Gulf non-oil sectors set for stronger recovery over H2 June’s whole economy PMIs for the Gulf were a mixed bag, although one common thread was that weaker external demand offset a pick up in domestic demand. Strong vaccine rollouts mean that most virus …
5th July 2021
Strong recovery accompanied by growing price pressures The PMIs point to the euro-zone economy recovering strongly in June and provide evidence that price pressures are now spilling over into the services sector, even in the periphery. Nevertheless, we …
Inflation picks up, start of easing cycle likely to be delayed The fresh rise in Turkey’s headline inflation rate to 17.5% y/y in June, coupled with signs of a strong rebound in activity after May’s three-week lockdown, means that an interest rate cut in …
PMI readings to soon rebound, but downside risks still significant The drop in India’s PMI readings for June should soon reverse as the second virus wave has subsided and restrictions are being eased. But a rapid reopening increases the risks of fresh …
Lockdowns to weigh on retail sales in June Retail sales are sure to decline in June as the impact of the recent lockdowns weighs on household consumption. Even so, the rise in retail sales in May means the risks to our forecast the consumption was …
Semiconductor shortage weighs on exports Exports were weaker than expected in May, but that was largely due to the ongoing global semiconductor shortage rather than weakening external demand. And with the rise in imports boding well for domestic demand, …
2nd July 2021
Payroll growth accelerates, but drag from shortages could persist The stronger 850,000 rise in non-farm payrolls in June may be a sign that some of the temporary labour shortages holding back the employment recovery are starting to ease. But with the …
Industry recovered only slowly May, June probably better The 1.4% m/m rise in Brazilian industrial production in May only partially reversed the falls in output in the three preceding months. And while surveys point to a stronger reading in June, the …
Shortages still pushing prices higher The headline ISM manufacturing index was virtually unchanged at a high level in June, but the far bigger story is the further rise in the prices paid index to 92.1 from 88.0, its highest level since the 1970s. That is …
1st July 2021
Re-opening boosts hiring activity The big fall in euro-zone unemployment in May highlights that the re-opening of many services sector firms in that month has boosted hiring activity. And with a strong recovery now underway, it now looks unlikely that …
PMI robust in face of third virus wave South Africa’s manufacturing PMI edged down in June but it remained strong given the context of a severe third wave of COVID-19 and we think that the further tightening of restrictions announced on Sunday will only …
Price pressures continue to mount The PMIs for June suggest that manufacturing sectors strengthened in Turkey, Czechia and Poland but weakened in Russia. Meanwhile, in Czechia and Poland, supply chain disruptions intensified, and there was further …
Manufacturing still impacted by second virus wave The drop in India’s manufacturing PMI in June suggests that the recent plunge in new virus cases has yet to translate into a pick-up in manufacturing activity. The recovery should get back on track as …
Net trade to turn from drag to boost While export values hit a record high in May, this was largely driven by soaring export prices and export volumes probably dropped back. However, we think that the drag from net trade on GDP growth will fade before …
Exports strong but close to peak After a strong end to the month, Korean export values reached a fresh all-time high in June. But with some signs external demand is levelling off and semiconductor shortages are biting, we suspect goods export values are …
More evidence of a slowdown The Caixin manufacturing index published today dropped back last month and adds to signs from the official PMI released yesterday that momentum in industry is waning. The surveys point to a levelling off in demand and easing of …
Industry conditions looking less rosy The June PMIs dropped back as virus outbreaks and supply chains issues created mounting headwinds for industry. With neither issue likely to be resolved soon, the rapid growth in industry over the past few quarters …
House prices to continue booming a little longer House prices are continuing to surge and forward indicators suggest the upswing has a little further to run. But we suspect the boom will peter out by the end of the year and prices will decline a little in …
Strong recovery in H2 The further rebound in the Q2 Tankan supports our view that the economy’s disappointing start to the year won’t prevent vaccines driving a strong rebound in the second half of the year. And firms’ upbeat capital spending plans …
Employment still down 10% despite gains in leisure and hospitality Employment growth in May was positive in all metros, largely driven by gains in the leisure & hospitality sector. This benefited Orlando, Los Angeles and Las Vegas the most, but still left …
30th June 2021
More good news on US crude demand US crude stocks fell for the sixth consecutive week amid the ongoing rebound in product demand as the virus-related restrictions continue to be lifted. That said, if OPEC+ decide to gradually raise output from August (as …
GDP not as weak as first thought The 0.3% m/m decline in GDP in April was smaller than Stats Can initially suggested and implies that, despite the third coronavirus wave, the economy held up relatively well. We now expect second-quarter GDP growth to be …
Industry has taken a sizeable hit India’s core infrastructure industries index dropped sharply in m/m terms in May, suggesting that the second virus wave has taken a large toll on industry even though it has been subject to fewer restrictions than a year …
Inflation likely to resume its upward path After dipping below 2% in June euro-zone inflation is likely to rise again in the coming months, led by higher inflation in Germany. But we think it will drop back early next year and remain low beyond that. The …
Larger stock of savings an upside to economic recovery The small downward revision to Q1 GDP growth probably won’t stop the economy from rising back to its pre-pandemic peak in the coming months. And the larger-than-expected rebound in the household …
Growth slowing, price pressures easing The latest surveys suggest that growth softened this month. A slower improvement in services activity was mostly to blame. But supply shortages also continued to hold back output in the manufacturing sector. On a …
Output to recover as car chip shortages ease The plunge in industrial output in May probably reflects chip shortages, but firms’ production forecasts point to a marked rebound over the coming months . The 5.9% m/m drop in industrial production was the …
House prices are booming, but not in a bubble House price growth gathered pace in April, with the annual growth rate hitting record highs on both the Case-Shiller and FHFA measures. But despite the pick-up in house price expectations, we don’t think a …
29th June 2021
Recovery firmly underway Economic sentiment in the euro-zone improved sharply in June as restrictions were lifted further. Although industrial confidence was flattered by low levels of stocks, presumably relating to supply shortages, the big picture is …
Strong recovery continues, price pressures building The EC’s Economic Sentiment Indicators showed a further rise in regional sentiment in June, driven by improvements in retail and services sectors. That said, there is also continued evidence of growing …
A surprise rise, but net lending is likely to fall again soon After falling sharply in April, net lending rose in May. We think this can be explained by the extension of payment holidays rather than an increase in new loans. Further ahead, we expect a …
Households resume pre-virus borrowing habits The signs that households have started to borrow again provide us with confidence that May’s surprise fall in retail sales was a result of a shift in spending from retailers to other areas as the economy …
Mortgage lending remains strong The tick up in mortgage approvals for house purchase in May left them 33% above pre-virus norms, and timely indicators suggest that mortgage lending will remain robust despite the looming end of the stamp duty holiday. The …
House price growth peaks at a 17-year high House prices recorded a fifth consecutive monthly rise in June, the final month before the stamp duty threshold begins to return to its usual level. There are few signs of market dynamics changing dramatically as …
Virus outbreak taking its toll Looking past the jump in y/y growth due to a weak base for comparison, GDP data suggest that Vietnam is facing a heavy economic toll from its efforts to control the virus. With sporadic outbreaks continuing, the economy is …
Spending and employment will soon bounce back While the further rise in the unemployment rate last month suggests on-off restrictions are taking their toll on the labour market, employment should bounce back strongly soon. Meanwhile, consumer spending …
Rise in inflation keeps plenty more tightening on the table The further rise in Brazilian inflation, to 8.1% y/y in the middle of June, keeps Copom on track to increase the Selic rate to 6.50% (from 4.25% now). But we don’t think that the inflation risks …
25th June 2021
Business equipment investment still expanding rapidly The 2.3% m/m rise in durable goods orders last month was driven by another big increase in commercial aircraft orders reflecting the recovery in air travel, with underlying orders weaker than expected …
24th June 2021
Banxico to keep looking through above-target inflation The strength of the Mexican headline and core inflation readings in the first half of June is likely to prompt a more cautious approach by Banxico at its meeting later today. Even so, we suspect that …
Surge in services activity The German football team only narrowly scraped through the group stage of the Euros yesterday, but the news about the economy continues to be much more emphatic. The increase in the Ifo Business Climate Index (BCI) from 99.2 in …
Stock drawdowns to continue, but unlikely to accelerate US commercial crude stocks declined again last week. However, with both implied demand for most products and refinery activity close to pre-pandemic levels, we think the pace of draws will stabilise …
23rd June 2021
Elevated construction costs distort sales While new home sales declined in May, data for homes that are yet to start construction were stronger, as elevated construction costs caused homebuilders to delay projects. But with falling lumber prices likely to …
Sales fell sharply in April and again in May The recent lockdowns caused retail sales to plunge by 5.7% in April and the preliminary estimate implies they fell sharply in May as well. The outlook is much brighter, with the record level of consumer …
Pace of economic recovery may be peaking The fall in the flash composite PMI from a record high of 62.9 in May to 61.7 in June indicates that the pace of the recovery may have peaked. That suggests the monthly rises in GDP will ease back from the 2.3% m/m …
Output and prices both rising quickly The further strengthening of the euro-zone Composite PMI to a 15-year high in June underlines that the economy is rebounding quickly. Alongside this recovery, price pressures are continuing to build. But we still …
Soft core inflation, economic setbacks to keep rates on hold Although South Africa’s headline inflation rate jumped to a multi-year high of 5.2% y/y last month, the weakness of core inflation and the recent tightening of lockdown measures means that the …
Supply shortages to continue to hamper manufacturers Today’s flash PMIs suggest that the onus is on the services sector to drive the recovery over the coming months. The fall in the manufacturing PMI suggests that that sector won’t rebound much further …
Slowdown in sales is well under way Record low inventory is weighing on housing market activity, with existing home sales falling to an 11-month low in May. And with booming house prices and rising mortgage rates set to stretch affordability, we expect …
22nd June 2021
Growth in China’s steel output is slowing Growth in global steel production is still running high in year-on-year terms owing to the low base a year earlier. However, daily production in May was somewhat lower than April, as output in China dipped. We …
Economy roars back to life as restrictions lifted Polish retail sales rebounded strongly in May as restrictions were lifted, while industry continued to expand at a solid pace. GDP looks set to return to its pre-virus level in Q2 and we expect the …
