Initial claims rose unexpectedly by 20 000 to 339 000, near the highest reading of 2007. Is this an indication that the weakening of the labour market has started in earnest or is it once more an outlier due to a flawed seasonal adjustment? A few weeks of more data are needed to answer the question. Continuing claims fell 8 000.

The NY Fed survey on manufacturing gave a mixed picture. The headline, general activity, index was little changed at a high 27.4, defying expectations for a decline to 18. Also new orders and shipments were very strong, but all other indices were weak as unfilled orders, inventories and supplier deliveries dropped below the 0 boom/bust line and the employment indices fell sharply too. The future conditions indices were uniformly weak with the headline index dropping 20 points to 30.6, the weakest figure in months.

The October CPI report was completely in line with expectations and trend-like. Headline CPI rose by 0.3% M/M to be up 3.5% Y/Y, following a 2.8% Y/Y rise in September. The steep rise in the Y/Y reading is due to a negative basis effect. Core CPI was up 0.2% M/M and 2.2% Y/Y, close to September’s outcome. The details showed little big surprises. The report should give the Fed some comfort on inflation, especially after the benign PPI report and ahead of the December 11 FOMC meeting. The next CPI and PPI reports are released after the FOMC meeting.


EMU: Inflation in line with expectations

The final EMU HICP report contains little surprises. The flash estimate of the headline HICP of 0.5% M/M and 2.6% Y/Y was confirmed. The core HICP ticked up to 1.9% Y/Y from 1.8% Y/Y previously, but this was expected too. Food and energy prices will push headline inflation higher in the next months, while core HICP will drop a bit when the effects of the German VAT increase fall out of the comparison.

The BdF business sentiment survey was surprisingly upbeat. The headline index rose to 108 in October from 105 in September. Strength was reported across all sectors.


Others: Weak UK retail sales push rates lower

October UK retail sales dropped 0.1% M/M, whereas expectations were for a 0.1% M/M increase. At the same time September’s 0.6% M/M increase was revised down to 0.3% M/M. The weakness raises concerns about the fate of the consumer.