US deficit, German orders fall unexpectedly
In the US, the trade deficit narrowed more than expected in July, as imports retreated and exports rose to their highest level since August 2008. The monthly trade deficit shrank 14% to $42.8 billion, as monthly exports rose 1.8%, led by strong...
In the US, the trade deficit narrowed more than expected in July, as imports retreated and exports rose to their highest level since August 2008. The monthly trade deficit shrank 14% to $42.8 billion, as monthly exports rose 1.8%, led by strong overseas demand for US civilian aircraft, machinery, computers and other capital goods.
In the labour market, new claims for unemployment benefit fell to a two-month low last week. In fact, initial claims dropped 27,000 to 451,000, the lowest since the week ended July 10, and well below financial market expectations of 470,000.
Meanwhile, the Federal Reserve published its Beige Book, confirming that the US recovery has slowed down in a number of districts. This slowdown in the economic recovery has led the Fed to restart talks on possible monetary loosening.
In the 16-member eurozone, German manufacturing orders unexpectedly fell in July at their steepest rate in more than a year, dropping by a monthly 2.2%, the lowest since February 2009. Other German data also shows the recovery losing steam. While German exports fell 1.5% in July, industrial production grew by just 0.1%, much less than the 1% economists expected.
Meanwhile, an index tracking investor sentiment in the EU-16 fell slightly to 7.6 in September from 8.5 in August. The European Central Bank published its September monthly report, and based on its regular economic and monetary analyses, it expects the economic recovery to proceed at a moderate pace in the near future, with uncertainty still prevailing.
In the UK, the Bank of England kept interest rates at 0.5% for the 18th month in a row and announced no new quantitative easing measures. Meanwhile, Britain’s goods trade deficit widened to its highest in almost five years, increasing to £8.66 billion from £7.53bn a month earlier. This increase was largely due to a rise in chemical and oil imports and a decline in exports.
British manufacturing output registered its third consecutive month of growth in July, rising 0.3% on the month – the same pace as in June and May. This lifted the annual pace of growth to 4.9%, the highest since December 1994. However, in the coming months the pace of growth could be hard to sustain given the impact of austerity measures and the slowing global economy.
This article has been prepared by Bank of Valletta plc for your general information only.