Crude stocks build won’t last for long US commercial crude stocks unexpectedly rose this week as net imports surged. Nevertheless, providing that the Delta virus variant doesn’t lead to the re-imposition of virus-related restrictions, we expect that …
21st July 2021
Soft core price inflation, bumpy recovery to stay policymakers’ hands South Africa’s headline inflation rate eased in June, to 4.9% y/y, and with soft underlying price pressures and clouds over the economic recovery, the Reserve Bank will stand pat at …
Economy loses a bit of momentum in June Polish industrial production and retail sales figures for June suggest that the rebound in economic activity softened a touch at the end of Q2, but GDP still looks to have expanded by 2.0% q/q in Q2. We think the …
Higher interest costs won’t stop deficit from falling quicker than OBR expects June’s public finances figures provided further evidence that the strong economic recovery is feeding through into lower government borrowing. So despite rising debt service …
Exports flattening off at a high level July data add to evidence that Korean exports are starting to plateau, after reaching very high levels. We expect some softening ahead as supply chain shortages bite and final demand weakens a touch. The timely …
Export tailwind weakening The rebound in exports showed further signs of slowing in June despite another high y/y growth rate caused by base effects. We think external demand will only provide a small tailwind to growth over the coming months as capital …
Supply shortages to constrain starts Single-family housing starts rose by 6.3% m/m in June. Despite this, even after the sharp decline in lumber prices in recent weeks there are still signs that supply shortages are holding back construction. But as these …
20th July 2021
Housing market to lose momentum in second half of the year House price inflation accelerated to 16% y/y in June but, with the sales-to-new listing ratio falling in recent months, price inflation will peak in the second half of the year. The 2.7% m/m rise …
Production growth to accelerate as curbs on power in China are eased Global aluminium output growth softened in June, largely due to power cuts in China’s key aluminium-producing province of Yunnan. But these curbs have started to be relaxed in recent …
Surge in prices masks weakness in real sales The 0.6% m/m gain in retail sales in June was a little stronger than we were expecting, but upward revisions to the decline in May take the gloss off that somewhat and, besides, with consumer prices rising by …
16th July 2021
Slow and steady easing of inflation The latest drop in Nigeria’s headline inflation rate, to 17.8% y/y in June, is likely to reassure policymakers that price pressures are softening and that policy tightening is not necessary to curb inflation. We think …
Strong inflation locks in RBNZ rate hike We had already expected the RBNZ to hike rates in August and the surge in inflation in Q2 only bolsters our confidence in that forecast. Consumer prices in Q1 rose 1.3% q/q, well above the analyst consensus of a …
Still few signs of widespread pressures building The rise in headline inflation in Israel to a near 8-year high of 1.7% y/y in June was largely a result of base effects that pushed up food inflation. The muted 0.1% m/m rise in prices suggests that …
15th July 2021
Shortages still constraining output The modest 0.4% m/m increase in industrial production in June was due to a weather-related spike in utilities demand and a recovery in mining output, with manufacturing output dragged down by another big …
Easing lending conditions to support house prices A further easing of concerns about the outlook for property prices and the economy suggests that mortgage lending conditions will continue to improve. That will help ensure that house prices are resilient …
Job market slack will keep underlying pay pressures contained May’s figures paint a picture of a labour market well on its way to recovery and will further fuel concerns about labour shortages and the possible boost to inflation from higher wage growth. …
Inflation set to fall sharply in July Saudi inflation rose to 6.2% y/y in June but it will fall sharply in July to around 1.0 y/y as the effects of last year’s VAT hike fall out of the annual price comparison. Inflation is likely to hover around 1.0-1.5% …
Better than Q1 but growth still subdued China’s GDP growth dropped back in y/y terms last quarter as the base for comparison became less flattering. In q/q terms, output rose at a slightly faster pace than in Q1, when a flare-up in virus cases weighed on …
Tight labour market set to lift wage growth before long The labour market continued to tighten in June and while the lockdown in New South Wales may result in some bumps over the next couple of months, we expect wage growth to accelerate soon . The 29,100 …
Rising US production may pose a further headache for OPEC+ US commercial crude stocks fell for the eighth week in a row, and domestic production is now showing signs of life. This may add to the pressure on OPEC+ to relax output cuts more quickly and …
14th July 2021
Manufacturing still struggling due to shortages Manufacturing sales fell again in May as the global supply shortages continued to take their toll. While those shortages should ease in the second half of the year, the rebound in production is set to be …
Semiconductor shortages to weigh on auto production for some time The euro-zone’s industrial sector took a step backwards in May as the global semiconductor shortage hit auto production. Supply disruptions look set to drag on for a while yet, constraining …
Decline in inflation will reassure Riksbank The further fall in Swedish headline inflation in June is at odds with the recent data from the US and the UK, but came as no surprise given the recent drop in electricity prices. And with non-energy inflation …
Higher commodity prices and shortages starting to boost inflation The rise in CPI inflation from 2.1% in May to 2.5% in June was smaller than the leap in US inflation to 5.4% released yesterday, but we think the gap between the two will shrink as …
WPI inflation has peaked Wholesale price inflation dropped for the first time in five months in June and is set to fall sharply over the coming months as commodity prices drop back. With headline CPI inflation also likely to have peaked last month, we …
Recovery to get quickly back on track The economy stumbled in Q2 after the government reimposed restrictions in response to a spike in virus cases, but with new infections down and the government rolling back containment measures, the recovery should …
Inflation scare far from over The 0.9% m/m surge in both headline and core consumer prices in June was much stronger than we expected and illustrates that temporary supply bottlenecks stemming from the pandemic are still putting significant upward …
13th July 2021
Industry holds up well but retail suffers during three-week lockdown Turkey’s activity figures for May, the month of a three-week national lockdown, showed that the industrial sector came through unscathed but that retail sales were hit hard. More timely …
Current strength is not sustainable Headline trade growth was stronger than expected last month, partly thanks to an increased supply of semiconductors. But exports remained below their recent peak and we still think shipments will soften in the coming …
Headline inflation has likely peaked India’s consumer price inflation remained above the 6% upper limit of the RBI’s target range for a second consecutive month in June. But if we are right in thinking that inflation has peaked, the central bank won’t see …
12th July 2021
Industry holding up while auto shortages bite The small 0.1% m/m gain in Mexico’s industrial production in May came despite a concerning 0.7% m/m drop in manufacturing production as shortages continued to hamper the auto sector. While there are signs that …
Easing of restrictions lifts employment, but hours worked disappoints The stronger-than-expected rise in employment in June confirms that labour shortages are not holding back the recovery, but the weakness in hours worked still suggests there are …
9th July 2021
Credit growth flattens Credit growth levelled off in June having previously decelerated to the pre-pandemic pace. We suspect this is a pause rather than an end to the slowdown – today’s RRR cut notwithstanding. Either way, the deceleration over the first …
Subdued core inflation will not prevent September rate hike The small increase in headline CPI inflation and small decrease in the Norges Bank’s target measure of inflation will make no difference to the immediate outlook for monetary policy, not least …
Losing a bit of verve The easing in the pace of the economic recovery in May suggests that GDP is now more likely to return to the February 2020 pre-pandemic peak in October rather than in August. The bigger point, though, is that the recovery so far has …
Price pressures start to ease After reaching a 12-year high in May, producer price inflation dropped back in June as the rally in global commodity prices faltered. Consumer price inflation declined too, on the back of a sharp drop in pork prices. We think …
US gasoline demand soars ahead of the holiday US crude stocks continued to plummet, and gasoline demand shot up ahead of the Independence Day holiday. We expect US product demand to remain strong in the coming weeks as travel activity picks up in tandem …
8th July 2021
Rising inflation to prompt rate hikes in Brazil and Chile The further rise in Brazilian inflation, to 8.3% y/y, means Copom will continue to hike when it meets next month. But the data are not quite enough to prompt a shift from 75bp hikes to a larger …
Strong inflation will keep Banxico in tightening mode The rise in Mexico’s core inflation to 4.6% y/y in June was largely driven by temporary factors which will gradually unwind. Nonetheless, given Banxico’s recent hawkish shift, and with headline and …
CBE to keep rates on hold for now as inflation drifts higher Egypt’s headline inflation rate edged up to 4.9% y/y in June and is likely to increase further over the coming months. Against this backdrop, we think the Central Bank of Egypt (CBE) will keep …
Market set to remain tight as stamp duty holiday ends Activity and house prices were extremely strong again in June according to the RICS survey, although there was a distinct softening in the more forward-looking balances. As supply remains limited, we …
Inflation rise will spook CBR The further rise in Russian inflation to a stronger-than-expected 6.5% y/y in June means the central bank (CBR) is likely to up the pace of tightening when it meets in a couple of weeks. A 75bp hike (to 6.25%) seems most …
7th July 2021
Housing demand returns to pre-pandemic level Home purchase mortgage applications fell back again in June, leaving them down 23% compared to the 11-year high seen in January. Tight inventory and stretched affordability are largely responsible for the …
Norwegian economy back in business The larger-than-expected rise in mainland Norwegian GDP in May indicates that the economy is back in business following the lifting of restrictions, and it is likely to have regained its pre-virus level in June. The …
Signs of market softening as stamp duty holiday winds down While we would be wary of reading too much into the small decline in house prices in June reported by Halifax, timely measures of house prices are consistent in pointing to a moderation in house …
Auto sector dragging on the recovery The small decline in German industrial production in May, which left it well below its pre-pandemic level, was due to another big fall in vehicle production. The problems in that, admittedly important, sector are …
Retail sales back above pre-pandemic level Euro-zone retail sales rose back above their pre-pandemic level in May. And as Covid restrictions continue to be lifted, spending in the services sector is recovering very rapidly, which will provide a …
6th July 2021
Construction booming despite difficulty sourcing materials Despite a further deterioration in the availability of building materials, construction output rose at the fastest pace since 1997 in June. That suggests output in the sector is now well above …
Strong wage growth on the horizon While the further acceleration in wage growth in May was again largely down to favourable base effects, we think wage growth will stay elevated as the labour market tightens and vaccines fuel a further recovery in …
Consumers and firms expect rise in inflation to be temporary The Bank of Canada’s latest surveys show more evidence of inflationary pressures building but, given firms and consumers expect higher inflation to be temporary, the Bank is unlikely to be too …
5th July 2021
