·
The US current account deficit improved
slightly last quarter to $195.8B but it was from a 2Q deficit that was
revised deeper. Also lessening the economic significance of the
improvement, it was entirely due to a narrower unilateral transfers
deficit caused by private transfers associated with hurricanes and
homeland security.
· The 3Q current account deficit amounted to 6.2% of GDP and is averaging 6.4% this year versus 5.7% in 2004. Consensus expectations had been for a deepening of the 3Q deficit to $204.6B.
· The deficit in merchandise trade
deteriorated to a record $197.9B from $186.9B in 2Q. Exports grew
just 0.8% (10.0% y/y), held back by the damage to Gulf Coast port
facilities caused by Hurricane Katrina. Imports, meanwhile, rose 3.1% (13.6%
y/y) in large part due to the 17% surge in value of petroleum products.
· The surplus on services improved for the fourth consecutive quarter to $15.1B and rose versus a surplus of $10.3B a year ago. Exports of services grew 1.9% (11.7% y/y and imports were roughly flat q/q (6.8% y/y).
· From the capital account, net US foreign direct investment abroad was positive for the first time since 1982 while foreign direct investment in the US surged to its highest since 2001.