The US trade deficit with the European Union soared by 47.1 per cent to $4.8 billion (#5.5 billion) in March as Washington recorded its largest one-month deterioration in trade on record. Exports of US aircraft and other manufactured goods fell while American purchases of foreign consumer goods from toys to clothing soared.

The jump in the overall trade imbalance by 16.1 per cent, from $26.9 billion (revised) in February to $31.2 billion, could be good news for the US economy, as the high level of imports suggest that American businesses expect consumer demand to pick up. On the other hand, a fall in US exports could signify a further weakening in the global economy. The deterioration was essentially on the import side - which fell in February - and reflected increases in consumer goods, the US Commerce Department said. This included "capital goods, automotive vehicles, parts and engines", it said. Demand for foreign cars rose by $192 million to $15.4 billion. The change in exports of goods reflected decreases in capital goods and other goods. No breakdown was given for the EU-US trade imbalance. While the increase in the trade deficit was the largest in one month, it came after a surprising fall in February and the trajectory for the January-March period was still improved, analysts said. Nevertheless, it represents a setback in the trade policy of President George W Bush, who is trying to persuade the US Congress to give him negotiating authority to make an All-Americas trade deal and to launch a new round of global trade talks.