According to the preliminary estimate, German HICP inflation slowed more than expected in October. The annual rate of HICP inflation slowed from 1.6% Y/Y to 1.3% Y/Y, while the consensus was looking for a more limited drop (to 1.5% Y/Y). German inflation is now at its lowest level since April, when it slowed to 1.1% Y/Y. Looking at the details, downward price pressures were broad-based with prices of leisure & entertainment, transportation and household energy falling the most. Only prices of clothing & shoes and food & beverages increased in October. Apart from Germany, inflation also slowed in Belgium and Spain with the annual rate of Spanish inflation (EU-Harmonized) slowing to 0.1% Y/Y. Euro zone CPI inflation slowed to 1.1% Y/Y in September and is expected to have stabilized in October. We believe however that also euro zone HICP inflation slowed further this month, adding pressure on the ECB to ease policy further as inflation is further moving away from the 2% target.
European Commission's economic confidence improved for a sixth consecutive month in October and the increase was even bigger than forecast. Economic confidence rose from 96.9 to 97.8 as industrial confidence improved significantly (-4.8 from -6.6), while a more limited rebound was seen in consumer confidence (confirmed at -14.5 from -14.9 in September). Services (-3.7 from -3.2), retail (- 7.8 from -6.9) and construction (-29.6 from -28.8) sentiment weakened in October. Also the country breakdown shows a mixed picture as economic sentiment improved in France, the Netherlands, Austria, Portugal and slightly in Germany and Cyprus. Economic confidence weakened this month in the hard-hit countries as Italy, Spain and Greece, but also in Belgium and Luxembourg. Although economic confidence improved further in the euro area this month, the breakdown shows a mixed picture, confirming that the pace of recovery is slowing in the final quarter of the year
European Commission's economic confidence improved for a sixth consecutive month in October and the increase was even bigger than forecast. Economic confidence rose from 96.9 to 97.8 as industrial confidence improved significantly (-4.8 from -6.6), while a more limited rebound was seen in consumer confidence (confirmed at -14.5 from -14.9 in September). Services (-3.7 from -3.2), retail (- 7.8 from -6.9) and construction (-29.6 from -28.8) sentiment weakened in October. Also the country breakdown shows a mixed picture as economic sentiment improved in France, the Netherlands, Austria, Portugal and slightly in Germany and Cyprus. Economic confidence weakened this month in the hard-hit countries as Italy, Spain and Greece, but also in Belgium and Luxembourg. Although economic confidence improved further in the euro area this month, the breakdown shows a mixed picture, confirming that the pace of recovery is slowing in the final quarter of the year
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