Data Galore Led By Eurozone GDP, US Retail Sales, PPI

A quiet start to the week yesterday with only Eurozone production reported will be overshadowed today by plenty of important numbers including: Eurozone GDP, US PPI and Retail Sales plus German ZEW - making it one of the more busy data days of the year.



Eurozone economy grew in third quarter: In yesterday's post we looked at Industrial Production versus GDP and found that according to output GDP would likely rise around 0.6 percent quarter-on-quarter. We cautioned, however, that production could well over-estimate GDP somewhat due to the drag from the public sector. With German and French GDP already released today showing growth of 0.5 and 0.4 percent, respectively (with mixed revisions, +0.2 and -0.1 pct.) the overall Eurozone GDP growth could well land somewhere between the consensus forecast of 0.2 percent and the prediction from Industrial Production.

US producer prices to ease? Inflation in the US has moderated a bit in recent months with PPI growing 6.9 percent year-on-year, having been in a range of 6.5-7.2 percent since April. Import prices, usually a good indicator of PPI, have eased to a still high annual growth rate of 11 percent from a peak of 13.7 in July, suggesting that PPI may also continue to decelerate further in the coming months. Consensus looks for -0.1 percent month-on-month or 6.3 percent year-on-year.




US retailers sees continued growth: Retail Sales have grown robustly in the US this year despite the slump in overall economic activity. The problem, however, is that Retail Sales have not accelerated enough to keep up with rising inflation meaning that real spending is coming down. Add to this the fact that the savings rate is at its lowest level of 3.6 percent since December 2007 - implying that consumers have lowered their savings rate to continue to spend at a roughly unchanged rate - and the case for continued spending growth is conditioned on a pick-up in the labour market, specifically income and wages. For October consensus looks for a 0.3 percent increase in Retail Sales and 0.2 percent excluding autos.