Industrial production rose by 0.8% M/M in August, while an increase by 0.6% M/Mwas expected. The July figure was sharply upwardly revised from 0.5% M/M to 1.0% M/M. The details show that the improvement was broad based as manufacturing rose by 0.6% M/M, utilities by 1.9% M/M and mining by 0.5% M/M. The increase in manufacturing was led by motor vehicles and parts (5.5% M/M) due to the popularity of the “Cash for Clunkers” programme, but also machinery (0.8% M/M) increased, while computers and electronics (-0.8% M/M) dropped. The strong gains in the last two months show that activity in the industrial sector has nicely picked up, putting the recovery on a stronger footing. The manufacturing surveys already suggested a revival but the production data are now the first “hard” evidence of the turnaround.

In August, US CPI inflation rose from -2.1% Y/Y to -1.5% Y/Y, while a figure of -1.7% Y/Y was forecasted. Also the monthly figure came out above expectations ris-ing by 0.4% M/M, while an increase by 0.3% M/M was expected. The breakdown shows that most of the increase was energy related (4.6 % M/M), while prices of ve-hicles and personal computers dropped significantly. The decline in vehicles was at least partially due to the “Cash for Clunkers” program and might thus be reversed in the next months as the program is stopped. Core CPI, excluding food and energy, dropped from 1.5% Y/Y to 1.4% Y/Y. Also in the US, CPI inflation is expected to have reached the trough in July and is expected to return into positive territory in the coming months, partially due to the unwinding of oil price base effects.

In September, confidence among US homebuilders rose for a third straight month, according to the NAHB housing market index. The index rose from 18 to 19 in Sep-tember, exactly in line with expectations. The headline index is now at its highest level since May 2008, but remains significantly below the benchmark level of 50.


EMU: CPI inflation is heading back to zero

In August, the final figure of euro zone CPI confirmed the first estimate, which showed an increase in the annual figure from -0.7% Y/Y to -0.2% Y/Y. On a monthly basis, CPI rose by 0.3% in August, exactly in line with expectations. Looking at the details, prices of food (-0.5% M/M) and education (-0.4% M/M) dropped significantly, while prices of clothing (2.3% M/M), transport (1.1% M/M) and energy (1.8% M/M) rose significantly. In the coming months, inflation is forecasted to head further into positive territory indicating that recent fears for deflation were somewhat overdone.


Other: UK unemployment at highest level since 1995

In the UK, jobless claims rose by 24 400 in August, while the consensus was look-ing for an increase by 25 000. The previous figure was however upwardly revised from 24 900 to 25 200. Also the ILO unemployment rate surprised on the downside of expectations rising from 7.8% to 7.9% in July, while a rate of 8.0% was forecasted. UK unemployment is now at the highest level since 1995 and is forecasted to in-crease further in the coming months.