Industry falters amid hits to both supply and demand The Caixin manufacturing index dropped to an 18-month low in August, adding to signs from the official PMI released yesterday that industry is coming off the boil. The surveys point to worsening supply …
1st September 2021
Output to plunge in Q2, but recession unlikely The further rise in GDP in Q2 was broadly in line with the RBA’s expectations and we suspect the Bank will press ahead with tapering its asset purchases this month . The 0.7% q/q rise in output marked a …
Lockdowns weighing on house price growth The drag from the current lockdowns on the housing market won’t last, but we expect house price growth to slow in earnest next year as affordability constraints bite. Across the eight capital cities, house prices …
Signs of virus disruption hitting production further afield Falling output indices in Korea and Taiwan suggest that the virus disruption in South East Asia is reverberating across the region. The end of supply chain shortages continues to slip further out …
House price growth surges to new high, but set for weaker H2 House price growth surged above 18% y/y in June, setting record highs on both the Case-Shiller and FHFA measures. However, demand has fallen back since the start of the year, and the timelier …
31st August 2021
GDP unexpectedly falls in Q2 and again in July The unexpected fall in second-quarter GDP means that there is little chance the Bank of Canada will press on with its tapering plans next week, particularly as the preliminary estimate implies GDP also fell …
Q2 contraction to give way to strong Q3, but downside risks remain The record y/y rise in Indian GDP in Q2 (Q1 of FY21/22) was due entirely to base effects. We estimate that the economy shrank by 12% in q/q terms as India struggled with its Delta …
Second consecutive fall in net lending as banks tighten on repayments The fall in July’s net lending total was the fastest drop since last July. As investment activity remained healthy and the economic recovery remains solid, it is likely that lenders …
Inflation will rise further before dropping back After rising to a near-10-year high of 3.0% in August, we suspect that euro-zone inflation will rise even further in the coming months. But this is due to temporary forces that should fade next year, …
Households’ appetite for credit subdued The latest money and credit figures do little to ease mounting concerns that the resurgence in virus cases in July and so-called “pingdemic” brought the consumer recovery to a halt. Consumers did not borrow …
Approvals decline as tax break winds down Mortgage approvals continued to fall back in July as the stamp duty holiday was tapered, but they remained above pre-COVID-19 levels. Timely indicators suggest that demand will be resilient even when the tax break …
Delta wave hit services hard The latest surveys suggest that China’s economy contracted last month as virus disruptions weighed heavily on services activity. Industry also continued to come off the boil as supply chain bottlenecks worsened and demand …
Employment to return to pre-virus level by year-end While the Delta wave may reverse some of July’s jump in employment, we think vaccines will allow employment to surpass its pre-virus level by the end of this year. Meanwhile, the fall in industrial …
Consumption will fall yet again in Q3 While retail sales recovered further in July, the high frequency data point to a renewed fall in August as the Delta wave intensified and we’ve pencilled in a 0.8% drop in private consumption in Q3 . According to …
30th August 2021
Swedish GDP (officially!) above pre-virus level and growth to pick up in Q3 The release of GDP data from Sweden this morning confirmed that the economy surpassed its pre-virus peak in Q2, and we expect output to make further gains in Q3. The 0.9% q/q …
27th August 2021
Sales will fall further before rebounding The decline in retail sales in July highlights the impact that lockdowns are having on the Australian economy. And with lockdowns spreading and intensifying in August, sales will fall further before they rebound. …
Economic rebound not as rosy as it looks The pick-up in Nigeria’s headline GDP growth to 5.0% y/y in Q2 was largely reflective of favourable base effects created by the sharp downturn a year ago. It appears that the underlying pace of growth actually …
26th August 2021
Firms still keen to invest when lockdowns ease We estimate that private investment rose by 1.5% q/q in Q2 and firms’ expectations of future capital expenditure suggest firms are still keen to invest when lockdowns ease. Today’s private capital expenditure …
US demand is solid, if not exciting Crude oil stocks fell again last week and implied gasoline demand rose, in broadly positive news for oil prices. For now, US consumers appear to be shrugging off the spread of the Delta variant of COVID-19. However, it …
25th August 2021
Equipment investment will probably remain a bright spot in Q3 The 0.1% m/m fall in durable goods orders in July was entirely due to a plunge in the volatile commercial aircraft component. The underlying details suggest that growth in business equipment …
Another 100bp hike on the cards The rise in Brazilian inflation to 9.3% y/y in the middle of August provides Copom with plenty to worry about and will keep it on course to hike the Selic rate by another 100bp (to 6.25%) next month. The outturn was a touch …
Losing some momentum The second successive decline in the Ifo Business Climate Index in August provides further evidence that Germany’s recovery is losing some momentum, partly due to supply chain difficulties in the manufacturing sector and the Delta …
Supply constraints hold back new home sales After a run of declines, new home sales eked out a small gain in July. The recent weakness in sales data likely reflects homebuilders restricting sales as they try to catch-up with the surge in demand seen last …
24th August 2021
Global steel output to be weaker in the second half of 2021 A slump in China’s steel production in July led to a dramatic slowdown in growth in global steel output. While China’s production may stabilise or rebound a little in the coming months, it …
Rising core inflation to keep Banxico hiking Mexico’s headline inflation rate dropped to a weaker-than-expected 5.6% y/y in the first half of August, but the further rise in core inflation will continue to concern the central bank. We expect another 25bp …
Home sales surprise on the upside Existing home sales surprised on the upside in July, rising for the second consecutive month. But with demand easing and inventory at record lows, we doubt this is the start of a resurgence. Instead, we expect sales will …
23rd August 2021
Recovery slowing more quickly than we had thought The chunky fall in the composite activity PMI suggests that the economy struggled to gain fresh momentum in August despite the apparent easing of the “pingdemic” and the final relaxation of all domestic …
Economy still growing strongly, price pressures high but no longer intensifying August’s PMIs suggest that growth slowed only slightly despite persistent supply problems and activity approaching more normal levels. They also imply that price pressures are …
Exports continue to hold up well, no clear signs of virus disruption to trade Korean export values look set to hold steady at elevated levels in August. With few signs of a drag from virus disruptions, the levelling off in exports probably instead …
Services sector to recover as most seniors now vaccinated Today’s flash PMIs suggest that the worsening Delta outbreak may yet result in a fall in consumption this quarter. And with supply shortages intensifying, the manufacturing sector isn’t stepping …
Re-opening drives strong rebound in sales The re-opening of non-essential stores drove a 4.2% m/m rise in retail sales in June. While the preliminary estimate for July suggests retail sales dropped back again, that was most likely because consumers …
20th August 2021
Concerns over aluminium supply look misplaced Aluminium prices have recently been supported by reports that government-imposed power rationing has weighed on production in China, but there is little evidence of this in the latest data for July. This …
Retail sales drop, but industry continues to thrive Polish industrial production continued to expand at a solid pace in July while retail sales fell as the re-opening of the economy shifted spending away from goods. The big picture is that the economy …
Retail sales slump, but better news on the public finances While there was good news on public borrowing, the slump in retail sales added to other evidence indicating that in July the economic recovery slowed to a crawl. Although public sector net debt …
Norwegian economy re-gained pre-virus peak in June The release of Q2 GDP data from Norway this morning confirmed that the mainland economy came within a whisker of re-gaining its pre-virus level in June. Growth is set to accelerate in Q3. The 1.4% q/q …
Underlying inflation will continue to pickup While headline inflation rose in July due to a pickup in energy inflation, it’s far weaker than the figure initially reported for June due to the introduction of a new CPI basket this month knocking off 0.7%pts …
House price inflation close to a peak The Teranet measure of house price inflation accelerated to a 32-year high in July and is on track to pick up further in August. That should mark the peak but, with the sales-to-new listing ratio still elevated and …
19th August 2021
Falling unemployment rate should keep RBA on track The further decline in the unemployment rate in July may not last long, but it should be more than enough to convince the RBA to proceed with its plans to taper asset purchases in September. The 2,200 …
US gasoline demand looks to have peaked While crude stocks fell again last week, gasoline inventories rose a little and there was a further pullback in implied gasoline demand . Given the ongoing rise in virus infections and some re-imposition of …
18th August 2021
Starts edge back, but set for strong H2 Single-family starts edged back in July, although they but remain elevated compared to pre-COVID levels. Shortages in lots, labour and materials are weighing on builder confidence and housing starts. But falling …
Re-opening and supply constraints lift inflation Inflation jumped to 3.7% in July as the coronavirus restrictions were eased and global supply chain issues pushed up goods prices. As the Bank of Canada’s preferred measure of core inflation was unchanged …
Recovery picking up pace after Q2 slowdown The stronger-than-expected 1.0% q/q rise in Chile’s GDP, alongside the brightening economic outlook, means we are raising our above-consensus 2021 growth forecast to 10% (from 9%). We also expect that the central …
Core inflation to jump in August The final euro-zone inflation data for July show that global supply problems have not pushed up goods prices dramatically, and “re-opening inflation” has been limited so far. We think that base effects will cause core …
No sign of unrest-related spike in inflation South Africa’s headline inflation rate eased in July, to 4.6% y/y, as fears that recent violent unrest would fuel inflation pressures proved to be overdone. Underlying price pressures remain soft and, against …
Still on course to reach 4.5%, despite July’s fall July’s drop in CPI inflation is likely to be followed by sharp rises in the next few months, taking inflation to a peak of about 4.5% by the end of the year. But provided the spike in inflation does not …
Sluggish wage growth means RBA won’t hike next year The subdued 0.4% q/q rise in the wage price index in Q2 underlines that the tight labour market didn’t generate large cost pressures even before the latest virus restrictions. That increase marked a …
Japanese exports to outperform other Asian countries Japan’s export volumes stagnated in July but given that a large share of those exports are cars and capital goods, we think they will rise again over the coming months. The slowdown in the annual growth …
Economy set for sharp slowdown in third quarter The 1.1% m/m fall in retail sales in July suggests that the hit to real incomes from surging prices, along with growing concerns about the Delta coronavirus variant, is starting to take its toll. The upshot …
17th August 2021
Headline inflation down on softer food price pressures Policymakers will probably take comfort in the latest fall in Nigeria’s headline inflation rate, to 17.4% y/y in July, even as price pressures mount in major price categories outside of food. Interest …
Recovery will continue at healthy pace over the summer The strong growth in the euro-zone GDP in Q2 is likely to be repeated in Q3 despite the spread of the Delta variant, and should bring the economy back towards its pre-virus size in the coming months. …
