U.S. industrial output, sapped by Harvey, falls for first time since January
U.S. industrial output fell in August for the first time since January as Hurricane Harvey battered oil, gas and chemical plants along the Gulf Coast and a cool summer sapped utility demand in the east, the Federal Reserve said on Friday. Overall industrial production fell 0.9 percent over the month after a July increase revised upward to 0.4 percent. The Fed, using a combination of high-frequency plant output data and economic modelling, attributed about 0.75 percentage point of the decline to storm effects that “temporarily curtailed drilling, servicing, and extraction activity for oil and natural gas.” Economists polled by Reuters had still expected a 0.1 percent increase in industrial output. The U.S. central bank’s measure of the industrial sector comprises manufacturing, mining, and electric and gas utilities. Though Harvey was a major force in the decline, helping push down mining output by 0.8 percent, other sectors contributed. The output of consumer goods fell 0.7 percent as a rise in production of consumer durables was offset by declines in non-durables and consumer energy products. Production of motor vehicles and auto parts rose 2.2 percent.
U.S. retail sales post biggest drop in six months
U.S. retail sales unexpectedly fell in August, likely hurt by the impact of Hurricane Harvey on motor vehicle purchases, suggesting a moderation in consumer spending in the third quarter. The Commerce Department said on Friday retail sales dropped 0.2 percent last month, the biggest decline in six months. Data for July was revised to show sales increasing 0.3 percent instead of the previously reported 0.6 percent jump. Economists polled by Reuters had forecast retail sales nudging up 0.1 percent. Motor vehicle sales tumbled 1.6 percent last month, the biggest drop since January, after being unchanged in July. Harvey, which slammed Texas in the last week of August and unleashed unprecedented flooding in Houston, probably dented sales of automobiles. Auto sales are, however, expected to get a boost from the replacement of flood-damaged vehicles. Overall retail sales increased 3.2 percent in August on a year-on-year basis, pointing to underlying strength in domestic demand.
China consumer, producer inflation to remain at reasonable levels: state planner
A pick-up in China’s inflation during August was due mainly to short-term pressures and the headline consumer price index and producer price index levels will remain within a reasonable range, the country’s state planner said on Friday. China’s producer price inflation accelerated to a four-month high in August while consumer inflation reached a seven-month high, both at a faster-than-expected pace. But analysts have said that price gains still remain modest and there is little pressure on the central bank to tighten policy further.
Euro zone bond sell-off grinds to a halt as North Korea “spoils the party”
Euro zone government bond yields edged off the week’s highs on Friday as geopolitical tensions drove investors back into a market they have been leaving all week. A glut of supply and growing expectations of tighter monetary policy in Europe and the United States had pushed investors away from government bonds up to Thursday, and yields — which move inversely to prices — had risen sharply. But another missile test from North Korea on Thursday night made many retreat back into safe-haven assets such as government bonds. North Korea fired a missile that flew over Japan’s northern Hokkaido far out into the Pacific Ocean on Friday, South Korean and Japanese officials said, deepening tensions after Pyongyang’s recent test of its most powerful nuclear bomb. Germany’s 10-year government bond yield, the benchmark for the region, was on Thursday set for its biggest weekly rise since late June, having risen 13 basis points to hit a high of 0.43 percent. But by Friday morning, they had edged back down to 0.41 percent.