By Eric Morath and Josh Zumbrun 

WASHINGTON -- The U.S. current-account deficit, a measure of the nation's trade and financial flows with other countries, widened to a 10-year high in the third quarter, as exports fell and imports continued to rise.

The report also showed that a surge of companies repatriating their foreign earnings, which had been prompted by last year's tax-code changes, has faded.

The overall current-account deficit climbed to a seasonally adjusted $124.82 billion in the third quarter from a revised $101.22 billion in the second quarter, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a $126.2 billion deficit.

The current account tracks movements of goods and services across borders as well as income from investments and other money movements, such as remittances. It is the broadest measure of how much money a country sends abroad and how much it pulls back in from the rest of the world.

The U.S. has run a persistent current-account deficit for decades, driven primarily by the country importing significantly more than it exports. The measure has drawn extra attention in recent years as President Trump has characterized such deficits as money that America "lost" and has vowed to close the deficit, with a particular focus on shrinking the deficit in goods.

The third quarter's current-account deficit was the largest since 2008, driven by a trade deficit that has continued to widen.

The increase in the current-account deficit during the third quarter mainly reflected a $23.95 billion increase in the goods-trade deficit to $227.01 billion, the department said. Goods exports decreased while imports increased during the quarter, widening the gap.

This owes, in part, to the U.S. economy being stronger than many global counterparts, leaving U.S. consumers and businesses better positioned to buy foreign goods, than the reverse.

The U.S. has a trade surplus when it comes to services, which narrowed slightly in the third quarter.

Meanwhile, the surplus on primary income, which includes investment income and compensation to employees, fell to $59.43 billion from $62.35 billion the prior quarter.

A closely watched subset of these figures has been dividends and withdrawals, which gauges the extent to which companies are repatriating their foreign earnings. The new tax law passed last year was intended to encourage U.S. firms to repatriate cash they had stockpiled offshore.

In 2017, the year before the new law went into effect, there was a quarterly average of about $40 billion in dividends and withdrawal payments back to the U.S. each quarter.

In the third quarter, companies brought back $92.72 billion, down from $183.7 billion in the second quarter and $294.86 billion in the first quarter. In recent quarters, companies have earned about $130 billion abroad. That means that earlier in this year, companies were effectively bringing back all their earnings and then some, while this quarter they returned to reinvesting a chunk of their earnings abroad.

Write to Eric Morath at eric.morath@wsj.com and Josh Zumbrun at Josh.Zumbrun@wsj.com

(END) Dow Jones Newswires

December 19, 2018 10:17 ET (15:17 GMT)

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