Friday October 21 2016
Canada Inflation Rate Up to 1.3% in September
Statistics Canada | Joana Taborda |

Consumer prices in Canada increased 1.3 percent year-on-year in September of 2016, following a 1.1 percent gain in August but below market expectations of a 1.5 percent rise. Cost of shelter and transportation contributed the most to the rise while food inflation was the lowest since February of 2000.

Year-on-year, transport cost rose 2.3 percent, following a 0.3 percent gain in August. Gasoline prices posted a smaller year-over-year decrease in September (-3.2 percent) than in August (-11.5 percent). The purchase of passenger vehicles index increased 5.8 percent in September, after posting a 5.2 percent gain in August.

Shelter prices went up 1.7 percent, the same as in the previous month. 

The clothing and footwear index rose 0.1 percent, following a 0.4 percent decline in August. This turnaround was partly attributable to increases in the men's clothing index and the women's clothing index. For the fifth consecutive month, shoppers paid less for children's clothing.

Food prices were up 0.1 percent after rising 1.1 percent in August. Prices for food purchased from stores recorded their first year-over-year decline since March 2008, down 0.9 percent. As a result of the decrease in September, food prices in stores returned to a level last recorded in January 2015.

Following gains in the price of some fresh vegetables in the fall and winter of 2015/2016, and subsequent monthly declines in those prices, the fresh vegetables index (-2 percent) was down for the first time since January 2013. On a year-over-year basis, the price of cereal products (-4.9 percent), which include rice, pasta, flour and breakfast cereal, fell for a third consecutive month. The condiments, spices and vinegars index (-5.3 percent) and the dairy products index (-1.1 percent) were down.

Prices for food purchased from restaurants were up 2.5% in the 12 months to September, matching the rise in August.

On a monthly basis, consumer prices increased 0.1 percent, following a 0.2 percent decline in August.

Excluding food and energy, consumer prices rose 0.4 percent on the month and 2 percent on the year.

Friday October 21 2016
Malaysia Inflation Rate Steady at 1.5% in September
Statistics Malaysia l Aloysius Unditu |

Consumer prices in Malaysia rose 1.5 percent year-on-year in September of 2016, the same as in August and below market estimates of a 1.7 percent increase. While prices of food rose at a slower pace, inflation for housing & utilities was steady and cost of transport fell less than in a month earlier.

Year-on-year, cost rose at a slower pace for food & non-alcoholic beverages (+3.0 percent from +3.5 percent in August), recreation services & culture (+3.4. percent from +3.6 percent) and miscellaneous goods & services (+1.5 percent from 2.5 percent) but rose slightly faster for restaurants & hotels (+2.2 percent from +2.1 percent). Inflation was steady for alcoholic beverages & tobacco (+19.7 percent); housing, water, electricity, gas & other fuels (+2.1 percent); furnishing, household equipment & routine maintenance (+1.3 percent), health (+2.2 percent) and education (+2.0 percent). In addition, prices declined for: clothing & footwear (-0.6 percent from -0.6 percent), transport (-5.5 percent from -6.7 percent) and communication (-2.6 percent from +2.4 percent).

Core consumer prices rose 2.1 percent year-on-year in September, compared with a 2.0 percent gain in August. 

On a monthly basis, consumer prices fell 0.3 percent after gaining 0.4 percent in a month earlier.  Prices were lower for transport (-1.6 percent), communication (-0.1 percent),  food & non-alcoholic beverages (-0.2 percent) and non food (-0.3 percent). In contrast, prices were higher for clothing & footwear (+0.2 percent), restaurants and hotels (+0.2 percent),  health (+0.3 percent). Prices for other items remain unchanged: housing, water, electricity, gas & other fuels, education, recreation services & culture, alcoholic beverages and tobacco, misecellaneous goods & services .

Thursday October 20 2016
US Initial Jobless Claims at 5-Week High of 260K
DOL | Joana Taborda |

The number of Americans filing for unemployment benefits rose to 260,000 in the week ended October 15th, above market expectations of 250,000 and reaching the highest in five weeks. Yet, it marks the 85th consecutive week initial claims are below 300,000, the longest streak since 1970 and signaling the labour market strength.

The previous week's level was revised up by 1,000 to 247,000. The 4-week moving average which smooths out week-to-week volatility in the claims data rose by 2,250 to 251,750. The previous week's average was revised up by 250 from 249,250 to 249,500.

On an unadjusted basis, the biggest increases in initial claims were recorded in Kentucky (up by 5,621); California (up by 3,028); Michigan (up by 2,721); North Carolina (up by 2,520), one of the zones hit by Hurricane Matthew and New York (up by 2,272). In contrast, Pennsylvania (-4,164) and Missouri (-1,988) recorded the biggest declines in initial claims. 

The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending October 8, unchanged from the previous week's unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending October 8 rose by 7,000 to 2,057,000. The previous week's level was revised up 4,000 from 2,046,000 to 2,050,000.

The 4-week moving average was 2,058,250, a decrease of 12,750 from the previous week's revised average. This is the lowest level for this average since July 8, 2000 when it was 2,056,250. The previous week's average was revised up by 1,000 from 2,070,000 to 2,071,000. 

Thursday October 20 2016
ECB Leaves Monetary Policy Unchanged
ECB | Joana Ferreira |

The ECB held its benchmark refinancing rate at 0 percent for the sixth straight time on October 20th, as widely expected. Both the deposit rate and the lending rate were also left steady at -0.4 percent and 0.25 percent, respectively. Policymakers reiterated they expect the key ECB interest rates to remain at present or lower levels for an extended period of time and confirmed that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary.

Excerpts from the Introductory statement to the press conference by Mario Draghi:

Looking ahead, we continue to expect the economic recovery to proceed at a moderate pace. Domestic demand remains supported by the pass-through of our monetary policy measures to the real economy. Favourable financing conditions and improvements in corporate profitability continue to promote a recovery in investment. Sustained employment gains, which are also benefiting from past structural reforms, and still relatively low oil prices provide additional support for households’ real disposable income and thus for private consumption. In addition, the fiscal stance in the euro area is expected to be mildly expansionary in 2016 and to turn broadly neutral in 2017 and 2018.

At the same time, headwinds to the economic recovery in the euro area include the outcome of the UK referendum and other geopolitical uncertainties, subdued growth prospects in emerging markets, the necessary balance sheet adjustments in a number of sectors and a sluggish pace of implementation of structural reforms. Against this background, the risks to the euro area growth outlook remain tilted to the downside.

According to Eurostat, euro area annual HICP inflation in June 2016 was 0.1%, up from -0.1% in May, mainly reflecting higher energy and services price inflation. Looking ahead, on the basis of current futures prices for oil, inflation rates are likely to remain very low in the next few months before starting to pick up later in 2016, in large part owing to base effects in the annual rate of change of energy prices. Supported by our monetary policy measures and the expected economic recovery, inflation rates should increase further in 2017 and 2018.

The monetary policy measures in place since June 2014 have significantly improved borrowing conditions for firms and households, as well as credit flows across the euro area. The comprehensive package of new monetary policy measures adopted in March this year underpins the ongoing upturn in loan growth, thereby supporting the recovery of the real economy. In the light of the prevailing uncertainties, it is essential that the bank lending channel continues to function well.

Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. As emphasised repeatedly by the Governing Council, and as again strongly echoed in both European and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the European level. The implementation of structural reforms needs to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. 

Thursday October 20 2016
Turkey Holds Repo Rate at 7.5%, Lending Rate at 8.25%
Central Bank of Turkey | Joana Ferreira |

The Central Bank of Turkey held its benchmark one-week repo rate at 7.5 percent on October 20th, as widely expected, and its overnight lending rate was unexpectedly left unchanged at 8.25 percent following seven consecutive cuts. Policymakers agreed that a cautious monetary policy stance had to be maintained as a weaker lira and other cost factors restrained the improvement in inflation outlook. The bank also said that the direction and the timing of the next step in the monetary policy would be data dependent. Inflation was last recorded at 7.3 percent in September, well above central bank's 5 percent target.

Recently released data and indicators regarding the third quarter display a deceleration in the economic activity. Reduced tightness in monetary conditions and the recent macroprudential measures support the overall financial conditions. The lagged effects of the terms of trade developments and the moderate course of consumer loans limit the widening in the current account balance driven by the decline in tourism revenues. Demand from the European Union economies continues to contribute positively to exports. With the supportive measures and incentives provided recently, domestic demand is expected to recover starting from the final quarter. The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly.

The slowdown in aggregate demand contributes to the gradual fall in core inflation. Yet, the recent developments in exchange rates and other cost factors restrain the improvement in inflation outlook and thus necessitate the maintenance of a cautious monetary policy stance.

In light of these assessments, the Committee decided to keep the interest rates at current levels. The Committee stated that the direction and the timing of the next step in the monetary policy simplification process will be data dependent.

Future monetary policy decisions will be conditional on the inflation outlook. Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the cautious monetary policy stance will be maintained.

Thursday October 20 2016
Bank Indonesia Unexpectedly Cuts Key Rate to 4.75%
Bank Indonesia | Yekaterina Gucshina |

The Bank Indonesia unexpectedly cut its key interest rate by 25 bps to 4.75 percent at its October 20th, 2016 meeting following a 25bps cut in September. The central bank also lowered its lending facility rate by 25bps to 5.5 percent and reduced its overnight deposit facility rate by 25bps to 4.0 percent. Markets were expecting the central bank to stand pat on monetary policy. Policy makers said that the decision aims to boost growth and lending.

Excerpt from the statement by the Bank Indonesia:

Bank Indonesia believes that the monetary easing is consistent with maintained macroeconomic stability, specifically inflation in 2016 that’s expected to fall near the floor of the target corridor, a better-than-expected current account deficit, bigger trade balance surplus and relatively stable exchange rate. Against a backdrop of global economic moderation, the eased monetary policy is expected to underpin efforts to stimulate domestic demand, including credit, in order to maintain economic growth momentum. Bank Indonesia will continue to coordinate with the government to ensure that inflation control, growth stimulus strenghtening, and implementation of structural reform, are well underway to support sustainable economic growth.

Domestic economic growth in the third quarter was down slightly from the previous projection. Consumption was indicated to improve but remained limited. On the other hand, private investment, particularly non-construction investment, is estimated to remain weak in line with the large installed production capacity. Meanwhile, Bank Indonesia predicts the impact of fiscal stimuli to remain somewhat limited as the government adjusts spending in the second half of the year. Externally, global economic moderation and sluggish world trade have undermined improvements in the real sector exports, despite several commodity prices starting to rebound. Consequently, Bank Indonesia predicts 2016 economic growth to be around the floor of the 4.9-5.3% (yoy) range.

Indonesia’s balance of payments is expected to record an increase of surplus, with a lower current account deficit. Current account deficit in the third quarter is estimated to fall below 2% of GDP, especially bolstered by trade surplus, in line with the rebound in primary commodity export price, as well as a decline of non-oil and gas imports. 

The rupiah remained stable with a tendency of appreciating. The rupiah appreciated by an average of 0.41% to a level of Rp13,110 per USD. The appreciation continues and on the third week of October, the Rupiah closed at a level of Rp13,005 per USD. At home, positive sentiment concerning the domestic economy, stemming from maintained macroeconomic stability together with sound implementation of the Tax Amnesty, bolstered rupiah appreciation. Externally, the rupiah appreciated as global risk surrounding the timing of the proposed FFR hike eased. Moving forward, Bank Indonesia will continue to maintain exchange rate stability in line with the rupiah’s fundamental value.

Bank Indonesia expects inflation to remain under control at a low level and, by the end of 2016, to fall towards the floor of the 4±1% target corridor. The Consumer Price Index (CPI) recorded inflation of 0.22% (mom) in September 2016, which is considered under control and consistent with historical trends. Consequently, CPI inflation stood at 1.97% (ytd) and 3.07% (yoy). 

Financial system stability was maintained along with banking system resilience. In August 2016, the Capital Adequacy Ratio (CAR) was recorded at 23.0% and the liquidity ratio (liquid assets/deposits) at a level of 21.1%. Meanwhile, non-performing loans (NPL) stood at 3.2% (gross) or 1.5% (net). The looser monetary policy stance is continuously transmitted through the interest rate channel as reflected by lower lending and deposit rates. In contrast, monetary policy transmission through the credit channel remained suboptimal, in line with limited demand, including low investment demand from corporations. Credit growth was recorded at 6.8% (yoy) in August 2016, decelerating from 7.7% (yoy) the month earlier.

Thursday October 20 2016
Hong Kong Inflation Slows to 2.7% in September
Census and Statistics Department | Yekaterina Guchshina |

Consumer prices in Hong Kong increased 2.7 percent year-on-year in September of 2016, following 4.3 percent rise in the previous month. The larger growth in August 2016 was attributable to the low base of comparison arising from the Government's payment of public housing rentals a year ago, and such effect did not come into play in September. Netting out the effects of all Government's one-off relief measures, the inflation rate was 2.3 percent, slightly larger than 2 percent in August.

Year-on-year, prices increased at a slower pace for housing (+4.2 percent compared to +9.5 percent in August);  meals bought away from home (+2.9 percent from +3 percent in August); food excluding meals bought away from home (+2.2 percent compared to +2.3 percent in August); miscellaneous goods (+2.2 percent compared to +2.5 percent in August); miscellaneous services (+2.1 percent compared to +2.7 percent in August) and transport (+1.7 percent compared to +2 percent in August).

In contrast, electricity, gas and water went up at a faster 10.3 percent(+4.2 percent in August), mainly due to the low base of comparison resulted from the special fuel rebate in electricity starting from mid-August last year.

Also, prices fell for durable goods (-5.4 percent, compared to -5.3 percent in August) and clothing and footwear (-3.6 percent compared to -5 percent in August).
Considering the first nine months of 2016, the CPI rose by 2.8 percent over a year earlier but netting out the effects of all Government's one-off relief measures, it went up at a slower 2.4 percent.

The spokesman commented that looking ahead, inflation pressure should remain contained in the near term, given the subdued global inflation as well as moderate local cost pressures.

Thursday October 20 2016
Spain Trade Gap Narrows 19.9% YoY in August
Mineco | Yekaterina Guchshina |

Spain's trade deficit dropped 19.9 percent year-on-year to €2.56 billion in August 2016. Exports rose 8.9 percent while imports increased at a slower 4.2 percent. In the first eight months of the year, the trade deficit fell 31.6 percent to €10.9 billion, the second lowest trade gap since 1997. Exports went up 1.3 percent and hit a new record high for that period, while imports rose 1.6 percent.

Total exports rose by 8.9 percent year-on-year to €17.6 billion, the highest reading on record for August month. Contributions to export growth came mainly from the food and beverages (contribution of +2.2 points), non-chemical semi-manufactures (+2.2 points), chemicals (+2.1 points) and automotive sector (+1.8 points). In the contrast, the only sectors that contributed negatively were other goods (contribution of -1.9 points) and capital goods (-0.9 points).
Exports to the EU went up 5.1 percent year-on-year; of which those for the euro zone rose by 7.4 percent. Among trading partners, exports increased to Germany (+9.8 percent), Italy (+11.4 percent) and France (+4.7 percent) but fell to the UK (-0.9 percent). Exports to countries outside the European Union edged up 0.1 percent. Meanwhile, sales dropped to China (-3.2 percent) and Japan (-9.6 percent).

Total imports increased by 4.2 percent to €20.2 billion.

The coverage rate stood at 87.3 percent, 3.8 percentage points higher than in August 2015 (83.5 percent), hitting the second greatest value from the beginning of the series in 1962. 

The non-energy balance showed a deficit of €1169.6 million (€755.1 million gap in August 2015) and the energy deficit decreased 43 percent from the previous year.

Thursday October 20 2016
Switzerland Trade Surplus Hits Record High in September
Swiss Customs Administration l Chusnul Ch Manan |

Switzerland trade surplus increased to CHF 4.37 billion in September of 2016 from CHF 3.13 billion a year earlier and beating market expectations of a surplus CHF 3.27 billion. It was the largest surplus on record, as exports rose much more than imports.

Year-on-year, sales grew by 10.3 percent to CHF 18.8 billion, driven by chemicals and pharmaceuticals (+18.3 percent), precision instruments (+14.5 percent), metals (+6.3 percent), jewelry and bijouterie (+18.9 percent), machinery and electronics (+6.3 percent) and textiles, clothing and footwear (+9.1 percent). In contrast, outbond shipments dropped for: watches (-5.7 percent) and food & beverages (-1.7 percent). Among major trade partners, sales were higher to the US (+36.7 percent), Africa (+20 percent), Japan (+57.8 percent), China (+31.4 percent) and the EU countries (+3.5 percent).  In contrast, sales declined to America Latin (-6.6 percent) and Euro Zone (-7.2 percent). 

Imports increased by 3.7  percent to CHF 14.4 billion. Purchases went up for: chemicals and pharmaceuticals (+17.1 percent),  textiles, clothing and footwear (+6.5 percent), precision instruments (+6.3 percent) and watches (+13.9 percent). In contrast, inbound shipments fell for machinery and electronics (-0.5 percent), energy products (-13.1 percent), plastics (-1.9 percent) and paper (-4.0 percent).

In August 2016, trade surplus was marginally  revised to CHF 3.01 billion.

Considering January to September 2016, sales rose 6.4 percent to CHF 52.55 billion while imports increased by 6.2 percent to CHF 42.37 billion. That brought a trade surplus of CHF 10.20 billion during the period, compared to a CHF 9.5 billion surplus in the same period a year earlier.

Thursday October 20 2016
Australia Jobless Rate Drops to 3-Year Low in September
ABS l Rida Husna |

Australia's seasonally adjusted unemployment rate unexpectedly dropped to 5.6 percent in September of 2016, compared to an upwardly revised 5.7 percent in August and below market estimates. It was the lowest jobless rate since September 2013 as the labor force participation dropped while the economy lost 9,800 jobs.

In September, the seasonally adjusted labour force participation rate came in at 64.5 percent from 64.7 percent in the prior month.

Employment fell 9,800 to 11,947,200: full-time employment decreased 53,000 to 8,105,300 and part-time employment increased by 43,200 to 3,841,900.

Unemployment decreased 12,500 to 705,100. The number of unemployed persons looking for full-time work decreased 7,400 to 492,300 and the number of unemployed persons only looking for part-time work decreased by 5,100 to 212,800.

Seasonally adjusted aggregate monthly hours worked in all jobs increased 4.0 million hours to 1,660.0 million hours.

Wednesday October 19 2016
Brazil Cuts Key Rate to 14%
Joana Taborda |

The central bank of Brazil lowered its benchmark SELIC rate by 25bps to 14 percent on October 19th 2016. It is the first rate cut in four years amid a severe contraction and signs of slowing inflation.

The decision came in line with market expectations.
The central bank said recent indicators suggest economic activity below expectations in the short-term although it expects a gradual recovery. Industrial production fell 3.8 percent in August from July, the biggest drop since January of 2012 and retail sales were down 0.6 percent for the second straight month in August. The GDP shrank 0.6 percent on quarter in the three months to June of 2016, the sixth straight quarter of contraction.
Policymakers also said recent inflation data came more favorable than expected due to lower food prices. Yet, it slowed to 8.48 percent in September, the lowest in sixteen months. Inflation forecasts for 2016 were lowered to 7 percent and were also cut to 4.3 percent in 2017 and 3.9 percent in 2018. The central bank added that the inflation convergence to target is compatible with moderate and gradual easing of monetary conditions although further rate cuts will depend on factors that raise confidence the inflation will converge to target. The central bank targets inflation at 4.5 percent ± 2 percent. 

Wednesday October 19 2016
Canada Keeps Monetary Policy Steady in October
Bank of Canada | Joana Taborda |

The Bank of Canada left its benchmark overnight rate unchanged at 0.5 percent at its October 2016 meeting as widely expected. Policymakers said the growth outlook is lower than projected due to slower housing resale activity and exports and that inflation remains below expectations. The Bank Rate was also left on hold at 0.75 percent and the deposit rate at 0.25 percent.

Statement by the Bank of Canada:

The global economy is expected to regain momentum in the second half of this year and through 2017 and 2018. After a weak first half, the US economy in particular is strengthening: solid consumption is being underpinned by strong employment growth and robust consumer confidence. However, because of elevated uncertainty, US business investment is on a lower track than expected.

Looking through the choppiness of recent data, the profile for growth in Canada is now lower than projected in July’s Monetary Policy Report (MPR). This is due in large part to slower near-term housing resale activity and a lower trajectory for exports. The federal government’s new measures to promote stability in Canada’s housing market are likely to restrain residential investment while dampening household vulnerabilities. Recent export data are improving but are not strong enough to make up for ground lost during the first half of 2016, despite the effects of the Canadian dollar’s past depreciation. Growth in exports over 2017 and 2018 are projected to be slower than previously forecast, due to lower estimates of global demand, a composition of US growth that appears less favourable to Canadian exports, and ongoing competitiveness challenges for Canadian firms.

After incorporating these weaker elements, Canada’s economy is still expected to grow at a rate above potential starting in the second half of 2016, supported by accommodative monetary and financial conditions and federal fiscal measures. As the economy continues to adjust to the oil price shock, investment in the energy sector appears to be bottoming out. Non-resource activity is growing solidly, particularly in the services sector. Household spending continues to rise, along with employment and incomes outside of energy-intensive regions. The Bank expects Canada’s real GDP to grow by 1.1 per cent in 2016 and about 2 per cent in both 2017 and 2018. This projection implies that the economy returns to full capacity around mid-2018, materially later than the Bank had anticipated in July.

Measures of core inflation remain close to 2 per cent as the effects of past exchange rate depreciation and excess capacity continue to offset each other. Total CPI inflation is tracking slightly below expectations because of temporary weakness in prices for gasoline, food, and telecommunications. The Bank expects total CPI inflation to be close to 2 per cent from early 2017 onwards, when these temporary factors will have dissipated, but downward pressure on inflation will continue while economic slack persists.

Given the downward revision to the growth profile and the later closing of the output gap, the Bank considers the risks around its updated inflation outlook to be roughly balanced, albeit in a context of heightened uncertainty. Meanwhile, the new housing measures should mitigate risks to the financial system over time. At present, the Bank’s Governing Council judges that the overall balance of risks is still in the zone for which the current stance of monetary policy is appropriate, and the target for the overnight rate remains at 1/2 per cent.

Wednesday October 19 2016
Russia Jobless Rate Steady at 5.2% in September
Federal State Statistics Service | Yekaterina Guchsina |

Russian unemployment rate remained unchanged at 5.2 percent in September of 2016 compared with a previous month and in a line with market expectations.

The number of unemployed people decreased by 19 thousand to 4.018 million in September. A year earlier, the figure was 4.032 million. 

Meanwhile, the number of economically active population decreased by 0.4 million to 77.1 million (53 percent of population). Compared to September of 2015, the figure increased by 0.1 million. 

Nominal wages rose 9.4 percent year-on-year to an average RUB 36115. Real pay went up 2.8 percent, following 2.7 percent growth in the previous month and above market expectations of 0.6 percent drop. Real disposable income decreased 2.8 percent, compared to 8.2 percent in August.

Wednesday October 19 2016
US Housing Starts Fall for 2nd Month
U.S. Census Bureau | Joana Taborda |

Housing starts in the United States tumbled 9 percent to a seasonally adjusted annualized rate of 1047 thousand in September from August of 2016, below market expectations of 1175 thousand. It is the lowest figure since March of 2015, due to a fall in construction of multifamily homes. In contrast, building permits rose 6.3 percent to 1225 thousand, beating expectations of 1165 thousand.

Starts declined in the South (-5.3 percent to 532 thousand), the Midwest (-14.1 percent to 146 thousand) and the Northeast (-36 percent to 87 thousand) and were flat at 282 thousand in the West. 

Housing starts for the volatile multi-family segment shrank 38.9 percent to 250 thousand while single-family homes, the largest segment of the market, rose 8.1 percent to 783 thousand. For the single family segment, biggest gains occured in the Northeast (20 percent to 60 thousand), followed by the South (12.1 percent to 426 thousand) and the Midwest (6.3 percent to 118 thousand) but fell in the West (-2.2 percent to 179 thousand). 

Building permits reached the highest since November. Increases occured in the South (2.6 percent to 594 thousand), the West (15.8 percent to 316 thousand) and the Northeast (23.6 percent to 131 thousand) while permits fell 5.2 percent to 184 thousand in the Midwest. Multi-family permits rose 17.2 percent to 449 thousand and the single-family segment edged up 0.4 percent to 739 thousand.

August figures for housing starts were revised upwards to 1150 thousand from 1142 thousand, representing a 5.6 percent fall (-5.8 percent earlier reported). Building permits were also revised up to 1152 thousand from 1139 thousand, a 0.7 percent gain compared to intial estimates of a 0.4 percent fall.

Year-on-year, housing starts declined 11.9 percent in September while building permits increased 8.5 percent.

Wednesday October 19 2016
UK Unemployment Rate Holds Steady at 4.9%
ONS | Joana Ferreira |

UK jobless rate remained unchanged at 4.9 percent for the fourth consecutive month in the three months to August 2016, in line with market expectations. It stood at its lowest level in eleven years, as the number of people in work and the number of unemployed people increased, while the number of economically inactive people fell.

There were 1.66 million unemployed people, 10,000 more than for March to May 2016 but 118,000 fewer than for a year earlier. There were 891,000 unemployed men, 12,000 fewer than for March to May 2016 and 81,000 fewer than for a year earlier. There were 765,000 unemployed women, 23,000 more than for March to May 2016 but 37,000 fewer than for a year earlier. The unemployment rate was 4.9 percent, unchanged compared with March to May 2016 but down from 5.4 percent for a year earlier.

There were 31.81 million people in work, 106,000 more than for March to May 2016 and 560,000 more than for a year earlier. There were 23.23 million people working full-time, 362,000 more than for a year earlier. There were 8.58 million people working part-time, 198,000 more than for a year earlier. The employment rate was recorded at 74.5 percent, the joint highest since comparable records began in 1971.

There were 8.81 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 65,000 fewer than for March to May 2016 and 231,000 fewer than for a year earlier. The inactivity rate was 21.5 percent, the joint lowest since comparable records began in 1971.

Average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.3 percent both including and excluding bonuses compared with a year earlier.

Wednesday October 19 2016
South Africa Inflation Rate Up to 6.1% in September
Statistics South Africa | Mojdeh Kazemi |

Consumer prices in South Africa rose 6.1 percent year-on-year in September of 2016, following a 5.9 percent increase in August and below market expectations of 6.2 percent gain. It was the highest figure since June as cost of transport went up at a faster pace.

Year-on-year, cost rose for housing and utilities (+5.4 percent from +5.8 percent in August); food and non-alcoholic beverages (+11.3 percent, the same pace as in August). Also, prices rose at faster pace for transport  (+3.5 percent from +2 percent) and miscellaneous goods and services (+7.2 percent from +6.9 percent). Additional upward pressure came form: alcoholic beverage and tobacco (+5.2 percent, the same pace as in August); household contents and services (+4 percent from -0.9 percent).

On a monthly basis, consumer prices increased 0.2 percent after a 0.1 percent decline in a month earlier. Prices of housing and utilities went up by 0.5 percent and cost of food and non-alcoholic beverages rose 0.2 percent, mostly due to a 0.3 percent gain in cost of processed food and a 0.7 percent rise in bread and cereals. In contrast, transport prices edged down 0.1 percent, as petrol cost fell 1.5 percent.

The core index which excludes prices of food, non-alcoholic beverages, petrol and energy increased 5.6 percent year-on-year, following a 5.7 percent rise in August. Month-on-month, prices rose 0.3 from 0.2 percent in the previous month.

Wednesday October 19 2016
China Quarterly GDP Growth Eases Slightly to 1.8% in Q3
National Bureau of Statistics l Rida Husna |

The Chinese economy advanced by 1.8 percent quarter-on-quarter in the third quarter of 2016, compared to an upwardly revised 1.9 percent growth in the previous three months and in line with market estimates.

Many uncertain factors in the economy remain, the National Bureau of Statistics said in a statement on its website. It also acknowledged that the foundation for sustained growth is not solid.

Year-on-year, the economy advanced an annual 6.7 percent in the September quarter 2016, the same pace as in the previous two quarters and matching consensus.

For 2016, the Chinese government is targeting the economy to grow between 6.5 to 7.0 percent. A year earlier, the economy expanded by 6.9 percent, the weakest since 1990.

Wednesday October 19 2016
China GDP Growth Matches Estimates in Q3
National Bureau of Statistics l Rida Husna |

The Chinese economy expanded an annual 6.7 percent in the September quarter of 2016, the same pace as in the previous two quarters.The figure was in line with market expectations, supported by an increase in government spending, fixed asset investment and retail sales while industrial output eased.

From January to September 2016, government spending rose 12.5 percent compared to the same period a year earlier while revenues increased by 5.9 percent.

Fixed-asset investment grew by 8.2 percent year-on-year, compared to a 8.1 percent rise in the first eight months of 2016 and in line with estimates. While investment by state firms jumped by 21.1 percent year-on-year; those by private firms rose 2.5 percent, accelerating from a record low of 2.1 percent in January to August.

In September, retail sales  rose 10.7 percent year-on-year, compared to a 10.6 percent increase in August. It was the fastest growth since December 2015 and slightly above consensus of a 10.6 percent rise. Sales grew for all categories: building materials (+14.2 percent), automobiles (+13.1 percent), personal care (+12.5 percent), office supplies (+10.4 percent), furniture (+8.7 percent), home appliances (+8.6 percent), cosmetics (+7.7 percent), garments (+6.7 percent), telecoms (+5.1 percent), jewelry (+5.0 percent) and oil. oil products (+2.9 percent).

Industrial production went up 6.1 percent from a year earlier, slowing from a 6.3 percent growth in August and missing market expectations of a 6.4 percent rise. Output rose the most in electricity, gas and water production (+7.3 percent), followed by manufacturing (+6.5 percent) and mining (+0.1 percent). 

Figures released earlier showed exports tumbled 10.0 percent year-on-year to USD184.51 billion in September 2016, compared to a 2.8 percent drop in the prior month while market estimated a 3.0 percent drop. In the last twelve months exports rose only in March (+10.7 percent). Imports unexpectedly dropped by 1.9 percent to USD142.52 billion, following a 1.5 percent rise in August and missing expectations of a 1.0 percent growth. 

Considering the first nine months of 2016, the services sector expanded 7.6 percent while the industry sector grew at a slower  6.1 percent.

From January to September 2016, final consumption accounted for 71.0 percent of Chinese economy. Meanwhile, investment contributed 36.8 percent of growth and net exports were a 7.8 percent drag on growth.

For 2016, the Chinese government is targeting the economy to grow between 6.5 to 7.0 percent. A year earlier, the economy expanded by 6.9 percent, the weakest since 1990.

On a quarterly basis, the GDP advanced 1.8 percent, compared to an upwardly revised 1.9 percent expansion in the June quarter and matching market consensus.

Tuesday October 18 2016
Chile Leaves Monetary Policy Steady in October
Central Bank of Chile | Joana Taborda |

The Central Bank of Chile left its benchmark interest rate unchanged at 3.5 percent on October 18th 2016 as widely expected. Policymakers said September inflation was unusually low at 3.1 percent, signaling the inflation will approach the 3 percent target sooner than expected.

Statement by the Central Bank of Chile:
Internationally, monetary and financial conditions are still favorable and long-term interest rates remain low. On the activity side, incoming data brought no big news, pointing to a gradual recovery of world growth next year. Despite fluctuations, the prices of commodities rose during the month, especially oil.
On the domestic front, September’s CPI was unexpectedly low, making annual inflation approach 3% sooner than expected. Various expectations indicators place inflation around the target in the projection horizon. Partial third-quarter data continue to point at limited growth in output and demand, consistent with the Monetary Policy Report’s baseline scenario. The labor market continues to adjust gradually.
The Board reiterates its commitment to conduct monetary policy with flexibility, so that projected inflation stands at 3% over the policy horizon. Any future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook.

Tuesday October 18 2016
US Inflation Rate at Nearly 2-Year High in September
BLS | Joana Taborda |

Consumer prices in the United States went up 1.5 percent year-on-year in September of 2016, higher than 1.1 percent in August and in line with market expectations. It is the highest inflation rate since October of 2014 boosted by robust gains in shelter and a smaller drop in energy prices while food cost fell for the first time in more than six years.

Year-on-year, prices of services less energy increased 3.2 percent, the same as in August: inflation was steady for shelter (3.4 percent) and eased for transportation services (3 percent from 3.1 percent) and medical care (4.8 percent from 5.1 percent). 

Food prices fell 0.3 percent after being flat in August, marking the first decline since February of 2010. In contrast, energy cost fell at a much slower 2.9 percent (-9.2 percent in August)

Annual core inflation which excludes food and energy eased to 2.2 percent from 2.3 percent in the previous month and below market expectations of 2.3 percent.  

On a monthly basis, consumer prices rose 0.3 percent after a 0.2 percent gain in August and also in line with market expectations. Increases in the shelter (+0.4 percent) and gasoline (+5.8 percent) indexes registered main upward pressures: gasoline cost accounted for more than half of the all items increase and the shelter index posted the largest gain since May. The energy index increased 2.9 percent, its largest advance since April. In contrast, the index for food was unchanged for the third consecutive month, as the food at home index continued to decline (-0.1 percent).

The core index edged up 0.1 percent, slowing from a 0.3 percent rise in August.  Along with shelter, prices for medical care, motor vehicle insurance, personal care, education, alcoholic beverages, airline fares, and tobacco all increased in September. In contrast, the indexes for communication, apparel, used cars and trucks, recreation, and new vehicles declined.