Cool data, turbulent markets

Yesterday's economic data gave monetary policy doves some ammunition.

In the US, producer price inflation in July looked contained. Bloomberg reports:

Prices paid to U.S. producers, excluding food and energy, rose 0.1 percent in July, the smallest gain in three months, the Labor Department said today in Washington. Producer prices overall increased 0.6 percent on higher costs for gasoline and natural gas, following a 0.2 percent decline in June.

In other good news for the US economy, the trade deficit shrank in June.

Another government report today showed that the U.S. trade deficit unexpectedly narrowed in June as exports soared to a record. The gap shrank 1.7 percent to $58.1 billion from a revised $59.2 billion in May that was smaller than previously estimated, the Commerce Department said in Washington.

In the euro zone, economic growth in the second quarter turned out weaker than expected. FT reports:

The 13-country economy expanded by just 0.3 per cent, leaving it again dragging behind the US. Eurozone GDP had expanded by 0.9 per cent and 0.7 per cent in the previous two quarters.

And in the UK, inflation dropped sharply in July. Again from FT:

July’s annual consumer price inflation rate plummeted to 1.9 per cent from 2.4 per cent in June, surprising investors who had expected a modest drop to 2.3 per cent. It was the largest monthly fall for five years in annual CPI inflation and the first time the measure was below the bank’s 2 per cent target since March 2006.

But yesterday also saw renewed turmoil in global markets. Investors may yet need all the relief on the monetary policy front they can get.