Re-opening boost pushes CEE economies above pre-pandemic levels The Q2 GDP data for Central and Eastern Europe revealed that the regional recovery gathered pace last quarter as economies reopened following virus waves in Q1. We expect the recovery to …
17th August 2021
Surge in earnings growth, but underlying pay pressures contained The latest batch of data brought signs that labour shortages are feeding through into higher pay growth in certain sectors. But underlying pay pressures were reasonably contained overall, …
Slow recovery in store for manufacturing sales Manufacturing sales started to rebound in June but, with the global semiconductor shortage set to ease only gradually, it is likely to be a slow recovery for manufacturing sales volumes. The 2.1% m/m rise in …
16th August 2021
Re-opening boost pushes economy far above pre-pandemic level The larger-than-expected 15.4% annualised expansion in Israeli GDP in Q2 took the economy to more than 3% above its pre-pandemic level. While we expect growth to slow markedly in Q3 as the …
Further falls in WPI inflation likely The drop in India’s headline wholesale price inflation in July came on the back of an easing in fuel and food inflation, both of which have further to run. And with headline CPI inflation having already peaked, we …
Not just about Delta wave disruptions There was a broad-based slowdown in all the key indicators last month. This partly reflects disruptions to consumer activity due to the recent virus flare-up and flooding in central China. But investment spending and …
Economy still on the rocks, despite surprise expansion in Q2 The surprise rise in Thai Q2 GDP is unlikely to be repeated this quarter as cases surge and the vaccine rollout makes only slow progress. The tourism sector is still on its knees, meaning any …
Delta has delayed not cancelled vaccine bounce Output only edged higher in the second quarter and won’t do much better this quarter as the Delta-driven fifth wave holds back consumer spending. But with the vaccine rollout still moving fast, a strong …
Signs point to further strong lending volumes in the coming months Outstanding real estate debt growth accelerated in July, supported by increases in residential, multifamily and non-farm commercial real estate debt. And with demand for loans growing on …
13th August 2021
Strong GDP growth takes economy back to pre-pandemic level The larger-than-expected 10.3% y/y expansion in Russian GDP in Q2 suggests that the economy returned to its pre-pandemic level as growth was driven by broad-based strength across sectors. Growth …
Small rise in inflation will leave the Riksbank unfazed The slight pick-up in Swedish headline inflation in July was primarily driven by a rise in energy inflation. However, the fall in core inflation to its lowest level since 2014, means that the …
Strong GDP growth to give the NBP food for thought The 1.9% q/q expansion in Poland’s GDP in Q2 left the economy 0.5% above its pre-pandemic size and we expect another strong reading for Q3 as activity in consumer-facing sectors continues to recover. …
Weakness to continue, but only in the short term Malaysia’s economy shrank by less than most had expected last quarter and while a further worsening in the virus situation means the immediate outlook is poor, rapid progress on vaccination has set the …
Drop in India’s inflation has further to run India’s consumer price inflation dropped below the 6% upper limit of the RBI’s target range in July, and we think further falls are likely. With the economy also still weak, there should be little doubt that …
12th August 2021
Manufacturing unlikely to boost GDP in coming quarters The second successive monthly fall in euro-zone industrial production in June was largely due to ongoing supply-chain difficulties in Germany. As these will ease only slowly, we don’t expect industry …
Recovery regains some momentum The media headlines have focused on the big 4.8% q/q gain in GDP in Q2, following Q1’s 1.6% q/q fall. But the real news was the unexpectedly strong growth in June which suggested that the recovery maintained a bit more …
Economy bounces back quickly from lockdown Turkey’s industrial production and retail sales figures for June confirm that the economy bounced back quickly from May’s three-week lockdown. This, coming alongside the further jump in inflation in July, means …
Limited stock supports prices as demand cools Despite new buyer enquiries dropping back in July, house prices continued to rise as buyers competed for limited stock. Sales volumes eased in July as the stamp duty holiday began to be phased out. (See Table …
Recovery in US oil demand topping out Last week’s fall in crude oil and gasoline stocks suggests that growth in demand in the US is continuing to outpace growth in supply. However, following a strong recovery from its pandemic-induced lows, we suspect …
11th August 2021
Core inflation unlikely to fall back as quickly as Fed hopes The more modest 0.3% m/m rise in core consumer prices in July indicates that the transitory burst of rising prices linked to reopening is fading and that, after falling to 4.3% from 4.5% in …
Clouds gathering over Mexican industry The surprise 0.5% m/m fall in Mexico’s industrial production in June was driven by broad-based declines across sectors, including further disruption to auto production. Industry probably continued to struggle in July …
The slowdown in credit growth resumes After stabilising in June, broad credit growth resumed its downward trajectory in July and is now at its slowest since February last year. We expect the slowdown and resulting headwind to the economy to continue in …
Rising inflation will add to Copom’s hawkishness The further rise in Brazil’s headline inflation to 9.0% y/y in July will add to the central bank’s concerns over the inflation outlook. We think that its aggressive tightening cycle has much further to run, …
10th August 2021
CBE to keep rates on hold for now as inflation moves back within target Egypt’s headline inflation rate rose to an eight-month high in July and is likely to drift higher over the coming months. Against this backdrop, we think the Central Bank of Egypt …
Below-target core inflation will not prevent September rate hike The small increase in headline CPI inflation in Norway, and the bigger decrease in the Norges Bank’s target measure, will have no bearing on the near-term outlook for monetary policy given …
Prospects for recovery diminishing after contraction in Q2 The Philippines’ chances of a strong economic rebound from the contraction recorded in Q2 are looking slim given the new surge in virus cases and the reimposition of containment measures. The …
Above-target inflation to keep Banxico in tightening mode Despite the small fall in Mexico’s headline inflation rate to 5.8% y/y in July, core inflation rose further to 4.7% y/y on the back of higher services inflation. This strong inflation reading will …
9th August 2021
Underlying price pressures swamped by pork price slump Rising factory gate prices for electronics products signal that supply chains are still tight but, with both semiconductor imports to China and China’s exports of electronics rising over the past …
Recovery picking up the pace The 1.1% q/q expansion in Saudi Arabia’s GDP in Q2 was driven by the unwinding of the voluntary oil output cuts and the easing of virus-related restrictions supported domestic activity. With the OPEC+ impasse now resolved oil …
Strong core inflation to trigger further rate hikes Although Russian headline inflation came in at a slightly-weaker-than expected 6.5% y/y, that masked a worryingly strong rise in core inflation that’s likely to trigger further monetary tightening. We …
6th August 2021
Payrolls acceleration could bring forward taper decision The stronger 943,000 rise in non-farm payrolls in July and upward revision to previous months’ gains indicates that employment growth has shifted into a higher gear and that the drag on hiring from …
Solid rebound in total hours worked shows impact of reopening The 94,000 increase in LFS employment in July was something of a disappointment given the lifting of coronavirus restrictions at the start of the month in many provinces, but the solid 1.3% m/m …
Recovery in July, but further slowdown still expected Halifax house prices returned to growth on a monthly last month, partly reversing a weak June figure. But the underlying trend, as the stamp duty discount is phased out, is for a modest slowdown. …
Manufacturing hobbling the wider recovery The further decline in German industrial output in June, to 6.8% below its pre-pandemic level, underlines that the problems in the auto sector will hold back an otherwise strong economic recovery. It is now …
Wage growth set to recover again The weakness in wage growth in June reflected both a slowdown in regular pay and a drop in summer bonuses. But with the labour market set to tighten and corporate profits on the mend, we think that wage growth will rebound …
Net trade will remain a drag on GDP growth in the third quarter The widening in the trade deficit to $75.7bn in June, from $71.0bn in May, is unlikely to be sustained now that consumer goods demand appears to have peaked and surveys show demand for US …
5th August 2021
Goods trade surges to biggest surplus since financial crisis The merchandise trade position returned to surplus in June thanks to a massive 8.7% m/m surge in exports, which suggests that second-quarter GDP growth was even stronger than the 2.5% annualised …
Recovery gathers pace, but may prove short-lived The latest RICS survey confirmed that construction activity rose strongly in Q2 and suggests expectations are upbeat about the outlook. But while we think output is likely to remain strong in the coming …
Construction PMI dips, but underlying demand strong July’s construction PMI figure was slightly disappointing compared with the previous month’s highs. But it continued to point to robust activity and we think any dip is most likely a reflection of …
Indonesia’s economy is struggling badly, with Q2 GDP data showing that the recovery lost some momentum even before the latest surge in virus cases, which will have thrown the economy back into contraction in Q3. GDP grew by 7.1% y/y last quarter, compared …
Headwind from net trade won’t last much longer Given that most of the rise in exports last quarter was driven by higher commodity prices, net exports probably provided another big drag on GDP growth in Q2 . But we think that won’t last much longer. …
After dropping back to just within the central bank’s target range for the first time this year, headline inflation in the Philippines is set to continue falling in the coming months. This will open the door for the Bank to loosen policy further to …
Gasoline demand to rise a bit further in the coming weeks US commercial crude stocks unexpectedly increased last week as net imports rose, but we suspect that inventories will fall back soon as demand for oil products, such as gasoline, continues to rise …
4th August 2021
Housing demand falls further, despite decline in mortgage rates The recent decline in mortgage rates buoyed refinancing activity in July, but didn’t prevent another month of declining home purchase activity. While market conditions are tight, there are …
Rebound still in full swing The final PMIs show that the euro-zone’s recovery continued apace at the start of Q3. Price pressures are continuing to mount and point to an increase in inflation in the coming months, but we expect this to be temporary. …
Recovery takes hold, but new virus waves a key risk The rebound in India’s PMI surveys in July provides further evidence that the economy was quick to get back on its feet after the second virus wave. But the rapid reopening, combined with low vaccination …
Consumption will decline in Q3 The decent rise in real retail sales last quarter is consistent with a further rise in consumption in Q2. But given the lockdowns in Q3, we expect consumption to decline before long. The 1.8% m/m decline in retail sales …
Low unemployment rate locks in RBNZ rate hike The decline in the unemployment rate to 4.0% all but confirms our forecast that the RBNZ will hike rates at its August meeting. The 1.0% q/q rise in employment was above the Bloomberg median forecast of a 0.7% …
A weak end to Q2, but Q3 looking better The stagnation in Brazilian industrial production in June suggests that industry made a negative contribution to q/q GDP growth over Q2 as a whole. But with virus cases having fallen sharply, it looks like the …
3rd August 2021
Non-oil sectors set to experience a stronger second half of the year July’s whole economy PMIs painted a mixed picture with recoveries in Qatar and the UAE’s non-oil sectors picking up pace, while those in Egypt and Saudi Arabia softening. Strong vaccine …
