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October 2016 German IFO business climate 110.5 vs 109.5 exp
October 2016 German IFO business climate report
Eurozone September M3 Money-Supply Growth Slows To 5.0%
Eurozone M3 money supply growth slowed slightly to 5.0% in the year to September from 5.1% the previous month and was slightly below the expected figure of 5.1%. There was also a slowdown in the rate of M1 growth to 8.5% from 8.9%.
The growth rate in private-sector loans was also slightly below expectations with an unchanged figure of 1.8% compared with an expected figure of 1.9%. The annual growth rate of loans to non-financial corporations was also unchanged at 1.9%.
The M3 growth rate was 4.9% in the year to September 2015 and there has been little change over the past few months, while growth in private-sector loans has increased from 1.1% the previous year.
The overall rate of money supply growth is still sufficient to support growth in the Eurozone economy, but there will be some concerns within the ECB that the growth rate is not stronger.
A key element of the bond-buying programme has been to lower borrowing costs for industry and spur and increase in private-sector loan growth. Although there will be relief that loan growth is in positive territory, there will again be some disappointment that growth rates are still relatively subdued despite the compression in yields.
In this context, the data will slightly increase the chances of the bond-buying programme being extended beyond March.
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Eurozone economic confidence Oct 106.3 vs 104.9 exp
Eurozone Oct confidence report 28 Oct
Carney to decide this week on his future at the Bank of England?
Reports in the UK press yesterday suggest BOE gov Carney could decide to stay or go this week.
It's not a resignation per se just his decision to exercise an option to step down after 5 rather than the full 8 year term. Carney took over as Governor in June 2013 for an eight year term, but with an option to leave after five years.
Both The Telegraph and Times have reported on the chances that Carney will make his decision public this week. as one or two of our readers have picked up in the comments section of w-e posts. The Times reported that he was "more likely than not" to choose to return to Canada in 2018.It also said that decision could come "within days".
In response the Bank of England said: "Nothing has changed. The governor has said he will make his decision public by the end of the year."
Carney got the backing this morning of Business Secretary Greg Clark on BBC Tv who said:
"I think Mark Carney has done a tremendous job, a fantastic job, during his tenure there. It is clearly a decision for him."
September German Retail Sales Drop 1.4%, Clothing Sales Slump
German retail sales in seasonally and calendar-adjusted terms declined 1.4% for September and the annual increase was held to 0.4%. The data was significantly worse than the expected monthly gain of 0.2%.
The sharp decline in clothing sales suggests seasonal influences, but a recovery will be needed next month to support confidence.
The data for the first nine months of the year was more favourable with an increase of 2.1%.
There was an increase in food sales of 3.4%, while there was a significant decline of 2.0% in non-food sales for the month.
Clothing sales declined sharply by 7.7% on the month with and 8.0% decline over the year, while sales of furnishings were also weak as there was a notable dip in sales at department-store sales.
Over the first nine months of the year, food sales increased 2.2%, while non-food sales data increased 1.7%.
The headline data will trigger some fresh concerns surrounding the overall spending trends, especially as there was a decline in consumer confidence according to the latest survey evidence.
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Germany Markit services PMI Oct final 54.2 vs 54.1 exp
Germany Markit services PMI Oct final 4 Nov
German data stopping the PMI slippage shown so far this morning.
A poor showing from Eurozone retail PMI's in October
The latest retail PMI's from the Eurozone fell in October.
Italy was the only one that gained but is still in contraction.
Perhaps more importantly we need to look at the Sep numbers ahead of the main Eurozone retail sales report at the top of the hour.
They we're much better either.
This won't be a direct indicator of the Sep sales as these are firm surveys, not consumer surveys but as the customer is the driver of firms fortunes, the surveys do give us some idea of what's going on.
Markit note that sales were down for the 4th month in 5.
"The retail sector's recent less-than-impressive performance continued into the final quarter, as sales dropped for the fourth time in the past five month and at the fastest rate since June. The only bright spot in an otherwise gloomy picture was Germany, though sales there rose only marginally and at the slowest rate for six months. "Belying the ongoing downturn in sales, retail employment continued to edge higher and there was also a renewed upturn in spending on goods for resale; perhaps a reflection of still-strong sentiment towards future sales prospects."
Sales are expected to fall -0.3% vs -0.1% prior m/m, and Rise 1.3% vs 0.6% prior y/y.
German November IFO Index Holds At 30-Month High
The German IFO business confidence index was unchanged for November at 110.4 with the October figure revised down slightly from the original 110.5 reading and was fractionally below the 110.5 level expected. The index was still at the highest level since May 2014.
The current conditions index strengthened to 115.6 from 115.1 previously, but there was a decline in the expectations component to 105.5 from 105.9 for October.
There was a decline in the manufacturing index to 14.7 from 16.4 with a slightly less confident attitude towards export prospects, although this was still the second highest reading of 2016. The construction sector continued to strengthen with the strongest reading of the year and the 8th successive monthly gain.
There was also a sharp improvement in the wholesaling sector to the highest level for 12 months. Confidence in the retailing sector also increased for the third month in succession.
Significantly, an increased number of companies intend to increase prices in the near term.
The construction sector is certainly the stand-out feature in the release, but the data overall continues to suggest that the economy will strengthen further in the short term with the very expansionary monetary policy gradually increasing in impact.
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Eurozone Money Supply Growth Slows To 19-Month Low
The latest Eurozone money supply data recorded a slowdown in the rate of annual M3 money supply growth to 4.4% in the year to October from a revised 5.1% in September, originally reported as an increase of 5.0%. This was the slowest rate of annual growth since March 2015.
Annual growth in M1 also declined to 7.9% from 8.4% previously, while the annual increase in private loans came in at 1.8%, unchanged from the previous month.
There was, however, an increase in the annual rate of total credit growth to 4.2% from 3.9% previously.
A sustained expansion in money supply and private lending is a crucial component in the ECB’s strategy to support growth conditions and boost inflation and the latest data will cause some unease within the ECB.
The data will increase pressure for an aggressive monetary policy and will also tend to increase speculation that the central bank will look to extend the full bond-purchase programme beyond March 2017. There will also be concerns that the negative deposit rate structure and bond-buying programme is having a counter-productive impact on bank lending. In this context, there will also be pressure for the ECB to take action to ease financing pressures on the commercial banks and steepen the yield curve in order to underpin underlying profitability.
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Eurozone economic confidence Nov 106.5 vs 106.8 exp
Eurozone November confidence report 29 Nov