Step 1: Recall how field strength falls with distance.
The magnetic field of a straight current carrying wire follows \[ B = \frac{\mu_0 I}{2\pi r} \] so \(B\) is inversely proportional to the distance \(r\) from the wire.
Step 2: Connect field strength to needle deflection.
A stronger local field pulls the compass needle away from north by a larger angle, and a weaker field pulls it away by a smaller angle.
Step 3: Move the compass farther out.
As \(r\) grows, \(B\) shrinks, so the torque on the needle shrinks too, and the needle swings back closer to its original north south position, meaning the deflection gets smaller.
\[ \boxed{\text{The deflection decreases}} \]