US: Initial jobless claims (Oct.24): 751k vs 770k expected (prior: 787k)
- Continuing claims: 7756 k after 8373 k the prior week.
US: GDP (Q3-20): 33.1% q/q vs 32% expected (prior: -31.4%)
- A sustained rebound, even firmer than expected, driven by consumption, equipment spending and residential.
- Consumption was up by a strong 40.7% q/q saar; it was sustained in all segments and particularly strong for durable goods (82% q/q).
- Investment was mixed as structures and R&D stayed under contraction but spending on equipment was up by 70%q/q (-35% q/q in Q2).
- Residential investment was up by 59.3% q/q after -35.9%q/q in Q2.
- There was a strong rebound in both exports and imports, but net trade has negatively contributed to GDP (-3 pp); public consumption was down by 4.5% q/q due to the end of support program (-0.7 pp net contribution to GDP).
- Inventories were less negative, adding 6 pp to Q3 GDP change.
- The rebound was mainly driven by sustained domestic demand; Q4 GDP is expected on a slower pace, while uncertainties on public consumption contribution remained in place.
US: Pending home sales (Sept.): -2.2% m/m vs 2.9% expected (prior: 8.8%)
- A decline in three of 4 districts after sustained upward trend in the past months; low inventories and rising prices could weigh on sales despite remaining sustained demand.
ECB meeting: more accommodation in the pipeline
- Very dovish statement on economic conditions with rising concerns related to pandemic should support more actions in the next Dec. meeting, already announced by Ms Lagarde.
- All members agreed that is necessary to act; probably there is not yet a large consensus on the instruments to be used and the magnitude of the changes, giving time to take more information and to reach a larger consensus.
- Lagarde mentioned implicitly that the ECB is expecting downwards revisions to GDP outlook in Dec. and is ready to take a broad-based action.
- Lagarde mentioned explicitly that all instruments could be re-calibrated to fit to the new economic environment and pandemic situation to reach ECB’s targets on accommodative financial conditions and inflation.
- Future action should not only be centred on amount or duration of PEPP, but to associate TLTROs and to combine other available instruments; this should increase expectations on markets and open to door to a Lagarde’s “whatever it takes”.
Eurozone: Business climate (Oct.): -9.6 vs -10.9 expected (prior: -11.4 revised from -11.1)
- Business confidence was less negative and better than expected over the month.
- Sentiment was less negative on orders, exports, past production and employment; on the opposite, views on future production have declined over the month.
- As seen in preliminary PMI, sentiment has relatively improved over the past month; the challenge is to keep this momentum going on while renewed partial lockdown is in place in several countries.
Eurozone: Service confidence (Oct.): -11.8 vs -14 expected (prior: -11.2 revised from -11.1)
- Confidence has slightly decreased and was still resilient compared to consensus expectations, but clearly downside risks should intensify next month due to renewed lockdown weighing on services.
- Over the month, modest improvement was seen in future demand and employment, and opinions were less negative in construction and in retail; a sharp new deterioration should be seen in Nov. in retail under renewed lockdown.
Eurozone: Consumer confidence (Oct.): -15.5 as expected (prior: -13.9)
- Sentiment has declined from the previous month; opinions have deteriorated on current situation and expectations have also decreased on future economic situation, employment and willingness to buy.
- Expectations were back to their June level, in line with renewed lockdown announced in several countries.
Germany: Unemployment rate (Oct.): 6.2% as expected (prior: 6.3%)
- Unemployed was down by 35 k after -10 k the prior month.
- On ILO definition, the unemployment ratio remained stable at 4.5%.
Italy: Consumer confidence (Oct.): 102 as expected (prior: 103.3 revised from 103.4)
- Confidence has eased on declining views on future economic situation and rising unemployment.
Italy: Manufacturing confidence (Oct.): 95.6 vs 91.8 expected (prior: 92.6 revised from 92.1)
- Business sentiment has increased more than expected from the prior month; opinions have improved on current production, orders and economic situation.
- Expectations on future production and orders were more cautious after a rebound the prior month.
Spain: CPI (Oct.): 0.3% m/m vs 0.5% expected (prior: 0.4%)
- Preliminary data have shown more stable trend in monthly prices, while yearly trend has declined further, from -0.6% y/y the prior month to -1% y/y.
Germany: CPI (Oct.): 0% m/m as expected (prior: -0.4%)
- Preliminary data have pointed toward remaining low inflation; the rises in clothes and energy prices have been more than compensated by lower prices in services.
- Yearly trend has declined further, from -0.4% y/y the prior month to -0.5% y/y.
UK: M4 (Sept.): 12.3% y/y (prior: 12.1%)
- M4 ex-OFC has slightly increased over the month (0.4% m/m after 0% m/m the prior month).
- M4 lending was up by 4.3% y/y after 4.4% y/y the prior month; lending to business has slowed down (from 9.7% y/y the prior month to 8.4% y/y), but lending to SMEs has accelerated further (from 21.9% y/y to 23% y/y).
- Credit consumer was down by 4.6% y/y (from -3.9% y/y the prior month), as consumers repaid debt; on the opposite, mortgage approvals stayed dynamic.