Market Movers
Today's main event is the US retail sales data for September. The US economy is currently split between solid domestic demand driven by private consumption spending and weak exports that hurt the manufacturing sector. Signs of weakness in the main US growth engine, personal consumption, would support the current dovish pricing of future Fed rate hikes. Consensus is looking for an 0.3% m/m increase in the important control group component (excluding sales of autos, gasoline, food and building materials) but we see downside risks to this as we estimate that the control group increased a more modest 0.1% m/m.
In the UK, we estimate that average weekly earnings ex bonus (3M average) increased to 3.0% y/y in August from 2.9% y/y in July. We believe wage growth will accelerate further as the labour market tightens with unemployment close to NAIRU. Our calculations suggest the unemployment rate (3M average) was unchanged at 5.5% in August.
The German ZEW expectations index declined more than expected in October and today we will get hard data on euro area industrial production growth for August, which we expect to show an 0.6% m/m decline.
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