In October, Conference Board’s consumer confidence dropped from an upwardly revised 53.4 to 47.7, while the consensus was looking for a slight improvement. The details showed that consumers became more pessimistic about both the present situation (20.7 from 23.0) and expectations (65.7 from 73.7) and also labour market conditions deteriorated in October. This is the second consecutive worsening in consumer confidence, but is no surprise after the deterioration in ABC and Michigan consumer confidence. The Conference Board added that “consumers’ assessment of present-day conditions had grown less favourable, with labour market conditions playing a major role in this grimmer assessment”.
After staying unchanged from July to September, the Richmond Fed manufacturing index unexpectedly deteriorated in October. The headline index dropped from 14 to 7, while another unchanged outcome was forecasted. Looking at the details, the worsening was broadly based with declines in all sub-indices except vendor lead time. Both prices paid (0.53 from 0.61) and prices received (0.18 from 0.48) increased, but at a slower pace than last month. After the worsening in both the Philly and Richmond Fed, the risk increases that also the ISM might show another decline in October.
In August, S&P Case Shiller home prices rose for the fourth consecutive month (1.18% M/M). On a yearly basis however, house prices are still down by 11.32% Y/Y, broadly in line with the consensus estimate. The improvement was wide-spread with only a small decline in Cleveland (-0.01% M/M) and Charlotte (-0.01% M/M).
EMU: M3 money supply slows again more than expected
In September, euro zone M3 money supply slowed again more than expected from an upwardly revised 2.6% Y/Y to 1.8% Y/Y, while the consensus was looking for an outcome of 2.2% Y/Y. The less volatile 3-month average stayed unchanged at 2.5% Y/Y. Looking at the lending data, loans to non financials dropped by 0.1% Y/Y (from 0.7% Y/Y) and loans to households fell by 0.3% Y/Y (from -0.2% Y/Y). Nevertheless, the monthly flow data showed an increase in loans to households (14 from 9), while loans to non-financial corporations dropped further (-4 from 3). The monthly increase in household lending is an encouraging sign as it is often considered as a leading indicator, but loans to non-financials are still deteriorating.
Other: CBI report shows another improvement in sales
In the UK, the CBI distributive trades report showed an increase in sales from 3 to 8 in October, the most positive reading in almost 2 years. The three-month moving average increased from -9 to -2, but stayed in negative territory. Also the volume of orders improved (11 from -3), while volume of sales for time of the year deteriorated somewhat (-7 from -5). Also for the coming month, the outlook remains encouraging.
