Macro View

The economy continued to perform in October, however, according to the Coincident Indicators, was mainly consumption

(reading time: 2 mins)

Summing up, the economy keeps performing, namely according to October’s data. The monthly Coincident Indicators, just released, are showing that is mainly consumption, which shouldn’t surprise, as salaries are increasing faster than inflation. Salaries increases should smoothly adjust, however the pressure on Services inflation should continue.  

The Bank of Portugal has just released the Daily Economic Activity Indicator yesterday (“The DEI, is published every Thursdays, and is based on high-frequency data and makes it possible to capture changes in economic activity in a timely manner… five daily series, namely card-based payments, road traffic of heavy commercial vehicles, cargo and mail landed, electricity consumption and natural gas consumption. These series present the strongest co-movement with GDP developments among the series assessed”, the for more information please visit the following link here

1 – The DEI is volatile, namely the daily observations (please see the graph below), while the weekly moving averages are slightly less volatile;

2 – October (average): 6.5%YoY vs. 6.6% and 6.0%; one and two weeks ago;

3 – 4QtD: 5.8% vs. 6.4% the week before.

Separately the BoP also released the monthly Coincident indicators, namely October’s data. The figures were the following:

1 - Economic Activity Coincident Indicator: 1.3%YoY vs. 12MMA (12 months moving average): 1.7% and 3MMA: 1.2%;  

2 - Private Consumption Coincident Indicator: 2.7%YoY vs. 12MMA: 2.4% and 3MMA: 2.5%.         

Our comments: the economy keeps performing, namely, according to October’s data. Meanwhile, October Coincident Indicators are showing that is mainly consumption, hardly surprising, since salaries are growing faster than inflation.

We should expect lower salaries increases in the coming quarters, even so, the pressure on services inflation should remain intense.     

Source: INE, BoP, AS Independent Research