Market insight

US: Retail sales (Dec): -1.2% m/m vs 0.1% expected (prior: 0.1% revised from 0.2%)

• Headline sales posted the largest drop in nine years. Excluding autos, which posted a strong 1.0% gain in December, sales plummeted an even sharper 1.8%. That's the worst m/m growth since 2008.
• The real weakness was in the underlying sales figures; after a 1.0% gain in November, control group sales plunged by 1.7%. Weakness in the report was broad-based across categories, with sales falling in all of the major categories that compose the retail control group.
• The largest declines were seen in sporting goods stores (-4.9%), miscellaneous store retailers (-4.1%), non-store retailers (-3.9%), and health and personal care stores (-2.0%). Outside of that core group, the only gains were seen in auto sales (up 1.0%) and building materials (up 0.3%).
• With this figure, the Fed should remain patient on key rates.

US: PPI (Jan): -0.1% m/m vs 0.1% expected (prior: -0.1% revised from -0.2%)

• Excluding the volatile food and energy components, underlying inflationary pressures remain firm.
• Final demand for services, particularly trade services, rebounded in the month - a sign that firming wage pressures may be progressing into a broad pickup in price growth.

US: Initial jobless claims (Feb 9): 239k vs 225k expected (prior: 235k revised from 234k)

• Continuing claims: 1773k vs 1740k expected (prior: 1736k)

Germany: GDP (Q4 P): 0% q/q vs 0.1% expected (prior: -0.2%)

• On a y/y basis: 0.6% vs 0.7% expected (prior: 1.1%)
• In Q3, the contraction was largely caused by a huge slump in output from the auto industry as new emission standards created widespread disruption.
• While the there is no breakdown at this stage, the press release says that the decline was mostly due to weak net exports.
• However, it also concedes that household consumption increased only "slightly". In contrast, fixed investment held up relatively well, particularly in construction.
• German Industry will continue to struggle if external demand is not stronger.

Eurozone: GDP (Q4 P): 0.2% q/q as expected (prior: 0.2%)

• On a y/y basis: 1.2% as expected (prior: 1.2%)
• The second estimate of euro-zone GDP confirmed that the economy increased by only 0.2%. There is still no expenditure breakdown for the aggregate figure, but we know from the national data that both external and domestic demand weighed on activity.

Turkey: Current account (Dec): -1.44bn USD vs -1.50bn expected (prior: 1.10bn revised from 0.99bn)

• Turkey posted a current-account deficit after running a surplus for four straight months.

Turkey: Industrial production (Dec): -1.4% m/m (prior: -0.3%)

• On a y/y basis: -9.8% vs -7.5% expected (prior: -6.6% revised from -6.5%).
• Durable consumer goods declined by 7.4% m/m, while capital goods decreased by 2.2% m/m.

US: CPI (Jan): 0% m/m vs 0.1% expected (prior: 0% revised from -0.1%)

• On a y/y basis: 1.6% vs 1.5% expected (prior: 1.9%)
• Core CPI: 0.2% m/m as expected (prior: 0.2%); 2.2% vs 2.1% expected (prior: 2.2%)
• The details of the report were mixed but broadly firm on net, with acceleration in the persistent shelter categories and further increases in the medical care services category.
• The CPI components relevant for the PCE report were on net firmer.
• We expect CPI inflation to remain below 2% through Q1, but to pick up to 2.2% year-end.

UK: CPI (Jan): -0.8% m/m vs -0.7% expected (prior: 0.2%)

• On a y/y basis: 1.8% vs 1.9% expected (prior: 2.1%)
• Core CPI y/y: 1.9% as expected (prior: 1.9%)
• Energy prices and utility tariff cuts have driven trend in headline prices lower.
• We expect CPI inflation to remain below 2% through Q1, but to pick up over the medium term.

Eurozone: Industrial production (Dec): -0.9% m/m vs -0.4% expected (prior: -1.7%)

• On a y/y basis: -4.2% vs -3.3% expected (prior: -3.3% revised from 3.0%)
• Energy prices declined by 0.4% m/m, while capital goods decreased by 1.5% m/m. Durable consumer was up by 0.7% m/m.

US: NFIB Small Business optimism (Jan): 101.2 vs 103 expected (prior: 104.4 revised from 104.4)

• The index fell to the lowest level since November 2016.
• The decline likely reflects both expectations for a growth slowdown this year and a temporary impact from the longest on record government shutdown.

US: JOLTS Job Openings (Dec): 7335 vs 6846 expected (prior: 7166 revised from 6888)

• Job openings, hirings and also separations have increased from past level.
• Overall, the report suggests a strong pace of underlying job growth and pressures on wages could remain in place in this environment.

UK: GDP (Q4 P): 0.2% q/q vs 0.3% expected (prior: 0.6%)

• GDP y/y: 1.3% vs 1.4% expected (prior: 1.5%).
• Sharp contraction in Q4, largely reflecting Brexit uncertainty and further weakening should continue in Q1-19.
• The slowdown over the quarter came as businesses cut investment for a fourth consecutive quarter, the longest continuous decline since the financial crisis, while private consumption and government spending help up.

UK: Industrial production (Dec): -0.5% m/m vs 0.1% expected (prior: -0.3% revised from -0.4%)

• Production in the manufacturing sector has fallen more than expected. Activity was up in mining, oil and gas, but down in electricity.
• Within manufacturing, production of durable goods was down by 1% m/m, non-durables declined by -0.7% m/m and investment fall by -0.9% m/m. Energy sector was the only sector up (+0.1% m/m).

Switzerland: CPI (Jan): -0.3% m/m vs -0.2% expected (prior: -0.3%)

• On a y/y basis: 0.6% as expected (prior: 0.7%)
• Goods declined by 1% m/m, while services slightly rose by 0.3% m/m.