GEW September 29, 2009

SUI: The UBS Consumption Indicator fell to 0.66 in August from 0.75 in the previous month and continued to remain below its long term average of 1.50 for the 11th straight month. However, the positive level for August indicates a modest increase in private consumption. UBS expects further weakening of private consumption in the coming months and forecast economic growth of 0.8% for 2009.

UK: Real GDP Growth shrank 0.6%qoq in Q2 2009, a slight improvement over previous estimates of economic contraction and a marked pick up from the 2.5% contraction in the previous quarter. However, compared with the same quarter in 2008, economic output was lower by 5.5%, the most on record. In terms of sectoral activity, industrial production was down 0.5% in Q2 led by a 3.6%qoq fall in electricity production with mining lower by 0.6%qoq and manufacturing having eased 0.1%qoq. Agriculture output was lower by 2.9% in Q2 while construction activity was down 0.8%qoq. Output in the services sector contracted 0.6%qoq as transport and communication sector activity declined 1.8% in Q2, while business and financial services eased 0.7% over the previous quarter. Based on the expenditure account, household consumption expenditure eased 0.2%qoq while Government expenditure continued to shore up final consumption expenditure with a 1.4%qoq rise. Business investments however continued to suffer, down a sharp 5.4% over the quarter, and the external sector also showed strains of a strong Pound, as exports fell 3.8%qoq and imports were down 2.4% in Q2. The household savings ratio increased to 5.6% in Q2, the most in six years and real household disposable incomes were up 0.9% over the second quarter to be higher by 0.7%yoy.

EUR: The Economic Sentiment Index rose two points to 82.8 in September, its six straight monthly rise and the highest in a year to be mostly in line with market expectations. On the negative side, the sentiment index remains still below its long-term average and the increase of two points in September was the smallest since April. The economic sentiment index improved on the back of a marked improvement in consumer confidence, which gained three points to -19. The index of industrial confidence rose one point to -24 in September; the retail sales index also rose one point to -15 as did construction index notch up a point to -31. Financial services sector confidence index (not part of the index) picked up a sharp 13 points to +19 in September, though the overall confidence in the services sector remained negative at -9.0. The Business Sentiment Index improved only slightly to -2.07 in September from -2.18 in the previous month and continued to remain lower than the long-term average.

USA: The S&P Case Schiller House Price Index fell 13.3%yoy in July, better than market expectations of a 14.2%yoy decline and was up 1.6% on a monthly basis. This was the biggest monthly increase in almost four years and the smallest annual decline since February 2008. Out of the 20 cities in the index, prices in Las Vegas plunged the most - by 31%yoy, followed by Phoenix, where prices were down 29%yoy. The smallest decline in prices printed in Cleveland, where prices fell 1.3%yoy.
USA: The Consumer Confidence Index dropped 1.4 points to 53.1 in September (after an upwardly revised August) to be well below market expectations of a rise to 57.0. The present situations index dropped to 22.7 in September from 25.4 in the previous month while the expectations index fell 0.5 points to 73.3 over the month. On business conditions, those that felt conditions were “bad” increased to 46.3% from 44.6% over month, while those claiming conditions to be “good” increased marginally to 8.7% in September from 8.5% previously. Those anticipating an improvement in business conditions over the next six months decreased to 21.3% from 22.2%, but at the same time those expecting conditions to worsen also decreased - to 15.0% from 15.2%. The share of consumers who thought of jobs to be plentiful fell to 3.4% in September from 4.3% in the previous month and the proportion of those who said jobs were hard to get increased to 47% from 44.3% in the same period. On a positive note, those who expect their incomes to rise over the next six months increased to 11.2% in September from 10.8% previously.