Mixed signals from prices, retail sales and German confidence

Plenty of economic news out yesterday. Reuters reports several of them, including US producer prices:

U.S. producer prices rose in October as soaring home heating costs offset cheaper gasoline... The Labor Department said prices received by farms, factories and refineries rose 0.7 percent last month...

Outside the volatile food and energy sectors, however, so-called core producer prices fell a surprise 0.3 percent in October despite economist forecasts for a 0.2 percent rise... The report on producer prices showed a big drop in automobile prices helped depress core inflation in October...

The 12-month increase in producer prices was 5.9 percent, largely due to a 26.1 percent increase in the cost of finished energy goods.

...retail sales:

A separate report from the Commerce Department showed retail sales dipped a smaller-than-expected 0.1 percent in October. Car sales were weak... shedding 3.6 percent in the month -- but retail sales excluding autos rose a robust 0.9 percent...

Target Corp. said November sales at stores open at least a year would come in below earlier forecasts... Wal-Mart Stores Inc...expected a good holiday season...

The International Council of Shopping Centers and UBS said sales rose 3.9 percent last week compared to last year, while Redbook Research found sales at major retailers up 3.5 percent over the same period.

...and manufacturing:

The New York Fed's Empire State index showed overall conditions for manufacturers rose to +22.82 from +12.08 in October, which was the weakest level in five months... The survey's employment index also rose to its highest level in over a year.

Bloomberg has economic news out of Europe.

German investor confidence unexpectedly declined in November... A gauge of institutional and analyst expectations fell to 38.7 from 39.4 in October, the ZEW Center for European Economic Research said today...

Euro-region growth accelerated to 0.6 percent in the third quarter from 0.2 percent in the three months through June, Luxembourg-based Eurostat said, exceeding the 0.5 percent median forecast of 39 economists in a Bloomberg survey. Germany's economy also expanded 0.6 percent from the second quarter...

In the U.K., Europe's second-largest economy, inflation slowed for the first time in more than a year in October. The annual rate of consumer-price increases moderated to 2.3 percent from 2.5 percent in September, the Office for National Statistics said today.

The fall in UK consumer price inflation followed a fall in producer price inflation reported the day before.

Factory gate inflation in the UK fell sharply in October, driven by a decline in scrap metal prices, according to official figures released on Monday.

Producer output prices dropped 0.1 month-on-month, compared with forecasts of a 0.2 per cent increase, taking the annual inflation rate down from 3.3 per cent to 2.6 per cent. Core prices, which exclude food, beverages , tobacco and petroleum, fell 0.3 per cent in October, compared with September, leaving the annual core rate at 1.3 per cent against 2.1 per cent the previous month...

Input prices rose a seasonally adjusted 0.3 per cent month-on-month, reflecting an increase in fuel costs, and rebounding from September's 0.4 per cent decline. But for the year, input price inflation fell from 10.2 per cent in September to 7.7 per cent in October.

China Daily reports the rise in retail sales in China:

China's retail sales rose by 12.8 per cent in October compared to the same month last year, accelerating slightly from the 12.7 per cent growth in September.

...as well as in industrial production:

China's industrial output in October totaled 632 billion yuan (US$78 billion; euro67 billion), the National Bureau of Statistics said, with the annual rate of growth slowing to 16.1 percent from 16.5 percent in September.

While some Chinese officials say both export demand and domestic demand are supporting strong growth in output, members of the country's top planning agency are starting to warn of overcapacity.

The latter report on China probably provides a good perspective on global inflationary trends, and reminds us that even as we look at inflation indices that exclude energy prices that are pushed up by Chinese demand, we need to be mindful of inflation data that incorporate prices that are pushed down by Chinese supply.