In October, US retail sales surprised on the upside of expectations rising by 1.4% M/M, while an increase by 0.9% M/M was expected. The September figure was significantly downwardly revised from -1.5% M/M to -2.3% M/M. Looking at the details, sales were again boosted by motor vehicles and parts (7.4% M/M) and therefore, core retail sales (excluding autos and gas) showed a more moderate increase (0.3% M/M). The core reading was boosted by strong sales in eating and drinking (1.2% M/M), general merchandise (0.8% M/M), clothing (0.4% M/M) and health, professional care (0.5% M/M). The downward revision in the previous figure might have a negative impact on third quarter GDP. Nevertheless, the trend in core retail sales remains encouraging.
Last month’s sharp increase in the NY Empire State manufacturing index appeared only temporary. In November, the index fell back from 34.57 to 23.51, while a milder decline was expected. The breakdown shows that the deterioration was wide spread. Shipments (12.97 from 35.08), new orders (16.66 from 30.82), number of employees (1.32 from 10.39) and average workweek (5.26 from 20.78) fell sharply and also unfilled orders and delivery time deteriorated somewhat, while inventories rose marginally. Price trends showed a mixed picture with prices paid dropping from 19.48 to 10.53, while prices received rose from -5.19 to -2.63. The deterioration is however no surprise as the October reading was the highest since May 2004, which might have been overly optimistic.
EMU: CPI inflation stays slightly negative in October
In October, the final figure of euro zone CPI inflation confirmed the first outcome of -0.1% Y/Y. On a monthly basis, consumer prices rose by 0.2% M/M, while the consensus was looking for an increase by 0.3% M/M. Looking at the details, prices of clothing (3.1% M/M) and education (1.1% M/M) rose significantly, but also prices of health, housing and alcohol and tobacco rose. Transport, communication, recreation and culture, hotels and restaurants, energy dropped in October. Core CPI, excluding food and energy, stayed unchanged at 1.2% Y/Y; while a slight decline was expected. After five months of negative inflation, CPI is expected turn positive in November as favourable base effects from energy prices continue to unwind. Nevertheless, underlying inflation pressures are set to remain subdued.
