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Market insight 16.10.2020

US: strong retail sales, rising consumer confidence but disappointing industrial activity

US: strong retail sales, rising consumer confidence but disappointing industrial activity

US: Retail sales (Sept.): 1.9% m/m vs 0.8% expected (prior: 0.6%)

  • Core sales were up by 1.3% m/m vs 0.3% m/m expected, -0.3% m/m the prior month.
  • Sales were strong in all segments, except for electronics; the most important rebound was seen in autos, clothes, sport and restaurants.
  • Lower but still existing income support, high savings and still positive labor market have underpinned stronger purchases in Sept, and in Q3 globally; this bodes well for Q3 GDP, expected above 30% q/q saar.

 

US: Industrial production (Sept.): -0.6% m/m vs 0.5% expected (prior: 0.4%)

  • The disappointing numbers were mainly due to sharp reversal in auto production (-6.7% m/m), but energy and production of equipment goods were also weak in parallel.
  • These data pointed towards downside risks in Q4, and the high level of dependence of activity to the consumer related sectors.

 

US: Consumer confidence (Michigan) (Oct.): 81.2 vs 80.5 expected (prior: 80.4)

  • Sentiment was better than expected but fuelled by rising expectations while current sentiment has eased contrary to expectations.
  • Future views were more positive on the economy, unemployment and income situation.
  • The current view has moderated after the prior month rebound with less positive situation on income and also willingness to buy large items, except housing.
  • Cautious stance on current situation could reflect uncertainties on contagion, fiscal debate and uncertainties related to presidential elections, while the outlook remained positive and sales still positively oriented.

 

US: Business inventories (Aug.): 0.3% m/m vs 0.4% expected (prior: 0.1%)

  • Inventories have increased for autos and general merchandises; sales were up by 0.6% m/m.

 

Eurozone: CPI (Sept.): 0.1% m/m as expected (prior: %)

  • Headline inflation was down by 0.3 % y/y after -0.2 % y/y the prior month; final data were in line with expectations, showing declining monthly data in energy, food and in services; one part is due to VAT cuts in Germany, but also related to weakening demand in some sectors.
  • This environment should add pressure on the ECB to accommodate further its monetary stance or to adopt a new inflation targeting strategy.


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Market insight 20.10.2020

US: strong momentum for single-family houses

US: Housing starts (Sept.): 1415k vs 1465k expected (prior: 1388k revised from 1416k)

  • Starts have rebounded after the fall the prior month, but they remained below their July high levels (1487 k).
  • Trend in single family houses (starts and building permits) continued to rise, while data on multi-family houses have shown a slowdown in starts and permits over the past 3 months.

 

Switzerland: Trade balance (Sept.): 3.28 Bn CHF (prior: 3.54Bn)

  • Trade surplus has declined from the prior month due to reversal in export performances.
  • Real exports: -2.1% m/m after 3% M7M the prior month, real imports: 2.1% m/m after -0.5% m/m the prior month.

 

Germany: PPI (Sept.): 0.4% m/m vs -0.1% expected (prior: 0%)

  • Basic good prices were up by 0.4% m/m, due to 1% m/m in energy prices; other prices were flat or slightly down over the month. Core PPI were up by 0.1% m/m.
  • PPIs stayed in negative territory on yearly trend: -1% y/y after -1.2% y/y.

 

Poland: Industrial production (Sept.): 15.5% m/m vs 13.4% expected (prior: -5.8%)

  • A strong rebound in activity in a traditional highly volatile monthly index; the rebound was centred on the manufacturing sector (17% m/m).
  • Yearly trend has rebounded from 1.5% y/y the prior month to 5.9% y/y.

 

Poland: PPI (Sept.): 0.1%m/m as expected (prior: -0.4% revised from -0.3%)

  • Mining prices were up by 1.9% m/m after -0.5% m/m the prior month.
  • Yearly trend has turned more negative, from -1.3% y/y the prior month to -1.6% y/y.
Market insight 19.10.2020

Rising optimism in US housing; Chinese Q3 GDP expanding, but below expectations

US: NAHB housing market index (Oct.): 85 vs 83 expected (prior: 83)

  • Sentiment has increased to new highs, with rising current and future sales; index has increased in all except one of the four districts.
  • Low interest rates and healthy labour market continue to support the trend in housing.

 

China: Q3 GDP pointed to continued recovery: 4.9% y/y vs expected 5.5% (prior: 3.2% y/y).

  • The economy expanded at a faster pace of 4.9% y/y (2.7% SA q/q) in Q3. This was slightly below consensus, but underlying data suggests that the recovery is becoming broader based.
  • Some downside risks to our growth forecast of 2.1% for 2020, which indirectly assumes a 6.5% y/y expansion in Q4. However, better domestic demand, compounded with a favorable base effect in Q1, point to upside risks in 2021. 

 

China: Sept. industrial production: 6.9% y/y (prior: 5.6%); retail sales: 3.3% y/y (prior: 0.5%); Fixed asset investment: 0.8% YTD y/y (prior: -0.3%)

  • The supply side continued to lead the recovery in the last month of Q3, with industrial production growing at 6.9% y/y and exceeding expectations of 5.8%.
  • Other activity indicators suggested that the recovery is spilling over to the demand side heading into Q4. Retail sales expanded by 3.3% y/y, exceeding expectations of 1.6%. Fixed Asset Investments entered positive territory for the first time since the COVID-19 outbreak, reaching 0.8% YTD y/y vs expectations of 0.8%.
Market insight 14.10.2020

Firmer US PPIs and weaker eurozone production than expected

US: PPI (Sept.): 0.4% m/m vs 0.2% expected (prior: 0.3%)

  • The rise in prices have shown above average monthly rise in food, iron and steel and in services related to trade, transport and warehousing costs.
  • Core PPIs were up by 0.4% m/m after 0.1 % m/m the prior month; PPIs were up by 0.4% y/y after -0.2% y/y the prior month and core PPIs up by 0.7% y/y after 0.3% y/y the prior month.

 

Eurozone: Industrial production (Aug.): 0.7% m/m vs 0.8% expected (prior: 5% revised from 4.1%)

  • Activity in industry has moderated after strong recovery in June and July; picture was mixed across sectors: a still strong rebound in durable consumer goods, energy and intermediate goods, but a contraction in capital goods and in non-durable consumer goods over the month.
  • Ahead of Q4, recovery momentum has faded and centred on some sectors.

 

Spain: CPI (Sept.): 0.4% m/m as expected (prior: 0%)

  • Inflation was confirmed in line with first estimate; prices of clothes were strongly up over the month, but food prices stayed moderate, and leisure and some services have seen prices contracting over the month. Core inflation was up by 0.1% m/m.
  • Headline inflation was stable at -0.6% y/y and core inflation stable at 0.4% y/y.

 

Poland: Current account (Aug.): 947Mio EUR vs 1307Mio expected (prior: 1012Mio revised from 1620Mio)

  • Current account surplus has been revised down for the prior month and it has weakened for the month under review.
  • Trade surplus has also reduced due to lower export performances.

 

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Market insight 20.10.2020

US: strong momentum for single-family houses

US: Housing starts (Sept.): 1415k vs 1465k expected (prior: 1388k revised from 1416k)

  • Starts have rebounded after the fall the prior month, but they remained below their July high levels (1487 k).
  • Trend in single family houses (starts and building permits) continued to rise, while data on multi-family houses have shown a slowdown in starts and permits over the past 3 months.

 

Switzerland: Trade balance (Sept.): 3.28 Bn CHF (prior: 3.54Bn)

  • Trade surplus has declined from the prior month due to reversal in export performances.
  • Real exports: -2.1% m/m after 3% M7M the prior month, real imports: 2.1% m/m after -0.5% m/m the prior month.

 

Germany: PPI (Sept.): 0.4% m/m vs -0.1% expected (prior: 0%)

  • Basic good prices were up by 0.4% m/m, due to 1% m/m in energy prices; other prices were flat or slightly down over the month. Core PPI were up by 0.1% m/m.
  • PPIs stayed in negative territory on yearly trend: -1% y/y after -1.2% y/y.

 

Poland: Industrial production (Sept.): 15.5% m/m vs 13.4% expected (prior: -5.8%)

  • A strong rebound in activity in a traditional highly volatile monthly index; the rebound was centred on the manufacturing sector (17% m/m).
  • Yearly trend has rebounded from 1.5% y/y the prior month to 5.9% y/y.

 

Poland: PPI (Sept.): 0.1%m/m as expected (prior: -0.4% revised from -0.3%)

  • Mining prices were up by 1.9% m/m after -0.5% m/m the prior month.
  • Yearly trend has turned more negative, from -1.3% y/y the prior month to -1.6% y/y.
Market insight 19.10.2020

Rising optimism in US housing; Chinese Q3 GDP expanding, but below expectations

US: NAHB housing market index (Oct.): 85 vs 83 expected (prior: 83)

  • Sentiment has increased to new highs, with rising current and future sales; index has increased in all except one of the four districts.
  • Low interest rates and healthy labour market continue to support the trend in housing.

 

China: Q3 GDP pointed to continued recovery: 4.9% y/y vs expected 5.5% (prior: 3.2% y/y).

  • The economy expanded at a faster pace of 4.9% y/y (2.7% SA q/q) in Q3. This was slightly below consensus, but underlying data suggests that the recovery is becoming broader based.
  • Some downside risks to our growth forecast of 2.1% for 2020, which indirectly assumes a 6.5% y/y expansion in Q4. However, better domestic demand, compounded with a favorable base effect in Q1, point to upside risks in 2021. 

 

China: Sept. industrial production: 6.9% y/y (prior: 5.6%); retail sales: 3.3% y/y (prior: 0.5%); Fixed asset investment: 0.8% YTD y/y (prior: -0.3%)

  • The supply side continued to lead the recovery in the last month of Q3, with industrial production growing at 6.9% y/y and exceeding expectations of 5.8%.
  • Other activity indicators suggested that the recovery is spilling over to the demand side heading into Q4. Retail sales expanded by 3.3% y/y, exceeding expectations of 1.6%. Fixed Asset Investments entered positive territory for the first time since the COVID-19 outbreak, reaching 0.8% YTD y/y vs expectations of 0.8%.
Market insight 15.10.2020

US: mixed picture in regional business sentiment; new rise in weekly jobless claims

US: Empire manufacturing (Oct.): 10.5 vs 14 expected (prior: 17)

  • The index has decreased more than expected from the prior month, but it remained in line with levels seen pre-COVID.
  • Sentiment has weakened on both current situation and expectations from the prior month; on the current situation, the picture was mixed as new orders, shipments and employment have improved but inventories have declined.
  • On expectations, orders, shipments, capex and IT spending have declined after a strong rebound the prior month.

 

US: Philadelphia Fed. (Oct.): 32.2 vs 14.8 expected (prior: 15)

  • The index has strongly rebounded for the prior month and recovered to the highs seen in Q1-19 and in 2018.
  • On current situation, sentiment has increased on new orders, shipments, but declined on employment.
  • On 6-month expectations, opinions have declined on orders but increased on shipments, employment and capex.
  • Global view on industrial activity remained constructive, but the two regional indices point towards disparities across sectors, regions and existing fragilities on current recovery.

 

US: Initial jobless claims (Oct.10): 898k vs 825k expected (prior: 845k revised from 840k)

  • Continuing claims: 10 018k after 11 183k the prior week.
  • Data were volatile over the past weeks, pointing towards renewed deterioration and rising number of persons under the pandemic support program.

 

Switzerland: PPI-import prices (Sept.): 0.1% m/m (prior: -0.4%)

  • Import prices were flat over the month, due to combination of falling energy prices, flat or slightly negative in the other sectors but rising metal prices.
  • Producer prices were up by 0.1% m/m due to firmer agriculture prices and recycling costs.
  • Combined yearly trend remained in negative territory: -3.1% y/y after -3.5% y/y the prior month.

 

France: CPI (Sept.): -0.6% m/m as expected (prior: -0.1%)

  • Prices were confirmed lower over the month due to falling prices in food, energy, transport and services and despite a rebound in prices of clothes.
  • Yearly trend has turned flat after 0.2 % y/y the prior month.

 

Italy: Industrial orders (Aug.): 15.1% m/m (prior: 3.4% revised from 3.7%)

  • Both foreign and domestic orders have rebounded over the month; sales were up by 5.8% m/m after 8% m/m the prior month.

 

Poland: CPI (Sept.): 0.2% m/m as expected (prior: -0.1%)

  • Prices have declined on food, but regained for clothes, communication, household equipment and education.
  • Yearly trend has increased from 2.9% y/y the prior month to 3.2% y/y.

 

Sweden: Unemployment rate (Sept.): 9% vs 9.1% expected (prior: 9.1%)