cut levels, which were typically in the $30-$40 billion range. Earnings were previously reported to have increased by $85.9 billion in the fourth quarter. Earnings repatriation peaked at $294.7 billion in the first quarter of last year.