US: manufacturing production falls for the first time in four months
Industrial production surprised on the downside of expectations in October. On a monthly basis, industrial production rose by 0.1% M/M, while an increase by 0.4% M/M was expected. The previous figure was downwardly revised from 0.7% M/M to 0.6% M/M. The breakdown shows a slight decline in manufacturing (-0.1% M/M) due to a 1.7% M/M decline in motor vehicles and parts (-1.7% M/M), but also computer and electronics (-0.3% M/M) dropped, while machinery rose by 0.2% M/M. Utilities rose by 1.6% M/M, while mining fell by 0.2% M/M. This was the fourth consecutive increase in US industrial production, but manufacturing dropped for the first time in four months due to a decline in auto manufacturing.
In October, US producer prices rose from -4.8% Y/Y to -1.9% Y/Y, slightly below the consensus estimate. On a monthly basis, producer prices rose by 0.3% M/M due to a significant increase in prices of gasoline (1.9% M/M), foods (1.6% M/M), energy (1.6% M/M) and residential electricity (0.9% M/M). More surprising was the development in core PPI (excluding food and energy), which dropped from 1.8% Y/Y to 0.7% Y/Y, due to lower prices for light motor trucks and passenger cars.
EMU: exports show biggest increase in 20 months
In September, the euro zone seasonally adjusted trade surplus rose to 6.87B, while the previous figure was upwardly revised from 1.0B to 2.2B. Looking at the details, both imports and exports rose, but the increase in exports (5.5% M/M) was bigger than the increase in imports (1.1% M/M). The increase in both exports and imports is an encouraging sign that the euro zone economy is climbing out of recession.
Other: UK inflation hit the trough in September
As expected, UK CPI inflation started to increase again in October. Consumer prices rose from 1.1% Y/Y to 1.5% Y/Y, slightly above the consensus estimate of 1.4% Y/Y. On a monthly basis, CPI rose by 0.2% M/M led by price increases in food (1.0% M/M), household services (1.6% M/M), housing (0.6% M/M), personal goods and services (0.6% M/M) and leisure services (0.5% M/M). Prices of household goods (-1.2% M/M), leisure goods (-0.3% M/M) and clothing and footwear (-0.3% M/M) dropped in October. As expected, UK CPI inflation reached the trough in September and in the coming months, inflation is forecasted to increase further, partially due to the unwinding of favourable base effects from energy prices, but underlying inflation pressure are set to remain subdued.
