Bernanke hints at further monetary policy easing

The US trade gap widened by 8.8% as a trade balance deficit of $46.3 billion was registered in August, worse than the $44bn expected, as growing demand for foreign cars and capital equipment offset increases in exports.

A separate report showed that inflation as measured by the Consumer Price Index (CPI) was less than expected as the headline index rose just 0.1% and the core index remained unchanged. On the other hand, retail sales exceeded expectations, rising 0.6% in September on top of the sizable upward revisions to the August figures.

Labour market data shows the number of people registering for unemployment benefits rose by 13,000 to 462,000 during the week ending October 9, much higher than the 445,000 expected by various analysts.

On Friday, Federal Reserve chairman Ben Barnanke highlighted that high unemployment and low inflation pressures pointed to a need for further ease US monetary policy.

Inflation in the 16-member eurozone, was confirmed at 1.8% in September, the highest level since November 2008, up from 1.6% in August.

The trade balance turned to a deficit of €4.3bn in August, as imports jumped 32% over the 31% rise in exports. This contrasts with a downwardly revised €6.2bn surplus in July.

In the manufacturing sector, industrial production rose more than forecast in August as output in the EU-16 rose 1% on the previous month. July’s industrial production was also revised upwards to show a 0.1% increase from no change previously.

In the UK, the inflation rate in September as measured by the CPI, stood at 3.1% from a year earlier, exceeding the government’s 3% limit for the seventh month.

The number of jobless claims rose for the second consecutive month by 5,300 in September. This was much higher than analysts expectations of 4,500 claims and also higher than the upwardly revised 3,800 claims in August. However, according to the International Labour Organisation’s wider measure, unemployment fell by 20,000 in the three months to August. According to the ILO the UK jobless rate fell to 7.7% in the three months to August, down from 7.8%.

This article has been prepared by Bank of Valletta plc for your general information only.