In December, the trade deficit contracted from a downwardly revised -$41.6B to - $39.9B, while a sharper narrowing was expected (-$35.7B). Looking at the details, both exports (-6.0% M/M from -6.0% M/M) and imports (-5.5% M/M from -11.9% M/M) declined further, which is traditional for periods of recession. Excluding petroleum, the trade deficit stayed broadly unchanged (-$21.13 from -$21.93). This outcome will have a negative impact on the fourth quarter (of 2008) GDP figures that will be revised lower from the advance reading of -3.8% to probably -5%..
Other: Riksbank slashes rates by 100bp and announces more cuts
In Sweden, the Riksbank decided to cut rates by 100 basis points to 1%, while the consensus expected a rate cut by 50 basis points. The Swedish Central Bank said that the large reduction in the interest rate was necessary to dampen the fall in production and employment and to attain the inflation target of 2%. Although the interest rate is now at a very low level, the Bank suggested that the interest rate may need to be cut slightly more over the coming six months.
In the UK, jobless claims rose by 73 800 in January to a total number of 1.23 million, while the consensus was looking for an increase by 89 000. The previous figure was upwardly revised from 77 900 to 79 900. In December, the ILO unemployment rate rose from 6.1% to 6.3% and both the rise in average earnings including and excluding bonus stayed unchanged. Although the jobless claims came out lower than expected, the total number of people receiving jobless benefits is now at its highest level since July 1999 and is expected to rise further in the coming months.
