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Current account narrows in fourth quarter

WASHINGTON (Reuters) - The current account deficit narrowed in the fourth quarter, aided by an increase in services exports and more income earned abroad, a government report showed on Thursday.

The Commerce Department said the current account deficit, which measures the flow of goods, services and investments into and out of the country, fell to $110.4 billion, from an upwardly revised $112.4 billion in the third quarter.

That represented 2.8 percent of gross domestic product, unchanged from the third quarter, and tied for the lowest since 2.5 percent in the second quarter of 2009.

The smaller deficit should be supportive of the dollar, even as the Federal Reserve continues its aggressive easing policy to boost economic growth.

Economists polled by Reuters expected the fourth-quarter current account gap to widen to $112.8 billion from a previously reported $107.5 billion for the third quarter.

The shortfall on the current account has narrowed from a peak of 6.5 percent of GDP in the fourth quarter of 2005.

In the fourth quarter, the deficit on goods increased to $180.6 billion from $174.2 billion in the prior quarter, the Commerce Department said.

The services surplus increased to $52.2 billion in the fourth quarter to $49.3 billion in the third and the surplus on income increased to $52.4 billion in the fourth quarter, from $46.6 billion in the third.

(Reporting by Doug Palmer; Editing by Andrea Ricci)

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