US current account deficit widens sharply in second quarter on imports

The US current account deficit widened sharply in the second quarter, reaching its highest level in more than two years amid a surge in imports of goods.

The Commerce Department's Bureau of Economic Analysis said on Thursday that the current account deficit, which measures the flow of goods, services and investments into and out of the country, increased $25.8 billion, or 10.7 per cent, to $266.8 billion last quarter.

That was the highest level since the first quarter of 2022. Economists polled by Reuters had forecast the current account deficit at $260.0 billion.

The current account gap represented 3.7 per cent of gross domestic product, the highest since the second quarter of 2022 and up from 3.4 per cent in the first quarter. The deficit peaked at 6.3 per cent of GDP in the fourth quarter of 2005.

The large current account deficit has no impact on the dollar given its status as the reserve currency.

Imports of goods increased $20.1 billion to $813.9 billion, the highest since the second quarter of 2022, boosted by gains in capital goods, mostly computer accessories, peripherals and parts as well as computers and semiconductors.

Consumer goods imports also rose, driven by medicinal, dental and pharmaceutical products.

Goods exports decreased $0.1 billion to $516.7 billion. There was a large decline in exports of nonmonetary gold, which offset an increase in capital goods, mainly computers.

The goods trade deficit widened to $297.1 billion, the highest since the second quarter of 2022, from $276.9 billion in the first quarter.