US: Consumer confidence unexpectedly improved in November
In November, Conference Board’s consumer confidence rose from an upwardly revised 48.7 to 49.5, while an outcome of 47.3 was expected. Consumers became more optimistic about the expectations (68.5 from 67.0), while the present situation sub-index deteriorated marginally (21.0 from 21.1). In November, consumers became more pessimistic about the labour market as the labour market differential dropped from -45.9 to -46.6. The indicator shows that consumer sentiment is still fragile and consumers remain concerned about the historical high unemployment.
The second estimate of US third quarter GDP showed a significant, but expected downward revision from 3.5% Q/Q (annualized) to 2.8% Q/Q (annualized). Looking at the details, personal consumption, non-residential & residential investments, net exports and change in inventories were downwardly revised compared to the first estimate, while government consumption showed an upward adjustment. The picture is a bit less rosy that the government reported last month, but it remains the best growth figure in two years and is no cause for concern.
The Richmond Fed manufacturing index deteriorated for the second consecutive month in November. The headline index dropped from 7 to 1, while markets were looking for a marginal improvement. The details confirmed the headline figure, as it shows that all sub-indices except vendor lead time worsened, while both prices paid (1.02 from 0.53) and prices received (0.22 from 0.18) rose. The regional business confidence surveys indicate that business sentiment remains fragile in the US.
S&P Case Shiller house prices rose for the fourth consecutive month in September. On a monthly basis, house prices rose by 0.27% M/M, compared to 1.13% M/M in October. The yearly figure showed a further slowing in the rate of decline from - 11.30% Y/Y to -9.36% Y/Y, which was slightly below the consensus estimate. The ongoing rise in house prices is a positive signal for the economy, but should hopefully continue for some more months.
EMU: German IFO at highest level in 15 months
In November, the German IFO indicator rose to its highest level since Augustus 2008. The headline index increased from an upwardly revised 92.0 to 93.9, while the consensus was looking for a figure of 92.5. Both the current assessment (89.1 from 87.4) and expectations (98.9 from 96.8) sub-index surprised on the upside of expectations. This outcome boosts hopes that German GDP growth will accelerate in the fourth quarter.
In Germany, the final figure of third quarter GDP confirmed the first estimate which showed an expansion by 0.7% Q/Q. The breakdown shows that the expansion was led by a slower pace of inventory liquidation, but a positive contribution came also from investments in machinery and equipment. Negative contributions came from private consumption and net exports. The data indicate that German growth was driven by a slower pace of inventory liquidation, in the coming quarters, it will be interesting to see whether also net exports and consumption will pick up.
