In the US, Q3 non-farm productivity posted a much stronger than expected 4.9% advance compared to a slightly downwardly revised 2.2% increase in Q2. As a result, unit labour costs remained well below expectations and even fell 0.2% Q/Q compared to an upwardly revised 2.2% increase in Q2. Strong productivity growth coupled to declining unit labour costs indicates that domestic inflationary pressures are easing and will be welcomed by the Fed.

In September, wholesale inventories rose 0.8% compared to August and following an already upwardly revised increase of 0.7% in August. Higher inventories in a context of slowing growth may weigh on industrial production in the coming months and accelerate a cyclical slowdown.

EMU: German industrial production slightly better than expected

In Germany, industrial production increased by 0.3% M/M and 6.0% Y/Y. The outcome was slightly better than expected. The details showed the increase was mainly due to the energy (1% M/M) and construction (0.7% M/M), while manufacturing output posted only a tepid increase of 0.1 M/M, although following strong increases in the previous months. Following Tuesday??™s disappointing factory orders, the production data ease some concerns that the activity in the German industrial sector is slowing rapidly.