In October, the Chicago PMI improved to its highest level in more than one year. The headline index jumped from 46.1 to 54.2, while a figure of 49.0 was forecasted. Looking at the details, the improvement was led by production (63.9 from 47.2) and new orders (61.4 from 46.3), but also order backlog (41.9 from 36.7) and supplier deliveries (50.7 from 49.3) increased. Inventories and employment, on the contrary, deteriorated slightly in October. Prices paid dropped from 51.3 to 48.6. Although the outcome is an encouraging sign, it’s difficult to draw too much positive conclusions for today’s ISM, as other regional manufacturing surveys were mixed. Overall though, we expect industrial production to advance sharply in Q4.

The final figure of Michigan consumer confidence showed a slight upward revision compared to the first estimate. The headline index showed an adjustment from 69.4 to 70.6, while a figure of 70.0 was expected. Both the economic conditions (73.7 from 72.1) and economic outlook (68.6 from 67.6) improved compared to the first estimate.

In September, both personal spending and income data came out exactly in line with expectations. Personal spending dropped by 0.5% M/M, for the first time in five months, due to the expiration of the cash for clunkers program. Personal income on the contrary stayed flat, while the previous outcome was downwardly revised from 0.2% M/M to 0.1% M/M. The savings rate rose from 2.8% to 3.3% in September after dropping sharply in the previous month when savings dipped to fund motor vehicle purchases. The results were already incorporated in the Q3 GDP figures, published earlier last week.


EMU: inflation stays in negative territory in October

According to the first estimate, euro zone CPI inflation rose from -0.3% Y/Y to -0.1% Y/Y in October, exactly in line with expectations. This is the fifth consecutive month of negative inflation in the euro zone, but in November, CPI inflation is forecasted to return to positive territory as favourable base effects from energy prices continue to unwind.

In September, the euro zone unemployment rate rose to 9.7%, compared with 9.6% in the previous month and 7.7% in September 2008. The number of people unemployed rose by 184 000 in the euro zone from August to September. In the coming months, unemployment is forecasted to increase further with the IMF expecting unemployment to rise to 11.7% in 2010.