Australian Data
Producer Price Index
The pace of growth in Australian producer prices slowed across all categories in the third quarter. At the preliminary stage domestic prices were up 0.2% while imported prices were down 1% with total prices up 0.1%. At the intermediate stage it was a similar story with domestic prices up 0.1% while import prices fell 0.3% leaving total prices up 0.1%. At the final stage domestic prices were up 0.7% with import prices flat with total prices up 0.6%. The annual price change for all components was lower in Q3 compared to Q2
Consumer Price Index
Consumer prices for the third quarter were undeniably soft with the headline reading coming in spot on expectations while the core reading was half of estimates. Headline inflation rose 0.6% with the annual rate easing back to 3.5% while core inflation (both the trimmed mean and weighted median) rose 0.3% with the annual rate firmly within the RBA’s target band at 2.45%. Housing costs accounted for two thirds of the rise in headline inflation while the cost of utilities alone, most predominately electricity, accounted for 0.26% of the 0.6% increase over the quarter
Offshore Data
US Chicago Fed National Activity Index
The Chicago Federal Reserve’s National Activity Index, which is made up of 85 separate indicators was negative again in September however it improved from a negatively revised -0.59 (previously -0.43) to -0.22 which was short of analysts expectations of -0.1. the index has now been negative for 6 of the past 7 months. indicating just how weak the Consumption and housing sector, its index has been negative for 57 straight months, that’s right, almost 5 years!
US Regional Fed Surveys
In addition to the Chicago Fed’s national activity index we have had a number of other Fed regional activity Indices with mixed outcomes. First we got the Richmond Fed Manufacturing index which remained unchanged at -6 for the second straight months after it was expected to move back into positive territory and has been negative for 5 of the past 6 months. While the Kansas Fed index improved marginally as expected, climbing from 6 to 8
US House Prices
After showing some tentative signs of forming a bottom, US house prices appear to be rolling over or stalling at best. After three months of small gains, the Federal Housing Financing Authority’s house price index stalled in July then resumed falling in August, dropping 0.1% with prices still down 4% against a year ago. Meanwhile both the 10 city and 20 city CaseShiller house price indices continue to eek lower after then too showed signs that the slide may be over earlier this year.
US Home Sales
We had two measures of home sales out this week with new home sales jumping 5.7% to an annual rate of 313k against expectations of a 1.7% rise. However putting this in perspective, at their current level new home sales are up 12.5% from their series low from October 2010 but at 77.5% below their high from July 2005. The index of pending home sales which leading existing home sales 1 to 2 months fell 4.6% after it was expected to rise 0.4%, suggesting existing home sales could drop in excess of 8% over the next 2 months.
US Consumer Confidence
Consumer confidence amongst American consumers continues to remain weak by a number of measures. The Conference Board’s Consumer Confidence index fell heavily in October, slumping from 46.4 to 39.8, its lowest level since the first quarter of 2009, after it was expected to remain unchanged at 46. While the final read on the University of Michigan Consumer Sentiment index was revised up a touch from 57.5 to 60.9, which was ahead of estimates, it remains around historical lows going back to the late 1970’s
US GDP
Growth in the US picked up in the third quarter after slowing over the first half of the year. GDP increased at an annualised pace of 2.5% or 0.625% from the previous quarter. The increase was boosted by a solid increase in personal consumption (accounting for 69% of growth) , mostly on durable goods and services while Investment (21%) was also strong with net exports making up the difference (9%). The governments contribution to growth over the quarter was flat. Despite the improvement the annual pace of growth remained unchanged at 1.6%
EU PMI’s
Purchasing Manager’s Indices across Europe continue to deteriorate with the Eurozone composite index sliding from 49.1 in September to 47.2 in October indicating the pace of contraction is accelerating. The manufacturing index slid from 48.5 to 47.3 while the services index dropped from 48.8 to 47.2. It’s not just the periphery that are under pressure with Germany’s manufacturing index falling below 50 to 48.9 while both France’s manufacturing and services indices slumped below 50 in October.
Yours in data – The Lighthouse Team.
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