WASHINGTON, Sept 14: The US balance of payments deficit narrowed in the second quarter to $190.8 billion from 197.1 billion in the first quarter, the commerce department reported on Friday.The US current account figure, roughly in line with analysts’ forecasts, represented 5.5 per cent of US economic output or GDP.

For the first quarter, the current account deficit was revised up to $197.1 billion or 5.8 per cent of the GDP.

The second quarter trade deficit on goods and services was almost the same as in the first quarter at $177.7 billion.

The deficit on goods increased to $204.2 billion, offset by a surplus in services of 26.5 billion.

It was higher investment income and lower US government spending abroad which accounted for the current account improvement, the Commerce Department said.

Investment income increased to $190.3 billion from 175.5 billion, mostly on interest and dividends.

The improvement in the current account deficit, the broadest measure of trade and income flows, suggested some easing of balance of payments – the huge debt the United States owes the rest of the world.

The large deficit is a factor in the weak dollar, and a big debt to the rest of the world generally makes it harder to attract capital.

Foreigners shifted to being net sellers of Treasury securities, with a decline of $7.6 billion in the second quarter.

In non-Treasury securities, however, net foreign purchases rose to $235.1 billion in the second quarter from 112.3 billion in the first.The category of “unilateral current transfers” to foreigners fell to $22.5 billion, down from 27.0 billion, because of lower US government grants. —APP