US retail sales dropped by 0.1% M/M in February after rising by a revised 1.8% M/M in January. Retail sales less cars painted a rosier picture, rising by 0.7% M/M, while slight drop was forecasted. Looking at the details, motor vehicles, parts (-4.3% M/M), building materials (-0.2% M/M), food and beverages (-0.7% M/M) and eating and drinking (-0.2% M/M) dropped. All other categories were rising led by gasoline stations (3.4% M.M) and clothing (2.8% M/M). After the improvement in January and the less negative figure in February, the report raises expectations that household consumption might improve in the first quarter of 2009.
In the week ended March 7, initial claims rose by 9 000, from an upwardly revised 645 000 to 654 000, slightly above the consensus estimate. More surprising was the development in continuing claims. In the week ended February 28, continuing claims rose by 193 000 to 5 317 000, while the consensus was looking for an outcome of 5 140 000. These data indicate that labour market conditions are still worsening and an improvement is not expected in March.
EMU: awful German industrail production data
In January, German industrial production showed the sharpest drop since the start of the series in 1978. On a monthly basis, industrial production plunged by 7.5% M/M, while a decline by 3.0% M/M was forecasted. The breakdown shows an awful drop in manufacturing and mining (-8.4% M/M) due to a 12.3% M/M plunge in capital goods and 8.1% M/M decline in intermediate goods. Energy rose by 3.2% M/M, while construction fell by 7.8% M/M. On a yearly basis, industrial production is down by 19.3% Y/Y. These data confirm again that Germany is hit hard by the recession and yesterday’s factory orders raise fears that a recovery is not around the corner.
Other: SNB announces to start quantitative easing
The Swiss National Bank decided to lower the target range for the three-month libor by 25 basis points, narrowing it to 0-0.75%. They added they would use all means at its disposal to gradually bring the libor down to the lower end of the new target range, to approximately 0.25%. The SNB also added it would increase liquidity substantially by engaging in additional repo operations, buying Swiss franc bonds issued by private sector borrowers and purchasing foreign currency on the foreign exchange markets to prevent any further appreciation of the Swiss franc against the euro.
