Trade Gap Narrows
"The U.S. trade deficit narrowed by 9.7 percent in January to $36 billion, the lowest monthly gap since October 2002," MarketWatch reports the Department of Commerce as having said. "This is the sixth consecutive decline in the trade balance, the first since the new data series was started in 1992."

Both imports and exports declined in January and the petroleum deficit shrank to $14.7 billion — the lowest since September 2004. The trade gap with China widened to $20.57 billion last month compared with $20.31 billion in January 2008.

China took a harder hit from the global downturn than expected, with a 25.7 percent drop in exports for February year-on-year, while the trade surplus stood at $4.84 billion, Agence France-Presse notes. That is almost a $35 billion reduction from January's totals.

China is facing a "grim" outlook, China's trade minister said to the Telegraph (UK), adding that more than one-third of the goods produced in Chinese factories are sold overseas.

In the first two months of the year, Chinese exports declined 21.1 percent from the same period in 2008. One bright spot reported by the national statistics bureau was that "fixed asset investment in urban areas — a rough gauge of manufacturing health — soared 26.5 percent in the first two months of 2009," Agence France-Presse says. The rise suggested that the benefits of the four trillion yuan (US$580 billion) stimulus package enacted last year were starting to make themselves felt.

Industrial Output Continues to Fall
The output of the nation's factories, mines and utilities plunged 1.4 percent in February, the Federal Reserve said today. Output has fallen in four straight months and five of the last six months.

Manufacturing output decreased 0.7 percent and was 13.1 percent below its 2008 level. The factory operating rate, which dates back to 1948 and dropped to an historic low in January, moved down an additional 0.5 percentage point in February, to 67.4 percent.

"Mining output moved down 0.4 percent, and the utilization rate fell to 88.2 percent, a rate below its year-earlier level but still 0.6 percentage point above its 1972-2008 average," the Federal Reserve reported. "The output of electric and gas utilities fell 7.7 percent, and the operating rate dropped to 80.1 percent, a rate 6.7 percentage points below its 1972-2008 average."

Output in January was also slightly weaker than previously estimated. Output fell a revised 1.9 percent in January, compared with the initial estimate of a 1.8 percent drop. Capacity utilization — a gauge of slack in the economy — fell to 70.9 percent. This matches a record low for the series, which dates back to the late 1960s. For factories alone, capacity in use fell to a new record post-War low of 67.4 percent.

U.S. Ranks No. 8 in Global Innovation Index
Among 110 countries, the U.S ranked eighth in innovation leadership, IndustryWeek reports. Singapore topped the list, followed by South Korea and Switzerland, according to a new report produced jointly by The Boston Consulting Group (BCG), the National Association of Manufacturers (NAM) and The Manufacturing Institute (MI).

The rankings were determined by both innovation inputs and outputs. "Innovation inputs included government and fiscal policy, education policy and the innovation environment," IndustryWeek explains. "Outputs included patents, technology transfer, and other R&D results; business performance, such as labor productivity and total shareholder returns; and the impact of innovation on business migration and economic growth."

"America needs a bold innovation strategy," said NAM President John Engler. "U.S. manufacturing innovation leadership is at risk. We've fallen behind countries in East Asia and Europe. America can not afford to lose its manufacturing innovation edge and the wealth and jobs that it generates throughout our economy."

A similar study by the Information Technology and Innovation Foundation ranked the U.S. sixth out of 40 countries and regions on global innovation-based economic competitiveness. Again, Singapore ranked first, Managing Automation notes.

(For the latest global competitiveness rankings from the World Economic Forum and the International Institute for Management, see last month's How Nations Measure Up: Global Rankings.)

GM Withdraws March Loan Request
"General Motors Corp. (GM) said Thursday it has enough cash to keep operating through the end of March and won't need the $2 billion government infusion this month it had requested," the Wall Street Journal (subscription required) reports.

GM "said its cost-cutting moves and spending deferrals in January and February successfully held off the need for more U.S. funds this month." A GM spokeswoman "said March's cash-flow performance was better than expected."

According to the Journal, GM has delayed or canceled a number of major capital projects, including a small-engine factory in Michigan. The elimination of the engine factory alone is expected to save about $120 million. The company also virtually halted vehicle production in January. Delaying the aid request "reflects the acceleration of GM's company-wide cost-reduction efforts as well as proactive deferrals of spending previously anticipated in January and February," GM CFO Ray Young said in a statement.

The Treasury Department confirmed that GM had notified the Obama administration's automotive task force on the loan issue. One government official said GM's delay in the need for more aid "doesn't change our timeline or approach" regarding how to rescue GM and Chrysler LLC.

While GM maintains that it will still need additional government aid, the automaker did not indicate whether those funds might be needed at some other time or if it planned to alter its request for an additional $16.6 billion in emergency loans, Agence France-Presse notes.

European Investment Bank Lends $3.85 Billion to Automakers
"The European Investment Bank approved 3 billion euros ($3.85 billion) in loans to car and truck makers such as Bayerische Motoren Werke AG and Volvo AB to boost production of cleaner vehicles," Bloomberg News reports. The auto industry is "pressing for financial help after car sales slumped the most in 15 years in 2008." The EIB "has said it expects to approve 7 billion euros in loans to the automotive industry in the first half of this year, including 4 billion euros set aside for green-transport projects."

"The EIB warned last week that it was unlikely to channel any more money to the car industry because the planned loans already make up 10 percent of its borrowing plans this year," the Associated Press reports. EIB loans "can only pay for carmakers' research into vehicles that produce less greenhouse gas and use less fuel — part of the European Union's push to slash carbon dioxide emissions and curb global warming."

European producer prices unexpectedly fell from a year earlier for the first time since 2004 in January, indicating inflation will slow more and adding to the case for further action by the European Central Bank, according to Bloomberg News.

Unemployment Worries Plague Americans
With the nation's unemployment rate at 8.1 as of February, it is no surprise that a new national poll by CNN/Opinion Research Corp. shows that worries about unemployment are the most pressing thing on Americans' minds. Thirty-six percent of respondents said unemployment is the most important economic issue facing the country today, almost three times higher than the 13 percent who felt the same way last April.

In the week ending March 7, the seasonally adjusted initial claims for unemployment was 654,000, an increase of 9,000 from the previous week's revised figure of 645,000, the Department of Labor reported Thursday. The four-week moving average was 650,000, up 6,750 from the previous week's revised average of 643,250.

The seasonally adjusted insured unemployment rate increased 0.2 percentage points from the prior week's unrevised rate of 3.8 percent, going from 5,124,000 the previous week to 5,317,000 for the week ending Feb. 28. The four-week moving average — which smooths fluctuations — was 5,139,750, up 124,250 from the preceding week's revised average of 5,015,500.

The number of people staying on benefit rolls rose in the previous week by 193,000 to a record 5.317 million, Bloomberg News adds. Plus, economists surveyed by Bloomberg News earlier this month predicted the U.S. jobless rate will reach 9.4 percent this year and stay elevated through at least 2011. Concurrently, the country's economy will shrink 2.5 percent in 2009, the biggest contraction since 1946.

FDA Leadership Appointments Announced
Over the weekend, President Barack Obama both created a group charged with recommending changes in food safety laws and named new leadership at the Food and Drug Administration (FDA), according to Forbes. President Obama announced the creation of the Food Safety Working Group, an advisory panel of cabinet secretaries and senior officials that will serve as the administration's sounding board on food safety. It's not clear, however, when the members of this group will be named officially, or how effective it will be. The president said he expects to provide recommendations "as soon as possible."

Also, in his weekly video address, Obama tapped Margaret "Peggy" Hamburg, a former New York City health commissioner, to lead the FDA, which has been "criticized in recent years for being ineffective, overstretched and too lenient in approving pharmaceutical products." The president also identified Baltimore Health Commissioner Joshua Sharfstein as FDA deputy commissioner. Whereas Hamburg's appointment requires congressional approval, Sharfstein's does not.

Free Rent, Printing and Doughnuts
Boris Johnson, the mayor of London, has unveiled plans to attract foreign businesses to the British capital by offering free office space for a year, the Telegraph (UK) reports. Through a partnership between Think London, the official foreign direct investment agency for the city, and the business center group Avanta, the scheme called "London Now" enables businesses to have free rent for 12 months. Avanta aims to benefit from the venture by keeping the foreign businesses in their centers after the year of free rent is completed.

Demand for new business space in London is low, with capital values in the UK falling by roughly 40 percent since their 2007 peak. "My message to overseas businesses is loud and clear. You will not only receive the warmest of welcomes but we will do all we can to ensure you get off to a flying start," Johnson says. "London offers magnificent opportunities for overseas business with unrivaled access to Western markets, a skilled workforce and one of the most diverse social and leisure scenes in the world."

Stateside, many businesses are offering free services and goodies in light of the downturn and skyrocketing unemployment. Last Tuesday, FedEx Office offered to print 25 copies of customers' résumés for free at any of its 1,600 stores nationwide. The company offered the free service for an entire day last week. On Tuesday afternoon, stores on the East Coast had seen a steady stream of customers taking advantage of the offer, and final numbers for the chain will be available later, a FedEx Office spokeswoman said.

FedEx joins other corporations, including Starbucks, Ben & Jerry's, Denny's and Krispy Kreme, in offering free goods as the economy has tightened. Krispy Kreme is inviting people to become "friends," whose perk is a free doughnut.