EUROZONE DATA: Stronger Than Expected France And Spain IP, Energy The Key Driver
Both French and Spanish industrial production came in firmer than expected, with energy (specifically electricity and gas in France) driving growth in both. In France, the "Other transport equipment" category again saw strong growth to help the headline rate, offsetting a decline in the automobile industry.
- France IP came in at 0.2% M/M for October (-0.1% cons, 0.7% prior, revised down 0.1ppt) and 1.7% Y/Y (1.3% cons, 1.3% prior)
- Spain IP grew 0.7% M/M (0.5% cons, 0.4% prior, revised down 0.1ppt), and 1.2% Y/Y (0.5% cons, 1.5% prior, revised down 0.2ppts).
- Looking into the French details, manufacturing production declined 0.1% M/M (with a notable 3.5% fall in electronics manufacturing), though this was offset by strength in the energy sector, where "Electricity, gas, steam and air conditioning" output grew 1.7% M/M (vs 0.3% Sep) this subcomponent makes up 16% of the IP index.
- The transport sector in France showed mixed details, with manufacturing of automobile equipment falling 4.0% M/M (vs +2.1% Sep). However, the "Other transport equipment" category again printed relatively strong at 2.4% M/M (after a notable 7.2% rebound in Sep) - leaving the overall transport equipment sector close to flat.
- For Spain, energy IP had the highest monthly growth rate at 0.5%, (and 3.6% Y/Y, vs 3.9% Sep). Nondurable consumer goods were weakest at -0.3% M/M.
- Despite modest downward revisions to prior data in both series, the releases point to stronger industrial output (particularly in energy) in the Eurozone in October.
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MNI: ITALY OCT SERV PMI 54.0 (53.0 FCAST, 52.5 SEP)
- MNI: ITALY OCT SERV PMI 54.0 (53.0 FCAST, 52.5 SEP)
RIKSBANK: Little Market Reaction With Decision Bringing No Surprises
As expected, little reaction in SEK FX and rates markets following the Riksbank decision and policy statement. Very light upside in NOKSEK appears driven by the NOK leg. There were no surprises in the Riksbank's guidance, and the decision was unanimous.
Continued labour market weakness was noted, though the Riksbank remains optimistic that a turnaround will take place soon (consistent with the September MPR projections).
"Growth was somewhat stronger than expected during the third quarter, according to preliminary statistics. At the same time, the labour market is still showing weak development, although there are now some signs that a turnaround is on its way. Overall, the outlook for inflation and economic activity remains largely unchanged."
RIKSBANK: Holds Policy Rate With Unchanged Guidance
The Riksbank holds the policy rate at 1.75% as unanimously expected. Guidance language was unchanged relative to September (as we had expected):
"The elevated inflation has begun to fall back, at the same time as economic activity is on its way to recovery. The outlook for inflation and economic activity thus remains largely unchanged and the Executive Board has decided to leave the policy rate unchanged at 1.75 per cent. The policy rate is expected to remain at this level for some time to come."
