FXstreet.com (Barcelona) - US deficit in goods and services, income and current transfers trade with the rest of the world has narrowed more than expected in the third quarter, on higher surpluses in services and income trade combined with a lower deficit in goods trade, according to data by the Commerce Department.

US trade has thrown a deficit of $ 178.5 billion in the third quarter of 2007 from $188.9 billion deficit posted in the previous quarter, revised from the initially estimated $191.0 billion gap.

The increase in the net foreign income surplus is one of the main reasons of the decrease on the US current account deficit, Ian Shepherdson, Chief U.S. Economist High Frequency Economics, Ltd affirms: "A surge in the net foreign income surplus to $20.5B from $12.7B accounts for the better-than-expected current account. No further details are provided in the data but the BEA says interest, dividend and earnings on direct investments abroad all rose, more than offsetting higher interest payments on US debt, public and private, owned by foreigners."

Goods and services deficit narrowed to $173.2 billion in the third quarter from $178.4 billion in the second, where The deficit on goods decreased to $199.7 billion in the third quarter from $204.2 billion in the second, good exports have increased to $297.9 billion from $279.3 billion.

Services trade has posted a $26.5 billion in the third quarter from $25.8 billion in the second.

Ian Shepherdson, Chief U.S. Economist High Frequency Economics, Ltd points out to an inflexion point in the US current account trend, now favourable to the US although he wars about the oil contribution in the next quarter: "The market chaos is all over these data, but the trend in the current account deficit is now favorable, though oil will likely lift the Q4 number.