The US trade deficit widened from $26.1B to $27.6B in March, while the consensus was looking for a larger deficit ($29.0B). The breakdown shows a 2.4% M/M decline in exports, while imports dropped by 1.0% M/M. Excluding petroleum, the deficit rose from $12.5B to $13.4B in March as prices of imported petroleum rose, but the volume declined. The smaller (real) deficit than expected will have a positive impact on first quarter GDP data that will be revised higher in its net trade component.


Other: Decline in UK manufacturing softens in March

Industrial production came out better than expected in March. On a monthly basis, industrial production dropped by 0.6% M/M, a softer decline than the expected -0.9% M/M. Also the previous figure was upwardly revised from -1.0% M/M to -0.8% M/M. The details show that the softer drop was driven by the manufacturing sector (-0.1% M/M), while mining & quarrying (-2.5% M/M), elec, gas & water (-2.8% M/M) and oil & gas (-3.1% M/M) showed sharper declines.

In April, UK jobless claims rose by 57 100, while the consensus was looking for an increase by 85 000. The previous figure was downwardly revised from 73 700 to 65 500. The ILO unemployment rate, on the contrary, surprised on the upside of expectations in March, as it rose from 6.7% to 7.1%. This is the second consecutive month that the decline in UK claims softens and after the improvement in “soft data”, the somewhat less negative “hard data” raise expectations that the worst might be over for the UK economy. Average earnings including bonus in the three months to March dropped by 0.4%, the fist decline since the start of the series in 1964.

In the UK, the total trade balance showed a contracting deficit. In March, the trade deficit contracted from a revised £2767 to £2537, while the consensus was looking for an outcome of -£3000. Looking at the details, exports dropped by 1.8% M/M in March, while imports fell by 2.3% M/M. The contracting deficit, due to a sharper decline in imports than in exports, might be partially caused by the weaker pound.