The durable goods orders came out surprisingly strong, rising 0.8% M/M in September, while the consensus was looking for a decline of 1.1% M/M. The August figure was downwardly revised from -4.5% M/M to -5.5% M/M. The less volatile durables ex transportations declined 1.1% M/M, while a drop of 1.5% M/M was expected. The August figure was downwardly revised from -3.0% M/M to -4.1% M/M. Most of the rebound was due to transportation (6.3% M/M from -9.3% M/M), but also electrical equipment (1.5% M/M from -3.5% M/M) and machinery (0.5% M/M from - 6.4% M/M) improved. Shipments of non-defence capital goods less aircraft, which is a good predictor of business investment in equipment & software, rose 2.0% M/M after falling 2.1% M/M in August.
EMU: German CPI drops more than expected
In Germany, the first estimate of October CPI came out lower than expected with the month-on-month figure declining 0.3% M/M, while the consensus was seeking for a drop of 0.2% M/M. On a yearly basis, CPI fell from 3.0% Y/Y in September to 2.5% Y/Y in October. Inflation fell sharply in Hesse (-0.7% M/M and 2.0% Y/Y) due to a cut in student fees. This lower-than-expected German inflation figure raises expectation for a lower euro zone CPI figure than the consensus estimate of 3.2% Y/Y.
Other: UK lending data remain at very low levels
In the UK, mortgage approvals showed a marginal improvement from 32 000 in August to 33 000 in September, which is broadly in line with the expectations. Net consumer credit came out at 0.3B, from a downwardly revised 1.1B in August and has now reached its lowest level since February 1994. Net lending secured on dwellings rebounded from a downwardly revised -0.7B in August to 2.2B in September. Although there is a slight improvement, mortgage approvals and lending secured on dwellings remain at very low levels due to tight credit conditions and the weak housing market.
