In July, the US trade deficit widened to $32.0B, while a deficit of $27.3B was expected. The June outcome was revised from -$27.0B to -$27.5B. Excluding petroleum, the deficit widened from $10.21 to $14.09 billion. The details show that the increase in imports 4.7% M/M exceeded the improvement in exports 2.2% M/M. The record increase in imports was caused by increased demand for cars, computers and oil. The increase in both imports and exports provides further evidence that the US and global economy are climbing out of recession, but a significant part was auto related due to the “Cash for Clunkers” program.
In the week ended September 5, initial claims dropped by 26 000 from an upwardly revised 576 000 to 550 000, slightly below the consensus estimate (560 000). Also continuing claims, which are reported with an extra week lag, came out better than expected. In the week ended August 29, continuing claims fell by 159 000 to a total number of 6 088 000, the lowest level in more than four months. Although both initial and continuing claims remain at elevated levels, they are now significantly below their peak, indicating that the rate of layoffs is slowing.
EMU: French IP shows third straight increase
In France, industrial production rose by 0.1% M/M in July, while the consensus was looking for an increase by 0.4% M/M. The previous figure was slightly downwardly revised from 0.3% M/M to 0.2% M/M. While the headline figure might have been a bit disappointing, but the fact that the cyclical manufacturing output posted a more solid gain (0.6% M/M) due to increases in food industries (0.8% M/M), wood, paper, print (2.6% M/M) support our view that the French economy is recovering. This was indeed the third consecutive increase in French industrial production.
