In February, consumer confidence plunged to a new record low. The headline index fell from a downwardly revised 37.4 to 25.0, while a reading of 35.0 was expected. The present situation worsened from 29.7 to 21.2, while expectations showed an even shaper deterioration (27.5 from 42.5). Consumers pessimism was especially driven by the bleak outlook for the labour market (-43.4 from -34.0).

After the NY and Philly Fed, also the Richmond Fed came out below expectations in February. The overall index dropped from -49 to -51, but the underlying picture was even weaker as all sub-indices (expect capacity utilization) were falling. These data indicate that both consumers and producers are becoming ever more pessimistic and the (slight) uptick in sentiment in January couldn’t be sustained.

S&P Case Shiller home prices dropped more than expected in December. Compared to one year ago, home prices were down by 18.55% Y/Y, while the consensus expected a decline by 18.30% Y/Y. This outcome is a bit disappointing as some were hoping to see signs of stabilization after the upward surprise in November.


EMU: German IFO hits new low in February

In February, the German IFO business climate indicator came out slightly weaker than expected. The headline index dropped from 83.0 to 82.6, while a flat reading was forecasted. Looking at the details, the current assessment sub-index fell from 86.8 to 84.3, while the expectations sub-index improved somewhat (80.9 from 79.5) for the second month in a row. While it would be wrong to draw too many conclusions from it, it is nevertheless a hopeful sign that some kind of stabilization may be in the offering. The expectation index traditionally leads the overall index. The sector breakdown shows an increase in construction (-24.5 from -29.5) and retail trade (- 24.3 from -26.5); manufacturing (-42.8 from -40.0) and wholesale trade (-27.8 from - 25.4) worsened. The IFO business climate indicator is now at a new cycle low, which indicates that last month’s marginal improvement was only short-lived.

Euro zone industrial new orders showed their fifth consecutive monthly decline in December. On a monthly basis, industrial orders plunged by 5.2% M/M, while the consensus was looking for a decline of 4.9% M/M. Weakness was broadly based, but machinery & equipment (-12.3% M/M) and basic metals (-10.1% M/M) were again the hardest hit. Industrial orders are down by 22.3% Y/Y on the year.


Other: CBI report shows improvement in retail sales

In the UK, the CBI distributive trades report showed an improvement in sales, while a further decline was expected. Sales rose from -47 to -25 and also ecop orders places (-31 from -51) and volume of sales for time of year (-39 from -47) showed a significant improvement. This report indicates that sales were not as poor as expected in February, but the CBI added that employment in the sector nevertheless deteriorated further.