Eurozone trade balance hits record deficit

The eurozone trade balance with the rest of the world collapsed to a
4.0-billion-euro (6.0-billion- dollar) deficit in August from a record
July surplus, official data showed on Friday.    The 16 countries
using the single euro currency had a 12.3-billion-euro surplus on
strong exports and flat imports in July, and August's deficit ended a
five-month run of trade surpluses.    While those surpluses were
attributed by analysts to an increase in global purchasing power
rather than to a richer and more confident Europe, the effects of a
dollar currently at a 14-month low on currency markets have yet to
be fed into the results.    The data therefore represents a
substantial knock to confidence after massive improvement during the
eurozone's climb out of the economic mire over the second and third
quarters of this year.    The euro is approaching 1.50 dollars, and
EU policymakers are concerned at the effect an idle US administration
could have on exports from the bloc, in particular within its leading
economy, Germany.    Some analysts say US authorities, despite
repeated proclamations in favour of a 'strong dollar,' are happy to
see the US currency weaken, which gives a welcome advantage to US
exports.    European Central Bank president Jean-Claude Trichet has
also warned that 'the euro was not created to be a global reserve
currency' among a series of pointed remarks on an issue rising up
the political agenda.    'Eurozone exporters ... will be fervently
hoping that the euro eases back,' said analyst Howard Archer of IHS
Global Insight.    The August trade balance for the 27-nation
European Union as a whole, including Britain, also saw a massive
retreat to a deficit of 12.1 billion euros after a revised
0.6-billion-euros surplus in July.    However, that was better than
the 28.7 billion euros recorded one year earlier, according to the
figures released by the EU's Eurostat office.    Seasonally adjusted
exports from the eurozone fell in August compared to the previous
month by 5.8 per cent and imports by 1.3 per cent. Across the full
bloc, exports dropped by 4.2 per cent and imports by 1.4 per cent.
 'Trade data can be very volatile from month to month, so not too
much importance should be covered to one month's data,' Archer
stressed.    'Nevertheless, it is worrying for eurozone recovery
prospects to see that seasonally- adjusted exports plunged by as much
as 5.8 per cent month-on-month in August, which more than wiped out
the gains of the previous two months.'    He added that
seasonally-adjusted Eurozone imports falling by 1.3 per cent in
August 'hardly points to marked improvement in domestic demand.'