U.S. current account deficit narrows unexpectedly in Q4 2016, hits lowest level in over a year

U.S. current account deficit unexpectedly narrowed in Q4 2016, data from the Commerce Department showed on Tuesday. U.S. current account deficit fell 3.1 percent to $112.4 billion in the fourth quarter, down to the lowest since the second quarter of 2015.

The reading compared to current account deficit for the third quarter which was revised up to $116.0 billion from the previously reported $113.0 billion. It was better than forecasts for the deficit rising to $128.2 billion.

Q4 current account deficit represents 2.4 percent of GDP, compared with 2.5 per cent in the previous quarter. However, the deficit for year 2016 rose to $481.2bn or 2.6 percent of GDP, compared with $463bn the previous year.

Strong increase in soybeans exports from the U.S. to the rest of the world was the main driver behind the improvement in the current account during the third quarter. A reversal from this soybean effect and a worsening of the current account deficit was expected. However, details of the report showed an increase in the primary income surplus offset a soybean-driven drop in exports.