Weekly Market Recap
Week in review
- U.S. retail sales strong at 1.7% m/m for October
- Australian wages grow by 2.2% y/y in 3Q
- U.K. inflation jumps to 4.2% y/y in October
- Eurozone and U.S. PMI for manufacturing
- RBNZ official cash rate
- Australia retail sales for October
Thought of the week
Worries that rising prices would harm consumer spending habits in the U.S. were soothed last week. However, despite the recent decline in consumer sentiment figures, the desire for more stuff appears relentless. The absolute level of retail sales was above the peak from earlier in the year, which was fueled by the government’s so called ‘stimi’ cheques. Retail sales is a value figure so reflects not just an increasing volume of purchases but also the increase in value as prices rise in response to supply shortages. However, even when controlling for things like rising fuel and food prices, spending was still up. The implication is that even as prices rise, individuals are willing to draw down on elevated savings to fund their purchases. Given that household consumption accounts for well over two thirds of the U.S. economy, the turn in spending habits points to a very strong final quarter for the U.S. economy and corporate earnings.
Declining confidence hasn’t harmed spending
U.S. retail sales (billion) and consumer confidence index
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