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US: Philly Fed surprised on the upside in November

Fri, Nov 20 2009, 09:21 GMT
by KBC Market Research Desk

KBC Bank

In November, the Philly Fed manufacturing index surprised on the upside of expectations rising from 11.5 to 16.7, while the consensus was looking for a figure of 12.2. The breakdown shows that both new orders (14.8 from 6.2) and shipments (15.7 from 3.3) rose significantly in November. Also inventories (-17.3 from -31.8), number of employees (-0.5 from -6.8) and average workweek (2.0 from -4.7) improved, while unfilled orders and delivery time deteriorated somewhat. Prices paid dropped from 21.3 to 14.9, while prices received rose from -4.3 to -1.5. One negative in the solid report was the third monthly decline in the expectation index. Recently, we saw that the correlation between the regional business confidence indicators in the US loosened, making it difficult to make an accurate estimate for the manufacturing ISM.

In the week ended November 14, initial claims stayed unchanged at an upwardly revised 505 000, which was very close to the consensus estimate of 504 000. Nevertheless, the data might be distorted due to the Veteran’s Day Holiday. Continuing claims, which are reported with an extra week lag, surprised on the upside of expectations. In the week ended November 7, initial claims dropped from an upwardly revised 5 650 000 to 5 611 000, while the consensus was looking for an outcome of 5 598 000. Although the data came out slightly weaker than expected, the trend remains still downward, suggesting that fewer workers are losing jobs.

US leading indicators rose for the seventh consecutive month. In October, the leading indicators rose by 0.3% M/M, while the consensus was looking for an increase by 0.4% M/M. The breakdown shows a sharp increase in the interest rate spread (0.32%), but also average workweek, jobless claims, consumer goods orders, stock prices and M2 money supply rose. Pace of deliveries, orders of nondefense capital goods, building permits and consumer expectations showed negative contributions. However, the data contain only a limited amount of new info.

Other: UK retail sales rise for the second straight month

In the UK, retail sales rose by 0.4% M/M in October, while the consensus was looking for an increase by 0.5% M/M. The previous figure was significantly upwardly revised from 0.0% M/M to 0.4% M/M. Looking at the details, food stores fell by 0.1% M/M, while non-food rose by 0.6% M/M. Especially sales of textile, clothing and footwear (2.1% M/M) and household goods stores (1.1% M/M) rose significantly in October. The improvement in sales of clothing is an encouraging sign that consumer confidence is picking up and consumers are starting to spend again.
In October, UK M4 money supply slowed from 11.6% Y/Y to 11.0% Y/Y, while a slowing to 9.9% Y/Y was expected. Public finance data however came out weaker than expected as Britain’s deficit in October was the worst for the month since records started in 1993. Net borrowing accounted to £11.4B, compared with a net borrowing of £0.1B in October 2008. October is normally one of the four months in the year that sees a surplus in public finances.

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Published on  Fri, Nov 20 2009, 09:21 GMT