Eurozone money supply records biggest drop in history. Data published by the European Central Bank (ECB) on Wednesday showed that money supply in the eurozone logged its biggest fall on record and bank lending grew at a much slower pace in August, as rising interest rates and weak economic activity take their toll on the currency bloc’s economy. A measure of money supply that comprises cash in circulation and balances in current accounts contracted by an unprecedented 11.9 percent in August as bank customers switched to deposits with longer maturities that now offer much better interest rates as a result of the ECB's rate hikes. Studies by the ECB show that a decline in this measure of money supply, when adjusted for inflation, is usually associated with an impending recession. However, ECB board member Isabel Schnabel noted that the current drop is more likely the result of a normalisation in savers’ investment strategies.
German consumer confidence fell further in October. According to survey data by market research firm GfK, sentiment among consumers in Germany weakened for the second month in a row in October, as Germans prefer to save their earnings rather than spend money on consumption, as the economic picture darkens. The institute's forward-looking consumer sentiment index fell to -26.5 heading into October from a slightly revised reading of -25.6 in September. The latest figure was below expectations of -26.0. “The chances of a recovery in consumer sentiment this year have probably fallen to zero,” said Rolf Bürkl, an analyst Gfk. “The reasons for this are a persistently high inflation rate due to sharply rising food and energy prices. Consequently, private consumption will not be able to contribute to overall economic development this year positively."
US credit card losses climb at fastest pace since the 2008 financial crisis. As US consumers take out more loans and credit card debt, credit card losses for card issuers have soared at an unprecedented rate that could continue for at least another year, according to analysts at Goldman Sachs, as US investment bank. Losses currently stand at 3.63 percent, up by 1.5 percentage points from the bottom registered in September 2021 and Goldman Sachs predicts they could rise a further 1.3 percentage points to 4.93 percent. This comes at a time when Americans owe more than one trillion dollars on their credit cards, a record high, according to the Federal Reserve Bank of New York. Analysts note that consumers’ finances are stretched thin due to persistent inflation, high housing costs and other expenditures that have forced millions of people to owe more debt than ever before collectively.
China industrial profits recover in August. Profits at Chinese industrial firms soared in August, while the decline in profits seen during the first eight months of this year eased as profitability improved across the board, official data showed on Wednesday. Industrial profits recorded a double-digit growth rate of 17.2 percent in August, in contrast to a contraction of 6.7 percent in the prior month. However, industrial profits during the January to August period fell by 11.7 percent compared to the same period last year and was slower than the 15.5 percent decrease seen in the seven months to July. “This data reflected that domestic demand has stabilised and the demand and supply side has seen balanced recovery,” said Bruce Pang, chief economist at Jones Lang Lasalle.
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