US, UK trade deficits shrink

The US trade deficit shrank in February. AFP/CNA reports:

The US trade deficit narrowed in February after hitting a seven-month high in January, thanks to a drop in imports in part due to China's new year holidays, official data showed on Tuesday.

The trade gap fell to a seasonally-adjusted US$45.8 billion from a revised US$47.0 billion in January, the Commerce Department said...

The sharp drop in the US trade gap in February was led by a 1.7 per cent drop in imports from the prior month. US exports also fell, by 1.4 per cent...

The politically-sensitive trade gap with China shrank sharply, to US$18.84 billion from US$23.27 billion in January.

While imports shrank in February, import prices continued their rising trend in March. Reuters reports:

U.S. import prices rose more than expected in March to post their largest increase in more than 1-1/2 years, driven by a surge in imported petroleum costs and higher food prices, a government report showed on Tuesday.

Overall import prices jumped 2.7 percent, a sixth straight month of gains, the Labor Department said. The increase outstripped economists' forecasts for a 2.2 percent increase and followed a 1.4 percent rise in February.

The UK also saw a narrower trade deficit in February. Reuters reports:

The ONS said Britain's total global trade deficit fell to 2.443 billion pounds in February from 3.858 billion pounds in January, driven by an unexpected fall in the deficit for goods.

Other UK data in the report were mixed.

Inflation eased in March for the first time since last summer as grocers cut food prices, reducing the chance of a Bank of England rate hike in May and giving it leeway to support the still shaky economy.

The unexpected drop in annual inflation to 4.0 percent from 4.4 percent in February -- together with a sharp decline in retail sales -- gives ammunition to those policymakers who want to see the economy on a solid footing before tackling inflation...

The British Retail Consortium said total sales, a measure which includes new floorspace, fell by 1.9 percent in March , the worst drop since the BRC began collecting the data in 1995. Like-for-like sales were 3.5 percent lower on the year.

German data on Tuesday were negative. Bloomberg reports:

German investor confidence fell more than economists forecast in April after the European Central Bank raised interest rates to curb inflation.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months in advance, declined to 7.6 from 14.1 in March. Economists expected a drop to 11.3, according to the median of 36 estimates in a Bloomberg News survey...

Still, German inflation unexpectedly accelerated to 2.3 percent last month after oil prices surged to more than $110 a barrel, a Federal Statistics Office report showed today.