Europe:
German inflation accelerates past expectations, preliminary figures show
German inflation accelerated ahead of expectations in November, the Federal Statistics Office said on Wednesday, with consumer prices rising 1.8 percent year-on-year, compared to the 1.7 percent forecast by analysts polled by Reuters. The preliminary numbers, harmonized to make them comparable with inflation data from other European Union countries, also showed that prices had risen 0.3 percent compared to October, faster than the 0.2 percent increase analysts expected. Higher energy costs had made the largest contribution to the headline price increases, the agency said, followed by increased food costs. Inflation figures from Europe’s largest economy are closely watched because of their influence on the European Central Bank’s monetary policy. Germany’s final inflation numbers for November will be published on December 13.
Asia:
Indian inflation likely to rise, interest rates won’t, economists say
The Reserve Bank of India is likely to leave interest rates unchanged at its December policy meeting and through the end of next year, despite expectations that inflation will breach its 4 percent target in the next few months, a Reuters poll showed. The results, from a poll of economists taken over the past week, also found there is a bigger risk the next move is a cut, even though forecasts diverge in three directions starting from the second quarter of next year. That suggests both that policymakers have little room for maneuver and the outlook for rates beyond the next few months is exceptionally fuzzy, with several respondents saying they were unwilling to look much beyond the turn of the year. The poll comes at a possible turning point for Asia’s third- largest economy, with a separate Reuters survey showing economists now expect a rebound in economic growth after five consecutive quarters of deceleration. “In the RBI’s perception, inflation is inching up and the risks of that remaining high remain for a longer duration, say a couple of quarters or so, it may be difficult for the RBI to consider a rate cut around that scenario,” said Shubhada Rao, chief economist at Yes Bank in Mumbai.
U.S.:
U.S. Third-Quarter Growth Revised Up to 3.3%, Three-Year High
The U.S. economy’s growth rate last quarter was revised upward to the fastest in three years on stronger investment from businesses and government agencies than previously estimated, Commerce Department data showed Wednesday.
Highlights of Third-Quarter GDP (Second Estimate)
- Gross domestic product grew at a 3.3% annualized rate (est. 3.2%), revised from 3%; fastest since 3Q 2014
- Consumer spending, biggest part of the economy, grew 2.3% (est. 2.5%); revised from 2.4%; down from 3.3% in 2Q
- Business-equipment spending rose at a 10.4% pace, a three-year high, revised from 8.6%; reflects transportation gear
- Corporate pretax earnings rose 5.4% y/y, following a 6.3% y/y advance
Key Takeaways
The latest results for GDP, the value of all goods and services produced, show the economy was on a more solid footing as it entered the final stretch of the year, withstanding the damage from hurricanes Harvey and Irma. While the revised growth rate is in line with President Donald Trump’s goal, economists generally see such a pace as unsustainable and expect growth to slow sometime in 2018. Trump and congressional Republicans are pushing a tax-cut plan with the aim of lifting GDP gains to 3 percent annually, though analysts expect any economic boost to be modest, on balance, if the proposal becomes law.