EUROPEAN DATA WRAP: Another indication of a weak start to Q4 in Germany, UK House Prices tick higher again

Analysis details (15:00)

German Industrial Output, Oct

• M/M -0.4% vs. Exp. 0.2% (Prev. -1.4%); 3M/3M -1.9%


• Another bleak Q4 data point for Germany, extending the run of negative industrial data to five consecutive months. Destatis points out that the decline is largely attributable to the performance of the “manufacture of machinery and equipment” sector; -6.3% M/M (prev. 3.9%). Construction also declined on the month. Though, the automotive sector posted M/M growth of 0.7%.


• A release which follows Wednesday's poor new orders and soft exports before that. Overall, the October metrics point to a particularly weak start for Germany in Q4 and validate the most recent PMI nowcasts which point to a contraction for GDP in Q4 and as such keeping recessionary concerns in focus. Moreover, it adds to the likelihood of the EZ itself entering a technical recession as 2024 concludes. On this, today’s Q3 EZ GDP was unrevised for the Q/Q (-0.1%) but the Y/Y was subject to a marginal downward revision to 0.00% (prelim. 0.10%).


• The data spurred Bunds from 134.95 to 135.11, with the move then continuing throughout the European morning to an eventual 135.81 session high.

UK Halifax House Prices, Nov

• M/M 0.5% (Prev. 1.1%); Y/Y -1.00% (Prev. -3.20%, Rev. -3.1%)


• Another M/M increase for house prices that has lifted the average to GBP 283.6k, but well within the YTD range and still some way shy of the mid-2022 peak. But, as Halifax highlights, this means the average price is more than GBP 40k above the pre-COVID period. Upside which has been driven by supply rather than demand developments; “… underpinned by a shortage of properties available, rather than any significant strengthening of buyer demand.”. However, mortgage approvals via BoE data ticked up M/M in October with RICS describing the housing market at that period as slightly less downbeat, though we now await the data/survey for November for a clean compare.


• Looking ahead, Halifax expects to see downward pressure on prices into 2024 given inflation, cost of living, employment and affordability factors. Furthermore, on the affordability/mortgage front, it is worth highlighting that market expectations for the BoE while dovish point to much less easing in 2024 vs the ECB/Fed, pricing which may also be subject to pushback from Threadneedle St. next week given the last meeting featured three hawkish dissenters to the unchanged 5.25% Bank Rate.


• No reaction to the release.

07 Dec 2023 - 15:00- Fixed IncomeData- Source: Newsquawk