Indonesia’s economy rebounded strongly in the final quarter of last year, but the recovery is now entering a more difficult phase. Omicron will act as a small obstacle in the first quarter. But a bigger drag will come from falling commodity prices and …
7th February 2022
Strong payrolls clear Fed for lift-off The 467,000 gain in non-farm payrolls in January is even stronger than it looks, as it came despite the spike in absenteeism driven by the Omicron virus wave and was accompanied by significant upward revisions to the …
4th February 2022
Omicron takes a heavy toll on employment The Omicron outbreak took a larger toll on the labour market than anticipated in January but, as many of the coronavirus restrictions have already been lifted, employment will bounce back this month. The 200,000 …
PMI bounces back in January with commercial activity at the helm In contrast to the decline at the end of last year, the construction PMI rose to its highest level in six months in January. There were also encouraging signs that supply and cost issues …
A disappointing end to 2021 The fall in euro-zone retail sales volumes in December means that sales growth slowed significantly in Q4 as a whole. While we expect consumer spending to recover over the coming months when restrictions are fully lifted, …
Economic headwinds and shortages to weigh on activity in the near term The latest RICS survey indicated that activity in Q4 and the outlook for the short term were broadly unchanged. The survey also suggested that labour and material shortages will …
3rd February 2022
Recoveries take a knock as Omicron restrictions bite January’s batch of whole economy PMIs showed activity in non-hydrocarbon sectors in the Gulf slowed at the start of this year as governments tightened restrictions to tackle fresh Omicron-driven virus …
Omicron hit to services activity The final Composite PMIs for January confirm that the euro-zone economy started 2022 on a weak note but the improving health situation suggests that growth will pick back up over the rest of the quarter. The PMIs also …
Back to the early 2000s Turkey’s headline inflation rate rose to a stronger-than-expected 48.7% y/y in January due to the effects of the recent collapse in the lira and large hikes to energy tariffs and it is likely to stay close these high rates …
Fallout from Omicron has been limited The drop in India’s PMIs in January suggest that activity weakened as the Omicron variant spread across the country. But the impact appears to be much less severe than that of the last two virus waves. And with new …
Drag from trade in Q4 won’t persist The fall in the trade balance in December is consistent with trade having been a sizable drag on growth at the end of last year. The 5.0% m/m rise in import values was much stronger than the 0.8% m/m rise in export …
Industry will be kept busy by order backlogs January Manufacturing PMIs suggest that regional industry remains in rude health after a very strong end to last year. While there are signs that producers are having some success in tackling large backlogs of …
Product demand could get stronger in near-term Product demand remains very strong for the time of the year and, if gasoline demand mounts a recovery once COVID-19 cases moderate, it could get even stronger. Although, we expect that slowing economic growth …
2nd February 2022
Employment fully recovered in just four of the 30 metros Progress in the labour market has been slow, with employment having recovered to pre-COVID levels in just four of the 30 metros. While Las Vegas and Orlando have seen decent job growth in recent …
Borrowers rush to secure a mortgage before rates rise further Mortgage rates rose to a two-year high of 3.78% in the last week of January. As yet that has done little to cool home purchase demand, with applications increasing to a one-year high. But a lot …
Auto recovery supports rebound in industry A chunky rise in Brazil’s motor vehicle production supported a much stronger-than-expected 2.9% m/m increase in industrial production in December and means that the economy may have just exited from its technical …
Inflation shock puts pressure on ECB January’s inflation data support our view that the ECB will soon forecast inflation to be at its target over the medium term. Accordingly, we think that policymakers will end net asset purchases completely this year …
Tight labour market will keep RBNZ hiking cycle going The further decline in the unemployment rate to a record low of 3.2% will keep the RBNZ on its hiking cycle in the months ahead. But we suspect the unemployment rate will rise again before long. The …
Manufacturing escapes Omicron hit The small fall in the ISM manufacturing index to 57.6 in January, from 58.8, suggests the Omicron virus wave hasn’t had nearly as big an impact on the factory sector as implied by some of the early regional surveys or the …
1st February 2022
GDP surpasses pre-pandemic level in November The stronger-than-expected rise in November means that GDP climbed back above its pre-pandemic level, but activity appears to have stagnated in December and November’s gain was likely reversed in January amid …
Net lending defies Omicron fears in December A marked jump in lending to standing property resulted in total net lending reaching its highest level in just over 18 months in December. Although this is encouraging, several challenges remain during the …
Spare capacity dwindling The euro-zone unemployment rate fell yet again in December, to just 7.0%, capping off a remarkable year for the region’s labour market. Most of the spare capacity that built up during the pandemic now seems to have disappeared, …
Banks supporting the recovery The Q4 ECB Bank Lending Survey suggests that banks are contributing positively to the region’s economic recovery. It also suggests that, while house prices are rising rapidly, risks to financial stability are mounting much …
Omicron didn’t put a big dent in household borrowing The decent rise in consumer credit in December suggests that, although consumers exercised a touch more caution as Omicron COVID-19 cases surged at the end of last year, the economy didn’t collapse. …
Housing activity to remain buoyant despite supply challenges The tick up in mortgage approvals in December suggested that the dip in housing market activity expected after the stamp duty holiday has already come and gone, and that transactions will stay …
Manufacturing sector on the mend from short and shallow Omicron-hit South Africa’s manufacturing PMI rebounded last month from the slump in activity on the back of the Omicron wave, but headwinds facing the sector and the wider economy will keep the …
Supply disruptions continue to ease but price pressures mount The strong 0.9% q/q expansion of Czech GDP in Q4 is consistent with data showing a recovery in industry and we think this is likely to continue this year. Meanwhile, more timely manufacturing …
Strong industrial activity to offset services softness The continued resilience of the manufacturing PMIs in Switzerland and Sweden in January indicates that industry will have supported activity through a restrictions-driven soft patch for services in …
House prices continue to surpass expectations There was no cooling in the housing market at the turn of the year, as the Nationwide house price index recorded its largest January increase for 17 years. We suspect that prices will continue to surpass …
Higher-than-expected inflation will give ECB pause for thought The smaller-than-anticipated fall in Germany’s inflation rate, and increase in core inflation in Portugal and Spain, suggest that underlying price pressures are continuing to build. Euro-zone …
31st January 2022
Falling into recession The 0.1% q/q fall in Mexico’s GDP in Q4 confirmed that the economy slipped into a recession over the second half of 2021, and we think growth this year will be weaker than most expect. Despite the softness of the economy, we expect …
Weak end to 2021 but Omicron hit set to be short-lived The small increase in euro-zone GDP in Q4 came as no surprise given the country-level data published last week and shows that the euro-zone economy was struggling at the end of last year. But …
Figures consistent with a strong rebound in Q4 The larger-than-expected 5.7% increase in Polish GDP over 2021 as a whole is consistent with another large expansion in Q4 and meant that the economy recovered faster than most other European economies from …
Economy struggling at the start of 2022 The latest surveys suggest that the pace of economic growth slowed in January due to a combination of weaker foreign demand, cooling property activity and efforts to contain recent outbreaks. We think momentum in …
Output likely to tread water in Q1 The small fall in both retail sales and industrial production in December suggests that the post-Delta rebound was losing steam before local Omicron cases started to surge. And while output is still set to have rebounded …
Supply-shortages continuing to bite The EC Economic Sentiment Indicator weakened in January as the Omicron wave took a toll on economic activity, particularly in the services sector. The survey also showed that supply shortages remained acute and …
28th January 2022
Sentiment holds up well at the start of the year The EC’s Economic Sentiment Indicators for January generally showed sentiment in Central and Eastern Europe holding up across all sectors of the economy. With Omicron waves likely to peak in the coming …
Weak end to last year but better start to 2022 The decline in economic activity at the end of last year left GDP well below its pre-pandemic level and much weaker than in other major advanced economies. Activity seems to have stabilised in January so …
Economy likely to slip back into contraction this quarter Hong Kong’s economy barely grew in Q4 despite a rebound in goods exports. And with stricter containment measures imposed this month to contain the latest outbreak, we expect an outright contraction …
Stronger than expected Both the French and Spanish economies ended 2021 on a strong note, but for different reasons. In France, domestic demand pushed output above its pre-virus level, a boon for President Macron ahead of April’s election. By contrast, a …
Stronger growth not a sign of things to come The acceleration in GDP growth to 6.9% annualised in the fourth quarter, from 2.3% in the third, mainly reflects a record surge in inventories, which will be partly reversed in the first quarter of this year. …
27th January 2022
Expectations for next 12 months become more upbeat Market sentiment picked up in Q4, driven by widespread improvements in conditions across sectors. Respondents are also becoming more upbeat about the next 12 months, with forecasts for rents and capital …
Omicron deals a blow to office and retail demand, while industrial surges The spread of the Omicron variant took some of the steam out of the property recovery in Q4 2021, but the latest RICS results are consistent with further growth in 2022. They also …
GDP growth in Taiwan rebounded last quarter on the back of a recovery in consumer spending, and we estimate the economy ended the year around 4% above its pre-virus trend. Growth is set to slow over the coming quarters on the back of weaker exports, while …
Fast growth won’t persuade central bank to start tightening While an Omicron wave means the economy’s continued strong performance in Q4 is unlikely to be repeated this quarter, we think growth will pick up again before long. That said, the overall …
Surging inflation will keep RBNZ hiking cycle underway The persistent rise in inflation to the highest levels in 30 years will be worrying the RBNZ. That’s why we expect the Bank to hike aggressively in the first half of this year. Consumer prices rose …
26th January 2022
Tentative signs of a revival in gasoline demand The surge in oil demand included the first signs of a recovery in transport-related gasoline demand. Although, we doubt demand will remain this buoyant for too long as economic growth is set to slow . The …
Lack of existing home inventory drives buyers to uncompleted new homes New home sales had a strong end to the year, as the record low number of existing homes on the market drove the sale of homes which were still under construction. That lack of existing …
Another 150bp rate hike almost certain next week The stronger-than-expected Brazilian mid-month inflation reading for January, of 10.2% y/y, means that the central bank is on course to hike the Selic rate by another 150bp (to 10.75%) next Wednesday. That …
Record capital value growth helps 2021 end on a high The NCREIF index saw its strongest ever quarterly price appreciation in Q4, with values up by 5.1% q/q, driving a quarterly return of 6.2%. That took annual returns to 17.7%, led by industrial, where …
