The euro reached a record near $1.60 against the dollar yesterday after European inflation data lessened the prospect of a European Central Bank interest-rate cut. That is adding to pressure on manufacturers trying to ship products into a U.S. economy teetering on the brink of a recession. France's Airbus this week said the euro's level is ``becoming unbearable.''

``A lot of the growth in the euro zone has been very much dominated by Germany and in particular trade,'' said Mitul Kotecha, head of foreign-exchange research at Calyon in London. ``Going forward, it's going to be quite risky. The reality is we're going to see some deterioration in trade and the strong euro is going to start to play a more negative part.''

So not only are exports to the USA the only ones that count, but maintaining exports there despite steadily less advantageous exchange rates = deterioration?... (And they quote an airline as evidence, airlines having trouble with oil prices too.)

Now, if you don't ask analysts in London, but check the actual Eurostat press release [pdf!], the news is - something completely different:

The first estimate for the euro area¹ (EA15) trade balance with the rest of the world in February 2008 gave a 0.8 bn euro surplus, compared with -1.6 bn in February 2007.

In other words, in February, the Eurozone's economy improved to have a trade surplus in place of a deficit over one year -- a period over which the Euro appreciated relative to the dollar by about 14%. What's more:

The January 2008² balance was -11.0 bn, compared with -7.3 bn in January 2007. In February 2008 compared with January 2008, seasonally adjusted exports rose by 2.0% while imports fell by 0.4%.

So after seasonal adjustion, compared with last month, trade balance improved again, even in relative terms.

The positive annual and seasonally adjusted month-on-month changes are reciprocated by the E-27, too:

The first estimate for the February 2008 extra-EU27¹ trade balance was a deficit of 15.3 bn euro, compared with -17.5 bn in February 2007. In January 20082, the balance was -31.2 bn, compared with -26.0 bn in January 2007. In February 2008 compared with January 2008, seasonally adjusted exports rose by 3.3% while imports fell by 0.7%.

Note that unlike in the Eurozone, the improvement here was merely a reduction of the trade deficit. Wonder why?

Concerning the total trade of Member States, the largest surplus was observed in Germany (+17.1 bn euro in January 2008), followed by the Netherlands (+3.2 bn). The United Kingdom (-12.1 bn) registered the largest deficit, followed by Spain (-9.1 bn), France (-5.5 bn), Italy (-4.1 bn) and Greece (-2.9 bn).

Why don't analysts in London talk about that? Sitting in a country less affected by an appreciating currency, with the Euro also making records vs. the Pound?

In the tables of the press release, noteworthy:

• In January 2008 vs. January 2007, 25% growth of Eurozone exports to China are contrasted by import growth of only 9% (though in absolute numbers, that's still a minor increase of a massive trade deficit);

• If you check trend in seasonally adjusted numbers, there was a low point in December, with two months of improvements after, for both the Eurozone and the EU-27;

• France's extra-EU-27 trade deficit turned a surplus (those with big deficits there are the Netherlands, the UK, Spain and Belgium - guess the only one with no improvement from January to February!). Italy, too, has its big trade deficits intra-EU.