WASHINGTON –  The U.S. current account trade deficit narrowed in the final three months of 2012. But that didn't prevent the deficit for the entire year from climbing to the highest level in four years.

The Commerce Department says the current account deficit in the October-December quarter narrowed to $110.4 billion, down 1.8 percent from the previous quarter. The improvement reflected gains in Americans' earnings on their foreign investments and stronger earnings on service trade, a category that covers such things as airline travel.

For the year, the current account deficit widened to $475 billion, a 1.9 percent increase from 2011. It was the largest annual imbalance since 2008.

The current account is the broadest gauge of trade. It tracks not only the sale of goods and services but also investment flows.