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Daily Macroeconomic Digest

Friday 15 February
US: weak industrial production and mixed empire manufacturing

US: Industrial production (Jan): -0.6% m/m vs 0.1% expected (prior: 0.1% revised from 0.3%)

  • The decline in IP was driven by a 0.9% drop in manufacturing output, which was largely driven by an 8.8% m/m plunge in motor vehicle output, which reversed a 4.3% surge in December. But there were also signs of weakness in other sectors, which machinery and electronics production both declining.
  • With the latest retail sales data, this provides further reason to think that the Fed won't be raising rates any time soon.


US: Empire manufacturing (Feb): 8.8 vs 7 expected (prior: 3.9)

  • While the index rose in Feb, the composition was mixed as the new orders index increased, but the shipments and employment components both declined. The prices paid measure decreased and the 6 months-ahead business conditions index rebounded sharply by 14.5pt to +32.3.


US: Consumer confidence (Michigan) (Feb P): 95.5 vs 93.7 expected (prior: 91.2)

  • Sentiment has rebounded more than expected; sentiment on current situation has increased lower than expected, while expectations rose higher than expected.


US: Import price index (Jan): -0.5% m/m vs -0.2% expected (prior: -1%)

  • The decline reflected a drop in the fuel category (-3.2% m/m).
  • Overall, the report was soft as consumer goods import prices fell at their fastest pace in 7 months and auto prices fell by 0.2% m/m.


UK: Retail sales (Jan): 1.2% m/m vs 0.2% expected (prior: -1% revised from -1.3%)

  • Sales ex fuel were up by 1.2% m/m vs 0.2% m/m expected (-1% the prior month); Internet sales have rebounded by 3.7% m/m and represent 18.8% of total sales (prior: 19.8%).
  • Overall, retail sales rebounded as clothing discounts attracted shoppers but downside risks could continue to weigh on consumption as political scenario remains unclear.


Spain: CPI (Jan F): -1.7% m/m as expected (prior: -0.5%)

  • On a y/y basis: 1% as expected (prior: 1.2%).
  • Clothing and footwear have driven trend in headline prices lower (-15.4% m/m), while transportation rose by 0.3% m/m.
Thursday 14 February
Unexpected plunge in US retail sales, German Q4 GDP lower than expected

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.
Wednesday 13 February
US Core inflation higher than expected, UK inflation fell back below BOE's 2% target

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.
Tuesday 12 February
A new record high in US job openings

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.
Monday 11 February
Sharp contraction in UK Q4 GDP growth

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.



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