Post-delta recovery well underway The surge in October’s Economy Watchers Survey is the strongest sign yet that the economy is rebounding rapidly now that the bulk of the population is fully vaccinated and new virus cases have plunged. “Current …
9th November 2021
Strong growth likely again in Q4, but recovery has a long way to go Q3 GDP data were much stronger than expected and output is set to jump again in the fourth quarter following a sharp drop in virus cases and the further easing of restrictions. That said, …
Wage growth set to recover Wage growth weakened in September as the Delta wave resulted in a drop in overtime working hours. But with the economy now rebounding and the labour market tightening, we still expect wage growth to climb above 1% next year. …
Strength in exports persists but will reverse before long Exports continued to soar last month while imports took another leg down despite directives to raise coal supply amid power rationing. As a result, the trade surplus reached its highest level since …
8th November 2021
Stronger payroll growth, but no signs of a rebound in labour supply The stronger 531,000 gain in non-farm payrolls in October suggests the economy is rebounding rapidly from the initial Delta wave but, despite easing virus concerns, there was absolutely …
5th November 2021
Employment growth slows as normalcy returns The 31,200 gain in employment in October represented a marked slowdown from the 157,000 increase the month before, but the underlying details were encouraging and there appears to be much less labour market …
Low inventory levels pushing up retail prices Retail sales have levelled off since June as consumer spending on other services has increased. The latest survey evidence suggests that low inventory levels might also be limiting sales and are set to push up …
No respite for German industry The 1.1% m/m fall in industrial production in September was worse than the consensus and our own expectation. Business surveys suggest that shortages of components, particularly in the auto sector, will keep manufacturing …
Indonesia’s economy only shrank slightly last quarter as exports offset much of the hit from a huge outbreak of COVID-19, and with restrictions being relaxed and virus cases now very low, we expect GDP to bounce back strongly in the final quarter. That …
Supply chain backlogs to keep trade growth subdued The sharp widening in the trade deficit to $80.9bn in September, from $72.8bn, should soon start to reverse as oil exports recover from the disruption caused by Hurricane Ida. But ongoing global supply …
4th November 2021
Surplus widens, as imports fall by more than exports The trade surplus widened to $1.9bn in September, from $1.5bn , which is better than we were expecting in light of the flash estimates suggesting that manufacturing sales declined last month and that …
Shortages continue to threaten recovery The latest RICS survey indicated that construction activity remained robust in Q3, while the outlook for the near term is favourable. Although we agree, we expect that building material and labour shortages, along …
Industry pulled down GDP growth in Q3, likely to continue in Q4 The 0.4% m/m fall in Brazilian industrial production in September suggests that the sector knocked 0.1-0.2%-pts off q/q GDP growth over Q3 as a whole. The latest surveys suggest that …
A modest improvement, but supply issues continue to bite Construction firms reported that activity strengthened in October despite higher costs and continued difficulty sourcing materials. The big picture is that until those constraints ease construction …
Supply problems, price pressures weigh on activity The PMIs suggest the euro-zone’s economic recovery will slow markedly in Q4 as supply shortages intensified throughout the region, especially for manufacturers. They also show that price pressures are …
Inflation jump to prompt further 75bp hike The further rise in Russian inflation to 8.1% y/y last month paves the way for the central bank to hike the one-week repo rate by another 75bp (to 8.25%) when it meets in December. The outturn was up from 7.4% …
3rd November 2021
Austin, Phoenix and Tampa regain job shortfalls, while six major metros lag While the 3m/3m growth rate was positive in all metros in September, employment fell in Baltimore, Detroit, Los Angeles and Pittsburgh on the month. That left employment in just …
Housing demand dips as mortgage rates rise Mortgage rates rose to an eight-month high in October, which drove a significant decline in refinancing activity. But home purchase demand saw a much smaller dip, and we expect it will trend down only gradually …
Labour market recovery is likely to continue While the fall in euro-zone unemployment in September brings the jobless rate back to its pre-pandemic level, employment has not fully recovered. But the economy is growing strongly and the vast majority of …
Gulf non-oil sectors ending the year on a strong note October’s batch of whole economy PMIs showed that recoveries in non-hydrocarbon sectors in the Gulf strengthened, particularly in the UAE as the Expo got underway this month. But price pressures are …
House prices maintain their momentum Yet another upside surprise in house prices last month confirmed that the end of the stamp duty holiday in September did little to cool the market. We expect house prices to continue to beat expectations in the near …
Inflation rises again, but further rate cuts still seem likely Turkey’s headline inflation rate rose further in October to reach 19.9% y/y but the small drop in core inflation and political pressure on the central bank means that further interest rate …
Recovery going strong, but downside risks remain The strength in India’s PMI surveys for October suggests that economic activity continued to hold up well last month. But we still think that the recovery is set to enter a slower phase, and India’s low …
Striking labour market improvement points to more aggressive hiking cycle The decline in the unemployment rate to 3.4% should encourage the RBNZ to hike rates more aggressively than we had previously anticipated in the months ahead. The massive 2.0% q/q …
2nd November 2021
Manufacturing rebound hit by strikes and power outages South Africa’s manufacturing PMI dropped back last month, pointing to a further slowdown in the sector’s already weak recovery. Persistent headwinds will probably keep manufacturing activity subdued. …
Swiss inflation close to its peak at 1.2% Inflation did surprise on the upside in Switzerland in October, but only by a trivial amount, leaving the headline rate at just over 1%. The market is pricing in an increase in policy rates to zero by end-2023 but …
No end in sight for shortages While the headline ISM manufacturing index fell only slightly to 60.8 in October, from 61.1, the survey details add to the evidence that shortages are constraining activity and pushing up prices. The ISM survey suggests that …
1st November 2021
City narrowly avoids another recession Hong Kong’s economy largely treaded water last quarter, with weaker exports and investment meaning the rebound from Q2’s downturn was much more tepid than expected. The pace of recovery is likely to remain muted in …
Supply constraints take a greater toll on industry The manufacturing PMIs in October showed that supply disruptions took a greater toll at the start of Q4, with industrial production growth in Turkey slowing and Czech industry likely to have contracted …
Manufacturing recovery still fragile The jump in India’s manufacturing PMI in October paints an upbeat picture of the health of manufacturing, but the recovery remains fragile against the backdrop of persistent global supply shortages and India’s low …
Exports to hold up well in the coming months After another strong month in October, Korean export values are set to remain elevated as high demand for electronics and petroleum products offsets troubles in the auto sector. The timely nature of the Korean …
Supply disruptions still weighing on industry The manufacturing PMIs diverged again this month. But the big picture is that power rationing and supply shortages continued to constrain output and push up prices. The Caixin manufacturing PMI continued to …
Supply backlogs will take time to clear following recovery from Delta wave While October Manufacturing PMIs point to a strong rise in manufacturing output, industry is likely to be working through huge backlogs of orders for many months to come and …
House prices will come off the boil next year Strong demand means that house prices will keep rising at a strong pace over the next few months, but we think that lending restrictions will result in a slowdown next year. Across the eight capital cities, …
A strong end to Q3, but virus outbreak dampens outlook Russia’s economy enjoyed a strong end to Q3, but the country’s severe COVID-19 outbreak has clouded the outlook more recently and is likely to cause growth to soften in Q4. Russia’s industrial sector …
29th October 2021
Third-quarter GDP growth weaker than expected GDP growth was weaker than expected in August and the preliminary estimate implies the economy stagnated last month. With third-quarter growth seemingly much weaker than the Bank’s latest forecasts imply, this …
Industrial recovery falters Output from India’s core infrastructure industries dropped in September, providing further signs that the industrial recovery is faltering on the back of supply constraints. The core infrastructure industries index measures …
Poor Q3 and recovery to struggle from here The surprise 0.2% q/q contraction in Mexico’s economy in Q3 was largely driven by lockdown-related disruption to the services sector, which should unwind in Q4 as restrictions have been eased. Even so, we think …
Growth will slow sharply after nearly full recovery The solid increase in euro-zone GDP in the third quarter means that the recovery phase is now almost complete in most of the euro-zone. Growth will be much slower in Q4 because the boost from reopening …
Further signs of stagnating spending growth The tepid rise in consumer credit lends support to our view that economic growth slowed to little more than a crawl in September. Against the backdrop of rising COVID-19 cases and higher inflation, we expect …
Risks to inflation next year lie firmly to the upside Euro-zone inflation looks set to rise further before year-end as higher input costs continue to feed through. We agree with the ECB that the forces pushing inflation up should fade next year, and our …
Rising repayments weigh on net lending Net lending to UK commercial property was negative for the fourth month in a row in September, probably due to a rise in repayments. We expect further repayments, caution when seeking development opportunities and …
Housing market shrugs off the end of the stamp duty holiday Unsurprisingly, mortgage lending spiked in September as buyers rushed to complete before the stamp duty taper period ended. More notable is the resilience of mortgage approvals, suggesting that …
Taiwan’s economy rebounded last quarter but by much less than expected due to a further fall in consumption. But with virus cases now very low and the vaccine rollout gathering momentum, we expect GDP growth to accelerate in the near term. Figures …
Further rise in Polish inflation to prompt another rate hike The rise in Poland’s headline inflation rate to 6.8% y/y in October opens the door for the central bank to deliver a 25bp at next week’s MPC meeting. Elsewhere, Czechia’s economy performed a …
A strong start to Q4 While many economies in Europe are facing the twin headwinds of supply constraints and high gas prices, the KOF Economic Barometer in October suggests that the Swiss economy continued to grow strongly at the start of Q4. The slight …
Almost fully recovered The stronger-than-expected increase in French GDP in Q3 took the economy back to within a whisker of its pre-virus size as the full lifting of restrictions caused activity to rebound strongly. Supply chain disruptions and rising …
Consumption to surpass pre-delta high in Q1 2022 The rise in retail sales in September means that the trough in consumption is now behind us. We expect retail sales to rebound in Q4 as restrictions relax and a growing number of Australians are able to …
Carmaking should soon rebound from September slump While employment fell sharply again in September it should rise strongly across Q4 as economic activity gets back to near normal now that most restrictions have been lifted. Meanwhile, the sharp fall in …
Survey indicators suggest quarterly capital growth may have peaked Overall sentiment saw little change this quarter, but there was a notable reduction in office occupier demand and three-month rent expectations. The bigger picture is that, with no …
28th October 2021
