U.S. Current Account Deficit Sets Record in Q1'21

• Goods trade deficit widens sharply.

• Services trade surplus shrinks to least since 2012.

The U.S. current account deficit deepened to $195.7 last quarter from $175.1 billion in Q4'20, revised from $188.5 billion. The Action Economics Forecast Survey anticipated a $207.0 billion deficit. As a percent of GDP, the deficit grew to 3.6%, it's deepest since Q4'08. During all of 2020, the current account deficit deepened to $616.1 billion, revised from $647.2 billion.

The deficit in goods trade deteriorated to a record $268.5 billion as exports grew 6.4% (2.6% y/y) in Q1. Industrial supplies & materials exports rose 12.8% (4.0% y/y). Food, feeds & beverage exports increased 4.5% (21.9% y/y and capital goods exports rose 4.2% (-7.0% y/y). Falling by 2.5% (-1.0% y/y) were auto, parts & engines exports while nonauto consumer goods exports declined 1.1% (3.0% y/y). Imports of goods rose 6.3% (13.1% y/y) in Q1. The gain reflected a 19.1% rise (12.2% y/y) in industrial supplies & materials imports as oil prices rose. Nonauto consumer goods imports gained 7.4% (24.8% y/y). Capital goods imports strengthened 5.8% (13.2% y/y) while foods, feeds & beverage imports rose 2.9% (6.8% y/y). Falling 6.2% (2.6% y/y) were auto & parts imports.

The surplus on services trade narrowed to $55.7 billion in Q1. Services exports rose 0.6% (-11.7% y/y) as travel exports strengthened 12.2% (-63.1% y/y). Export charges for the use of intellectual property weakened 7.1% (+1.7% y/y). Imports of services improved 1.5% (-9.8% y/y), reflecting a 5.1% rise (-64.2% y/y) in travel imports in Q4. Imports of charges for the use of intellectual property increased 4.2% (14.8% y/y).

The surplus on primary income fell to $50.3 billion after increasing sharply in Q4'20. Investment income receipts rose 3.8% (3.3% y/y) while investment income payments increased 6.9% (4.8% y/y). The deficit on secondary income grew to $33.3 billion.

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

• Sales decline reverses March increase.

• Declines occur throughout most of country.

• Median home prices near-record high.

Sales of new single-family homes declined 5.9% (+48.3% y/y) during April to 863,000 units (SAAR) following a 7.4% increase to 917,000 in March, revised from 1.021 million. The Action Economics Forecast Survey expected 970,000 sales in April.

Sales in the South fell 8.2% (+61.2% y/y) to 545,000 units after increasing 24.0% to 594,000 in March, revised from 694,000. In the Midwest, sales weakened 8.3% last month (+46.7% y/y) to 110,000 units following a 6.2% March rise to 120,000, revised from 132,000. Sales in Northeast weakened 13.7% to 44,000 units (+100.0% y/y) after a roughly one-third March rise. Increasing by 7.9% (11.6% y/y) were sales in the West to 164,000 units following a 31.8% decline during March.

The median price of a new home rose 11.4% (20.1% y/y) in April to $372,400 following two months of roughly 5.5% decline. Working 8.7% higher (20.8% y/y) to $435,400 was the average price of a new home, following a 0.5% easing in March. These prices are not seasonally adjusted.

The supply of new homes for sale rose to 4.4 months in April, the most since May of last year. The median number of months a new home stayed on the market was 3.8, after surging to 4.6 months in March.

New home sales activity and prices are available in Haver's USECON database. The consensus expectation figure from Action Economics is available in the AS1REPNA database.