Growth hit by Delta, fading fiscal boost and shortages GDP growth slowed to only 2.0% annualised in the third quarter, as the Delta wave of infections, the waning fiscal stimulus and shortages, particularly of motor vehicles, triggered a marked slowdown …
28th October 2021
Office demand improves for first time since onset of pandemic Surveyors reported a continued improvement in occupier demand and investment enquiries in Q3, and notably the net balance for offices turned positive on both measures. That said, surveyors …
Supply chain problems still evident The EC Economic Sentiment Indicator for October increased a touch, but the details show that expectations for production declined slightly, probably due to the worsening supply chain problems. So there is nothing here …
Sentiment softens at the start of Q4 The EC’s Economic Sentiment Indicators for October showed that sentiment in industry and services softened across most of Central and Eastern Europe at the start of Q4. With rising virus cases adding to existing …
Strong Q3 but supply chain pressures building The stronger-than-expected growth in Swedish GDP in Q3 shows that the recovery continued apace over the summer, lifting activity even further above its pre-pandemic level. But while business confidence …
Consumption held back by supply disruptions While retail sales rebounded in September as the Delta wave ebbed, supply shortages in the car industry may prevent a full recovery until year-end . The 2.7% m/m rise in retail sales was stronger than the …
US commercial stocks rise, but will remain low for a while US commercial stocks rose last week on a release of strategic reserves and a jump in net imports. Exports could fall further in the coming weeks given the need to rebuild stocks at the WTI Cushing …
27th October 2021
Shortages weighing on investment too The weakness in headline durable goods orders last month was driven by another fall in transport orders, which mostly reflects worsening supply problems in the auto market. The strong increase in underlying orders and …
Strong underlying inflation will keep pressure on the RBA The decline in headline inflation in Q3 was entirely driven by base effects. More importantly, the strong rise in underlying inflation will keep pressure on the RBA to keep reducing monetary …
House prices growth starts to cool The FHFA reported that annual house price inflation declined in August for the first time since May 2020. Rising mortgage rates mean that slowdown will continue, and we expect it to fall back to 3% y/y by end-2022. …
26th October 2021
Slump in output points to high prices for longer Global steel output plunged in September primarily owing to a dramatic decline in China’s production. We suspect that China’s output will remain low for some months yet, which will act as a floor under …
Copom now likely to hike by 150bp The larger-than-expected increase in Brazilian inflation in the middle of October, to 10.3% y/y, alongside the latest rise in inflation expectations mean that Copom is likely to step up the pace of tightening at its …
Strongest quarter for 16 years points to the best annual return since the GFC The NCREIF index recorded a huge 5.2% quarterly return in Q3 thanks to further improvement in all sectors. With no sign of any let-up in investment demand, that puts annual …
While Korea’s recovery lost some momentum last quarter as the virus weighed on growth, the economy should pick up pace again this quarter as high vaccination levels allow the rolling back of containment measures. The Bank of Korea is unlikely to be …
Economy likely to tread water in Q4 The fourth successive monthly fall in the Ifo Business Climate Index provides more evidence – if it were needed – that supply side disruption is causing the German economy to slow sharply and suggests that the problems …
25th October 2021
Low core inflation will keep the MAS on hold in 2022 While inflation in Singapore is set to rise further over the next few months, both the headline and core rate should moderate in 2022 to well within the Monetary Authority of Singapore’s (MAS) comfort …
Strong August, but sharp decline in September highlights downside risks Retail sales increased markedly in August, as expected, but they appear to have fallen sharply in September and the expiry of the CRB presents a downside risk to spending over the …
22nd October 2021
Inflation to remain stubbornly high in the coming months The further rise in Mexico’s core inflation rate to a 12-year high of 5.1% y/y in the first two weeks of October, which contributed to the rise in the headline rate to 6.1% y/y, will add to the …
Building price pressures raises chances of near-term interest rate hike The fifth consecutive fall in retail sales in September, together with signs that non-retail spending was also weak, supports our view that the economic recovery slowed to a crawl …
Supply problems getting worse October’s euro-zone PMI surveys suggest that supply problems in the manufacturing sector are getting worse, weighing on output and causing price pressures to intensify. The fall in the Composite PMI from 56.2 in September to …
Underlying inflation to rebound Headline inflation in September turned positive for the first time this year due to spikes in fresh food and energy inflation. As the drag from mobile phone tariffs fades in the first half of next year, underlying inflation …
Home sales rise, but improvement will be short-lived The 7.0% m/m rise in existing home sales in September does not mark the start of an upward trend in activity. With mortgage rates rising, inventory close to record lows and home buying sentiment at …
21st October 2021
Ending Q3 on a positive note The latest activity data suggest that Poland’s economy ended Q3 with solid momentum, and GDP is likely to have risen by 1.6% q/q (4.7% y/y) in Q3 as a whole. But with the re-opening boost fading and supply issues likely to …
Good news for the Chancellor ahead of the Budget September’s public finances figures mean that the Chancellor will be able to boast in next Wednesday’s Budget that he has reduced government borrowing much quicker than expected. But we suspect he’ll set …
Exports climb ever higher Korean export values continue to climb in October driven by both rising prices and growth in underlying volumes. The strength of the external sector adds weight to our view that the economy will expand faster, and the central …
Stocks fall and are likely to remain low in the short term Strong exports contributed to the first drawdown in stocks in four weeks last week, supporting already-high crude prices. What’s more, stocks at the hub of Cushing, Oklahoma, also fell and they …
20th October 2021
Further rise in inflation due to supply disruptions Inflation rose further to 4.4% in September due to both renewed supply disruptions and the easing of travel restrictions. We do not expect the various supply disruptions that are pushing up goods prices …
High power costs likely to deter production Slower growth in aluminium output in September was probably linked to surging power prices. The combination of constrained output and soaring production costs will support aluminium prices in the near term and …
Inflation will rise further before it comes back down Euro-zone inflation looks set to climb further in the coming months as higher input and energy costs feed through. An unusually cold winter would put even more upward pressure on gas prices in the …
Inflation creeping up, policymakers to start dovish tightening cycle Although South Africa’s headline inflation rate picked up to 5.0% y/y in September, soft underlying price pressures and a fragile economic recovery mean that policymakers will only …
The lull before the storm The dip in CPI inflation in September feels a bit like the lull before the storm as we expect inflation to jump to close to 4.0% in October and to between 4.5% and 5.0% by April next year. As such, the fall in September probably …
Exports should be able to shake off supply shortages The sharp fall in exports in September suggests that supply shortages are severely hampering manufacturing activity in some sectors. However, we think exports will soon bounce back as supply shortages …
Single-family starts flat as strong demand runs up against supply constraints Single-family starts and building permits have been stable over the past three months at around 1.1m annualised, as strong new home demand has run up against shortages of …
19th October 2021
Mixed signals on inflation expectations and wage growth The Bank of Canada’s quarterly surveys point to significant upside risks to wage growth. That said, as wage growth was still low in September and the surveys suggest that longer-term inflation …
18th October 2021
Hurricane and shortages hamper production The 1.3% fall in industrial production in September partly reflects a temporary hit to mining and chemicals output from Hurricane Ida and a drop in cooling demand, as the weather returned to seasonal norms. That …
China’s rebound falters In q/q terms, official GDP growth slowed to a crawl last quarter. And our China Activity Proxy points to a sharp contraction. Although some of the recent weakness in services is now reversing, industry and construction appear on …
Surging inflation will add fuel to RBNZ hiking cycle While we think the surge in inflation will start to abate in the year ahead, the strength will surely be worrying the RBNZ, supporting the case for further rate hikes. Consumer prices rose 2.2% q/q in …
Net lending returns to pre-COVID levels Outstanding real estate debt increased for the fourth consecutive month in September, thanks to net lending turning a corner in the residential sector and accelerating in the commercial sector. Total outstanding …
15th October 2021
Shortages likely to keep spending growth subdued The 0.7% m/m rise in retail sales in September suggests goods spending held up a little better than we had anticipated, but real consumption growth still slowed sharply in the third quarter. There were some …
Inflation close to reaching a peak The further rise in Israeli inflation to 2.5% y/y in September contained no major surprises and we think it will ease towards the lower end of the central bank’s 1-3% target next year. Even so, with the recovery motoring …
Easing food price pressures continue to push down headline inflation The drop in the headline inflation rate in Nigeria, to 16.6% y/y in September, will ease pressure on the central bank to raise rates and allow policymakers to focus on supporting the …
Stocks rise again, but will remain depressed for months to come A large fall in the refinery utilisation rate drove another increase in stocks last week, although utilisation rates are normal for the time of the year. And with output set to remain …
14th October 2021
Rise in manufacturing sales volumes probably reversed in September Manufacturing sales volumes were a bit stronger than we expected in August, but the renewed cuts to production at auto production plants in September suggest that sales volumes fell again …
Improving credit conditions may protect housing market from higher rates An ongoing improvement in credit availability may offset the increase in Bank Rate we expect in 2022. That offers support to our forecast that mortgage rates will remain low. A …
Inflation to edge higher Saudi inflation rose to 0.6% y/y in September and is likely to drift a little higher over the rest of this year. However, we do not envisage a significant pick up in the headline rate and inflation is likely to remain around …
Core inflation to stay moderate While CPIF inflation in Sweden rose to a 155-month (!) high in September, we expect core inflation to remain at a more moderate level over the coming years, and lower than in the US, say. As a result, we forecast the …
Further falls in WPI inflation likely Headline WPI inflation dropped to a five-month low in September on the back of a fall in food and fuel inflation, both of which are likely to continue easing. And with the recent drop in consumer price inflation also …
Housing market shrugs off broader economic headwinds The RICS survey suggests that the housing market has shrugged off the deterioration in sentiment about the broader economy so far. Demand stabilised at a high level in September while stock remained …
Factory-gate inflation hits a new record Producer price inflation reached a new high last month due to the surge in global coal prices. There are few signs that this is feeding through to higher output prices of consumer goods, however. The overall …
Unemployment rate to fall towards 4% next year While employment plunged yet again in September, hours worked started to rebound and the end of lockdowns will result in a rapid recovery in the labour market over coming months. The 138,000 fall in …
