WASHINGTON, Dec 17: The US current account deficit narrowed by more than anticipated in the third quarter to $178.5 billion from $188.9 billion in the second quarter, the Commerce Department said on Monday.

The current account deficit is viewed as the broadest measure of US trade and income flows. The government survey showed that the vast debt the United States owes the rest of the world eased between July and September.

Most economists had only expected the deficit to shrink to around $183 billion.

“The combination of slower growth in US demand, solid growth in overseas economies, and a declining dollar has been pulling the trade deficit lower as exports have outstripped imports,” said Nigel Gault, a US economist at Global Insight.

The balance of payments deficit declined to around 5.1 per cent of US economic output or gross domestic product (GDP) during the quarter, marking its lowest level since the first quarter of 2004 and shaving several percentage points off the second quarter’s 5.5 per cent reading.

The second quarter payments deficit was revised lower to $188.9 billion from an original tally of $190.8 billion.

“Increases in the surpluses on income and on services and a decrease in the deficit on goods more than accounted for the (overall current account) decrease,” the government said.

The current account partly shrank as US corporations with overseas operations saw their foreign profits fattened by the weak dollar.

The survey showed the third quarter trade deficit on goods and services narrowed to $173.2bn compared with $178.4bn previously.

The services sector posted a surplus of $26.5bn compared with $25.8bn in the prior quarter helping to drive the overall deficit lower.

A pickup in tourism also helped narrow the deficit, the survey showed, in a further reflection of how a weakened dollar is helping trim America’s debts with the rest of the world.—AFP