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US: Chicago PMI collapses in October

Mon, Nov 3 2008, 08:44 GMT
by KBC Market Research Desk

KBC Bank


Chicago PMI came out surprisingly weak in October as the headline figure fell from 56.7 to 37.8, while the consensus was seeking for an outcome of 48.0. Looking at the details, production showed an extreme drop from 71.4 in September to 30.9 in October, but also new orders (32.5 from 53.9), orders backlog (39.0 from 54.9), supplier deliveries (47.5 from 55.0) and employment (41.5 from 49.1) declined sharply. Prices paid were sharply lower (53.7 from 80.7), while inventories rose significantly (56.5 from 37.7). After the exceptionally sharp drops in the regional business sentiment indicators, we expect manufacturing ISM to show another plunge in October, after the very weak September figure.

In September, personal spending fell 0.3% M/M, while the consensus was looking for a decline of 0.2% M/M. Most of the weakening was due to a 3.1% M/M drop in consumption of durable goods, but also non-durables showed a decline (-0.6% M/M). Personal income came out slightly higher than expected (0.2% M/M), while the previous figure was downwardly revised from 0.5% M/M to 0.4% M/M. The savings rate improved from 0.8% M/M to 1.3% M/M. Employment costs rose 0.7% in the third quarter, as was expected.

University of Michigan consumer confidence was slightly upwardly revised from 57.5 to 57.6, while no change was expected. The economic conditions were downwardly revised from 58.9 to 58.4, while the economic outlook was upwardly revised from 56.7 to 57.0.


EMU: inflation falls back to 3.2% Y/Y

The October euro zone CPI estimate came out in line with the expectations at 3.2% Y/Y, against 3.6% Y/Y in September. We were hoping for a slightly lower figure after the national inflation data, released earlier this week, came out below the consensus estimates. We are looking forward to see the final inflation data which will provide us with some more information and might even report a (downward) change in the headline figure.

Published on  Mon, Nov 3 2008, 07:51 GMT


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This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

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