November 15, 2019
United States (US): US Commerce Chief: US, China Trade Talks to Continue Friday; Industrial Production Slumps Due to Strike at GM; Import Prices Fall 0.5% in October Amid Steep Drop in Fuel Prices
US-China trade talks are set to continue with a telephone call on Friday as both sides seek to hammer out a phase one trade pact, US Commerce Secretary Ross said, adding that progress was being made on the agreement’s details. Ross also said there was a very high probability that the US would reach a final agreement on a phase one trade deal with China. But, he added that it was unclear when the initial agreement would be finalized after a potential deadline this month evaporated with the cancellation of an international summit in Chile and with upcoming US tariffs on Chinese imports looming next month. “We’re down to the last details now,” Ross said. More US tariffs on imported Chinese goods are set to go into effect Dec. 15. Asked if the goal was to get a deal before then, Ross did not say. “Maybe we get disappointed again now and, if we do, the president has made quite clear he’s happy to live with the situation where we impose tariffs,” he said, adding that President Trump has not yet indicated any change to the upcoming tariff increase.
Industrial production in the US fell by much more than expected in October, with manufacturing production showing a notable decrease due to the since-resolved strike at General Motors. The Fed said industrial production tumbled by 0.8% in October after falling by 0.3% in September. The steep drop reflected the biggest decrease in production since May of 2018. The bigger than expected decrease in industrial production came as manufacturing output fell by 0.6% in October following a 0.5% drop in September. The strike at GM contributed to a 7.1% nosedive in the output of motor vehicles and parts. Excluding motor vehicles and parts, manufacturing output edged down by just 0.1%. The Fed also said capacity utilization for the industrial sector slumped to 76.7% in October from 77.5% in September. Capacity utilization had been expected to dip to 77.1%. Capacity utilization in the manufacturing and mining sectors edged down to 74.7% and 88.8%, respectively, while capacity utilization in the utilities sector fell to 75.4%.
Import prices slid by 0.5% in October after inching up by 0.1% in September. The bigger than expected decrease in import prices was driven by lower petroleum prices, which plummeted by 3.7%. Prices for fuel imports plunged by 2.9% in October after jumping by 1.5% in September. Excluding fuel imports, import prices dipped by 0.2% in October after edging down by 0.1% for two straight months. Export prices edged down by 0.1% in October after dipping by 0.2% in September. The drop in export prices came as a 0.3% decrease in prices for non-agricultural exports more than offset a 1.9% jump in prices for agricultural exports.
European Union (EU): Eurozone Inflation Confirmed At 3-year Low
Euro traded at 1.1045 against USD at 9:00 am PST.
Eurozone's inflation slowed in October to its lowest level in nearly three years. CPI rose 0.7% YoY following a 0.8% increase in September. The latest inflation rate was the lowest since November 2016, when it was 0.6%. The initial estimate for core inflation was also confirmed. The figure rose for a second straight month, to 1.1% from 1% in September. The rate of core inflation was the highest in four months.
Italy: Inflation Slows in October
CPI rose 0.2% YoY in October, after a 0.3% increase in September. The core inflation excluding energy and unprocessed food rose 0.7% in October, following a 0.6% increase in September. Prices for miscellaneous goods and services grew 1.5% annually in October, and those of restaurants and hotels, education grew 1.4% and 1.3%, respectively. On a monthly basis, consumer prices edged down 0.1% in October, following a 0.6% fall in September. HICP rose 0.2% annually in October.
Mexico: Bank Cuts Benchmark Interest Rate
Mexican Peso traded at 19.2050 per USD at 9:00 am PST.
The central bank cut its benchmark interest rate in a move that was predicted by economists, who expect the bank to continue monetary policy easing in 2020. The BoM cut the interest rate by 25 basis points to 7.5%. The bank made quarter-point cuts at its last two meetings after inflation dropped and the economy continued to slow.
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