In August, US retail sales rose by 2.7% M/M, the sharpest increase since January 2006. The previous figure was slightly downwardly revised from -0.1% M/M to -0.2% M/M. Looking at the details, motor vehicles and cars rose by 10.6% M/M due to the government’s “Cash for Clunkers” programme. Also gasoline rose significantly (5.1% M/M), but more important for markets is the core figure. Excluding auto’s and gas, retail sales rose by 0.6% M/M, while a flat outcome was expected. The improvement in the core reading was led by clothing, department stores, sporting goods and general merchandise, supported by strong back-to-school shopping, while furniture and building materials dropped. The broad based improvement in retail sales is an encouraging sign and indicates that consumers are becoming more confident.
In September, the NY Empire State manufacturing index extended its rebound after returning into positive territory in August. The headline index rose from 12.08 to 18.88, significantly above the expectation (15.00). The breakdown shows significant improvements in new orders (19.84 from 13.43), delivery time (1.19 from -10.64) and average workweek (5.95 from -6.38), but also unfilled orders (-4.76 from -9.57) increased somewhat. Shipments (5.34 from 14.11), inventories (-25.00 from -22.34) and number of employees (-8.33 from -7.45) on the contrary, deteriorated. Also remarkable was the increase in both prices paid (20.24 from 13.83) and prices received (-3.57 from -12.77).
In August, US producer prices rose by 1.7% M/M, significantly more than the expected 0.8% M/M increase. Also the annual PPI figure rose significantly, but remains firmly into negative territory (-4.3% Y/Y from -6.8% Y/Y). Most of the increase was energy related, but also the core figure (0.2% M/M) rose somewhat and is still at rather elevated levels (2.3% Y/Y) given the current point in the economic cycle. This suggests that recent deflation fears have been overdone.
EMU: Rebound in German ZEW slows in September
After the impressive improvement in August, the German ZEW surprised on the downside of expectations in September. The headline (economic sentiment) indicator rose from 56.1 to 57.7, while an outcome of 60 was forecasted. The current situation index increased from -77.2 to -74.0, which was also somewhat lower than markets had expected. The outcome might be a bit disappointing, but is no real surprise as the index is already at its highest level in more than three years.
Other: UK CPI inflation surprises on the upside
In the UK, CPI inflation dropped from 1.8% Y/Y to 1.6% Y/Y in August, while the consensus was looking for a figure of 1.4% Y/Y. The monthly figure rose by 0.4% M/M, somewhat more than expected. Looking at the details, only prices of food showed a decline, while prices of fares, travel costs (2.7% M/M), household goods (1.4% M/M), clothing and footwear (1.4% M/M) and auto-related (1.0% M/M) showed the biggest increases. Core CPI, excluding food and energy, stayed unchanged at 1.8% Y/Y. From October onwards, unfavourable base effects from crude oil are likely to play a key role in seeing the yearly inflation figure creep up again.
