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An improving picture for US trade performance and inflation rates

The latest economic data show slight improvement in the US trade deficit and a not-so-drastic increase in inflation. Wholesale prices rose just 0.3 percent in May, and the United States merchandise trade deficit narrowed to $13.3 billion in April. But sales fell 0.3 percent in April while inventories rose by 0.2 percent.

The wholesale prices and trade reports could indicate that while the weaker dollar finally is helping to ease the trade imbalance, it also might not be creating as big an inflationary danger as some economists had worried.

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But the combination of rising inventories and falling sales does add a negative note, indicating a likelihood of cutbacks in production and employment in the months ahead as manufacturers try to work down inventories.

The Commerce Department says business sales totaled a seasonally adjusted $443.5 billion in April following a 0.4 percent rise in sales during March. Inventories held on shelves and in backlots totaled $664.3 billion in April, with the 0.2 percent increase following a much larger 0.4 percent rise in March.

Meanwhile, the US Labor Department said the 0.3 percent rise in its producer price index was the smallest since a 0.1 percent gain in February, and was down sharply from the 0.7 percent jump of April.

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