US current account widens to $192.6 bln

The US current account deficit widened in the first quarter to $192.6 billion from a significantly downwardly revised estimate of $187.9 billion in the fourth quarter of 2006, the US Commerce Department said yesterday.

The Commerce Department previously pegged the fourth-quarter current account deficit at $195.8 billion. The midpoint estimate of analysts surveyed before Friday's report was for the current account deficit to widen to $201.0 billion.

The department also significantly lowered its estimate of last year's current account gap to $811.5 billion, from $856.7 billion previously reported. It also lowered its estimate of the current account deficit for other years dating back to 2001, while raising estimates for the years 1997 through 2000.

The department said the revisions reflected newly available source data and a methodological change.

The first-quarter current account gap equaled 5.7 per cent of gross domestic product, up from 5.6 per cent in the fourth quarter. The gap equaled 6.1 per cent of GDP for 2006 as a whole, unchanged from 2005.

The current account, the broadest measure of US trade with the rest of the world, includes goods, services and income flows. The huge US current account deficit is seen as one of the major risks to the US economy.

Most of the quarterly increase in the current account gap was from net income transfers to foreigners, such as US government grants to the Middle East and private remittances.

Those net unilateral transfers rose to $26.1 billion in the first quarter, from $20.7 billion in the fourth.

The goods and services deficit decreased slightly to $176.8 billion in the first quarter, from $176.9 billion in the fourth.

Goods exports increased to $270.1 billion from $266.5 billion, with the largest gains in consumer goods, agricultural products and auto and auto parts.

Goods imports increased to $471.0 billion from $466.8 billion, largely driven by oil and to lesser degrees by capital goods, consumer goods and foods, feeds and beverages.

US Treasury debt prices and stock futures were higher in morning trade while the dollar eased, but financial markets were focused on news of milder-than-expected consumer inflation Last monthrather than on the current account figures.