US current account, European inflation fall, German confidence rises

Yesterday's news had more of what we had earlier in the week.

On the US external front, the current account deficit reportedly shrank in the third quarter. Reuters covers this news.

The U.S. current account gap narrowed in the third quarter to $195.8 billion as government transfers fell, the services surplus grew and income shifted to a surplus from a deficit, government data showed on Friday.

The quarterly shortfall was smaller than Wall Street forecasts for a deficit of $204.8 billion. However, the Commerce Department revised the second-quarter gap to $197.8 billion from the $195.7 billion originally reported.

Hurricanes that hammered the U.S. Gulf Coast mid-quarter helped narrow the closely watched current-account deficit, as extensive damage from the storms led to large insurance claims and donations from abroad, the Commerce Department said.

Brad Setser analyses the data and projects that "the q4 current account deficit will be much, much larger".

On the inflation front, we have Eurostat confirming the fall in EU November prices.

Euro-zone annual inflation was 2.3% in November 2005, down from 2.5% in October. A year earlier the rate was 2.2%. Monthly inflation was -0.3% in November.

EU25 annual inflation was 2.2% in November 2005, down from 2.4% in October. A year earlier the rate was 2.2%. Monthly inflation was -0.2% in November.

And there was more evidence of improvement in German confidence. Bloomberg reports:

Business confidence in Germany, Europe's largest economy, climbed to a five-year high in December, suggesting economic growth will accelerate as increasing exports help fuel corporate investment.

The Ifo confidence index, based on a monthly survey of 7,000 executives, rose to 99.6 from November's 97.8. Economists expected the Munich-based institute's indicator to rise to 98.2, the median of 40 estimates in a Bloomberg survey showed.