Economic wrap: US CPI in focus - Westpac

Analysts at Westpac offered an economic wrap.

Key Quotes:

"US retail sales came in on the weak side of expectations in August, falling 0.3% (vs -0.1% expected), The control group stumbled too with a 0.1% fall, well shy of expectations at +0.4%. Look for Q3 GDP expectations to be trimmed on this. The weakness was broad-based - 9 of 13 spending categories contracted. Among other data releases, the NY Empire Fed survey was also subdued at -2, though encouragingly the new orders and employees sub-indices both improved in Sep. Also on the plus side, the Philly Fed saw a handy gain , from 2.0 to 12.8, well above consensus with new orders (+8.6pts improvement) and employment (+14.7pts improvement) also firming. PPI was flat in Aug as well as yoy (vs +0.1% expected for both), and industrial production also disappointed.

The Bank of England kept the policy rate on hold at 0.25%, and the asset purchase plan unchanged, while continuing to signal further easing if its growth outlook was met – all widely expected.

Economic Event Risks Today

US CPI: Divergence persists between headline and core inflation. Core CPI inflation continues to print above 2%; headline inflation below 1%yr. Services inflation is the key area of strength.

NZ consumer confidence (ANZ) should continue to point to further GDP gains during the months ahead."