America’s deficit in the broadest measure of international trade improved slightly in the April-June quarter but is still at its second-highest level ever.

The Commerce Department reported Friday that the deficit in the U.S. current account was US$195.7 billion in the second quarter, down 1.5% from the deficit in the first three months of 2005, then at an all-time high of $198.7 billion.

Even with the slight improvement, America is on track to surpass last year’s record current account deficit of $668.1 billion. While the United States so far has not had any trouble attracting the foreign money needed to finance this deficit, economists worry that at some point foreign investors will no longer want to hold such sizable sums of dollar-denominated assets.

The slight improvement meant that the second quarter deficit represented 6.3% of the country’s total economy, down from the record level of 6.5% in the first quarter.

Federal Reserve chairman Alan Greenspan has called the current account deficit unsustainable at present levels but he has also said he believes market forces should be able to deal with the problem in a way that does not seriously disrupt the economy.

The slight improvement in the second quarter deficit reflected the fact that the country made lower payments of foreign aid. This caused unilateral transfers to decline to $21.9 billion in the second quarter, down from $26.3 billion in the first quarter.

The deficit in goods and services increased in the second quarter, rising to $186.9 billion, up from $186.3 billion in the first quarter. The increase was driven by higher payments for foreign oil.

The balance on investment earnings turned negative in the spring, something that had not happened for three years. The deficit in this category was $455 million, down from a surplus of $643 million in the first quarter.