The U.S. current account deficit narrowed to $128.2 billion during Q2'19 from an upwardly-revised $136.2 bil. during Q1'19 (was $130.4 bil.). The Action Economics Forecast Survey anticipated a $127.4 bil. deficit. As a percent of GDP, the deficit narrowed to 2.4% from an upwardly-revised 2.6% in Q1 (was 2.5%), and a six-and-a-half year high 2.8% in Q4'2018.

The smaller deficit last quarter was the result of an increase in the income surplus of $14.9 bil. which offset a $6.9 widening of the goods and services deficit. The goods trade deficit increased by $6.6 bil. to $223.3 bil. as exports fell 1.1% (-2.9% y/y) while imports increased 0.3% (0.7% y/y). Almost all categories of goods trade showed widening deficits, led by a $4.8 bil. worsening in the capital goods balance. The biggest improvement came from a $1.3 gain in foods, feeds and beverages, though that category still remains in deficit.

The surplus on services trade edged down to $60.0 bil. from a slightly downwardly revised $60.3 bil. (was $61.9 bil.). Services exports were unchanged in Q2 (+0.8% y/y) while service imports edged up 0.1% (5.8% y/y). Five of the nine services categories showed a worsening trade balance led by a $0.7 bil. decline in travel services. Meanwhile, the transportation services deficit narrowed by $0.7 bil.

The surplus on primary income increased to a record high $67.6 bil. though as a share of GDP it has hovered around 0.3% since 2012. Despite higher interest rates in the U.S. versus much of the rest of the world, the investment income balance rose to a record $70.8 bil. -- it has also been range-bound around 0.3% of GDP since 2012. The deficit on secondary income narrowed to $32.5 bil. from last quarter's record $36.6 bil.

Balance of Payments data are in Haver's USINT database, with summaries available in USECON. The expectations figure is in the AS1REPNA database.