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US: Another very weak claims report

Fri, Oct 3 2008, 08:02 GMT
by KBC Market Research Desk

KBC Bank

In the week ended September 27 initial claims rose 1 000 from an upwardly revised 496 000 to 497 000, while the consensus was looking for an outcome of 475 000. Also continuing claims came out higher than expected at 3 591 000 and the previous figure was slightly upwardly revised to 3 543 000. Initial claims are at a sevenyear high, but the press release indicated that the hurricanes Ike and Gustav have added around 45 000 claims to the total. However, this weak outcome raises fears for a weak payrolls report today despite the better-than-expected ADP report.

Factory orders came out weaker than expected in August, falling 4.0% M/M, while a decline of 3.0% M/M was expected. The July figures were downwardly revised from 1.3% M/M to 0.7% M/M. Excluding transportation, new orders fell a more modest 3.3% M/M. The details are broadly the same as in the durables, with transportation (- 9.1% M/M from 2.7% M/M), machinery (-6.6% M/M from 3.8% M/M) and primary metals (-9.6% M/M from 2.9% M/M) falling sharply. Non-defence capital goods shipments less aircraft fell -2.1% M/M after showing a slight increase (0.3% M/M) in July. Factory orders showed the sharpest contraction since October 2006 confirming the deterioration in the manufacturing sector in the third quarter.

EMU: PPI falls in August on lower energy prices

In August, producer prices fell 0.5% M/M, while the July figure was upwardly revised from 1.1% M/M to 1.3% M/M. On a yearly basis, PPI came out at 8.5% Y/Y against a revised 9.2% Y/Y in July. Ex-energy, producer prices rose 0.2% M/M (from 0.6% M/M) and 4.3% Y/Y (from 4.4% Y/Y), which indicates that the decline is due to lower energy prices (-2.5% M/M).

Other: Credit conditions survey indicates that current rates are too restrictive

In the UK, the Bank of England third quarter credit conditions survey reported that lenders had reduced the availability of credit to both households and corporates in the three months to mid September by more than had been expected. Additional reductions in credit availability are expected over the next three months. Overall spreads on secured lending to households were reported to have been unchanged over the past three months, while non-price terms were reported to have tightened and a further tightening is expected. Spreads on corporate lending widened more than expected and a further increase is forecasted. The survey indicates that credit conditions are worsening further and supports the case for an early rate cut.

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Published on  Fri, Oct 3 2008, 08:05 GMT