Australian Data
Motor Vehicle Sales
Total sales of motor vehicles in Australia rose 1.1% or 995 vehicles to 88,182 in October after the falling by a revised 1.4% or 1,203 vehicles in September. The breakup of sales was a reversal of the usual trend with the sale of passenger vehicles the main driver, rising by 3% over the month while sales of SUV’s fell 0.5% and other vehicles fell by 1.9%. The outcome across the states was varied with sales in NSW (+846), which accounted for the bulk of the gains, QLD (3+79) VIC(+260), ACT(+36) and Tasmania (+49) all rising while WA (-181), SA (-366)and NT (-28)all went backwards.
Leading Index
The Westpac leading fell 0.3% in September which followed a revised 0.7% jump in August. The fall resulted in a pull back in the annualised rate from the 4.5% originally reported in August to 3.3% in September which is in line with its long run average. However our preferred indicator, the coincident index, performed much better and posted an increase of 0.3% over the month which saw the annualised rate edge higher to 0.9%. However at 0.9%, the annualised rate of the coincident index remains well below its long run average of 2.7% and points to weak growth ahead.
Wages
The wage price or wage cost index fell short of market expectations with overall growth of 0.7% (0.9% expected) with the annual pace of growth dipping from 3.8% to 3.6% and is now just below its long run average while the average weekly wage measure rose 1.2% to $1,323 with the annual increase rising to 5.3% after the last of the low quarterly reads dropped out of the calculation. The key is the slowing in the quarterly outcomes and with further weakness in the labour market expected to continue for some time according to leading indicators of employment, wage pressure is likely to remain benign.
Offshore Data
US inflation
Both headline producer and consumer prices fell in October driven by a fall in commodity prices, predominately energy related with producer prices falling 0.3% while consumer prices were down 0.1%. Producer prices ex food and energy were flat while core consumer prices edged up 0.1%. Headline annual rates for both series are looking like rolling over as the pressure from previous commodity price rises filter through, however the recent steady rise in the price of oil back up towards and briefly above $100bbl could mean that inflationary pressure may remain a little stickier than first expected.
US Regional Fed Surveys
We got the Empire (New York) and Philadelphia Fed manufacturing surveys this week and both general business conditions indices were generally positive. The Empire index rose more than expected from -8.48 to 0.61 against expectations of -2 with the index now positive for the first time since May while the Philadelphia index unexpectedly fell from 8.7 to 3.6 against expectations of a rise to 9 but the key is that it remained positive. While both indices remain just above 0, the key is new orders which remain subdued so we would be looking for a bounce in new orders for a clearer sign of an improvement in the outlook.
US Industrial Production
Industrial production in the US rose almost twice as much as expected in October, rising 0.7% against expectations of a 0.4% rise while the 0.2% gain previously reported for September was revised down to show a fall of 0.1%. By industry manufacturing production, which accounts for 75% of all industrial production rose 0.5% driven by a 3.1% rise in motor vehicle while utilities production (12%)eased 0.1% driven by a 3.1% fall in natural gas and mining production (13%) jumped 2.3% following a 0.5% fall the previous month. Despite the steady improvement in industrial production it had a minimal impact on employment in the sector.
US Housing Data
Housing starts and building permits were mixed in October with housing starts falling 0.3% to an annual rate of 628k after they were expected to drop 7.3% with the previous months surge of 15% was revised down to a gain of 7.7% while building permits were up 10.9% to an annual rate of 653k against expectations of a 2.4% rise while last month’s drop was a little larger than expected at 5.8%. Meanwhile, mortgage delinquencies fell in the third quarter from 8.44% to 7.99%, however mortgage foreclosures were unchanged at 4.43%.
EU GDP
Growth across the Eurozone rose 0.2% in line with market estimates over the third quarter with the annual rate slowing to 1.4% which is the slowest pace since the GFC. The 0.2% increase matches growth for the second quarter meaning that the euro area has only grown 0.4% over the past 6 months or at an annualized rate of 0.8%. Growth was boosted by Germany whose economy grew by 0.5% over the quarter while the French economy grew by 0.4%, however their second quarter was revised to -0.1% after it was previously flat. Growth is expected to be much weaker over the remainder of the year.
EU ZEW Survey
The monthly survey from the Centre for European Economic Research known as ZEW (Zentrum für Europäische Wirtschaftsforschung) continues to point to a collapse in growth across the Eurozone with the expectations index falling a further 7.9 points in November to -59.1 which is a shade above the low (on a monthly basis) reached during the 2008 crisis while the current situation index fell 8.1 points to 39.8. The indices for Germany (-55.2), France (-55.8) and Italy (-58.7) have all fallen in sync and as the chart suggests, will likely see a capitulation in growth in the coming quarters.
UK CPI
After a two month surge in prices the growth rate of both the consumer and retail price indices eased back in October. The consumer price index rose 0.1% after consecutive rises of 0.6% while the retail price index was unchanged following increases of 0.6% and 0.8%. With a couple of solid increases in November and December to drop out of the calculation over the months ahead we could see the annual rate of both indices fall substantially but with the BoE back printing through an increase in their bond purchase program the outlook for inflation is a little less certain.