Stronger economy feeding through to lower borrowing May’s public finances figures suggest the strong economic recovery is starting to feed through into lower government borrowing. This reinforces our view that the tax hikes and spending cuts that most …
22nd June 2021
Global production to edge higher in the coming months Average daily global aluminium production edged up in May as smelters continued to take advantage of high prevailing prices. We think that production will rise further in the near future . According to …
21st June 2021
Exports close to their peak Korean export values look set to dip in June after a record high in May. We suspect goods export values have peaked. The timely nature of the Korean trade data makes them a good bellwether for the health of the export sector …
Less time shopping, more time socialising Rather than suggest the economic recovery is already spluttering, the decline in retail sales in May is probably just a result of the reopening of indoor hospitality in mid-May prompting households to spend less …
18th June 2021
Upwards pressure on inflation from reopening to be muted Headline inflation rose sharply in May due largely to a pickup in energy inflation. But while we expect headline inflation to rise further over the coming months, in contrast to many other large …
Reopening set to push inflation up further The final euro-zone inflation data for May do not provide much evidence that price pressures are rising as the economy re-opens. We suspect that these will materialise in the coming months and will push core …
17th June 2021
Extraordinary labour market recovery to continue The surge in employment in May demonstrates that the labour market is continuing its extraordinary rebound which supports our call for the RBA to move to a flexible asset purchase programme in July. The …
Solid rebound in activity to persist The solid rise in activity in Q1 means that New Zealand easily avoided a second technical recession and we expect GDP to continue its rebound over the rest of 2021. The 1.6% quarterly rise in production GDP was …
Rebound in production won’t last long Despite an uptick in domestic production, US commercial crude stocks plummeted last week as refinery throughput rose and net imports slumped. However, we suspect that the pace of draws will slow in the coming weeks as …
16th June 2021
Falling lumber prices to support starts Single-family starts edged higher in May but have been broadly flat since the start of the year. While worsening affordability is now weighing on the demand for homes, record low inventory and falling lumber prices …
Housing, re-opening and supply constraints lifting inflation The rise in inflation to 3.6% in May was driven by several factors including ongoing global supply constraints, the booming housing market, and the start of the re-opening process. While …
Wage growth to remain weak Average hourly labour cost growth slowed in Q1, and we expect wage growth to remain subdued over the coming years. This will keep underlying inflationary pressures down. Data released this morning showed that growth in average …
Consumption a bright spot as momentum elsewhere falters Headline growth on all the key indicators dropped back last month. But after adjusting for base effects the picture was more mixed, with investment slowing, industrial output growth holding steady …
Reopening of the economy may push inflation up to 3% With businesses having raised their prices by more than we expected once they reopened after COVID-19 lockdowns ended, we now think CPI inflation will rise to a peak of 2.9% later this year compared to …
Export tailwind fading Despite the spectacular y/y growth rates in May, the rebound in exports is showing signs of slowing. Indeed, we doubt external demand will provide much of a tailwind to growth over the coming months as global consumer goods demand …
Early signs of the re-opening pushing up core inflation The rise in inflation in Israel to 1.5% y/y in May was partly driven by food and energy, but there are some signs that underlying price pressures have increased. We think that inflation will rise …
15th June 2021
Manufacturing recovery remains unspectacular The 0.8% m/m rise in industrial production in May, driven by a 0.9% gain in manufacturing output, suggests that some of the shortages holding back production in recent months could have eased. But manufacturing …
Inflation probably past its peak The second consecutive drop in Nigeria’s headline inflation rate, to 17.9% y/y in May, will probably go some way towards easing policymakers’ recent concerns about high and rising inflation. While we expect inflation to …
Fading stimulus boost partly offset by reopening spending on services The 1.3% decline in retail sales in May is arguably a lot better than it looks because there were big upward revisions to the April data and spending on food and drink services posted …
Rise in inflation to be short-lived The rise in Saudi inflation to 5.7% y/y in May is likely to be followed by another increase in June, but the headline rate will fall sharply in July to around 1.0-1.5% y/y as the effects of last year’s VAT hike fade. …
Strong recovery underway but still plenty of slack Another strong set of labour market figures released this morning will feed concerns about labour shortages and the possible impact on inflation of higher wage growth. But the level of employment is still …
Struggling due to supply shortages Manufacturing sales volumes slumped 3.3% m/m in April, as the disruption from the global semiconductor shortage intensified. While sales volumes should gradually rise again from May, it will be some time before overall …
14th June 2021
Larger-than-expected jump in inflation should reverse soon India’s consumer price inflation jumped to a six-month high in May on the back of an unexpected surge in core inflation, which we suspect is a result of rising commodity prices now seeping into …
Almost back to pre-covid levels The further rise in euro-zone industrial production in April suggests that the sector is continuing to recover. Supply disruptions look set to drag on for a while yet, constraining the sector’s recovery, but the business …
WPI inflation close to peaking Wholesale price inflation surged to a three-decade high in May on the back of the sharp rise in global commodity prices and will be a concern for policymakers. However, there are reasons to think that WPI inflation has …
CRE lending growth to ramp up slowly this year Commercial real estate debt held by banks grew again in May. But while we expect growth to accelerate as the year progresses and confidence returns, investor caution toward the office and retail sectors will …
11th June 2021
Subdued industry delivers triple-digit growth There is unlikely to be a clearer illustration of the distorting impact of base effects than the 134% y/y rise reported in Indian industrial production in April. Industrial output actually dropped in April as …
A small bump in the road The surprise drop in Mexican industrial production in April may partly be payback for a strong March. And early indicators suggest that industrial activity picked up in May. Moreover, with services sectors recovering, we continue …
Recovery stepped up a gear as economy reopened The jump in GDP in April was another sign that consumers are raring to spend as the economy reopens. And all the early indicators suggest that GDP growth was strong in May as well. As such, our forecast of …
April figures point to fall in GDP in Q2 The m/m falls in Turkish industrial production and retail sales in April are likely to be followed by further weakness in May (when a three-week lockdown was in place). This supports our view that the economy will …
Another strong month Korean export values dipped a little at the start of June after a record high in May, but external shipments remain well above their pre-crisis level and should continue to boost GDP growth. The timely nature of the Korean trade data …
Surging inflation starting to look a little less transitory The further jump in core CPI inflation to a 28-year high of 3.8% in May, from 3.0%, was again driven by the same handful of categories most directly affect by the lifting of virus restrictions. …
10th June 2021
Credit growth takes another leg down Broad credit growth continued to slide in May and is now at its slowest since February last year. Evidence of policy tightening weighing on borrowing is clearest in bank loan growth which, apart from during last year’s …
Underlying inflation subdued Inflation in Norway and Sweden was lower than expected in May, with core inflation falling in both economies. This will reassure Sweden’s Riksbank that it can keep its policy rate on hold, but we still think that the Norges …
Inflation rises, but rate cuts are coming Egypt’s headline inflation rate rose to 4.8% y/y in May, the fastest pace recorded so far this year. But it remained below the lower bound of the central bank’s (CBE’s) target range, supporting our view that …
Looming end of tax break yet to bite The looming end of the stamp duty holiday has only applied the slightest dab to the brakes of the housing market thus far. But while the new buyer enquiries started to ease, sales instructions fell more sharply …
Diminishing scope for further falls in crude stocks US commercial crude stocks fell again last week, in part due to higher refinery activity. However, rising product stocks and lower product demand suggest the downward trend in crude stocks may slow soon …
9th June 2021
Copom to hike by a further 75bp next week The further jump in Brazil’s headline inflation rate last month, to 8.1% y/y, makes a 75bp hike in the Selic rate (to 4.25%) next week certain and Copom will probably signal that another 75bp hike is on the cards …
Rise in core inflation unlikely to last The rise in Mexican core inflation to its highest rate in over three years in May, at 4.4%, appears mainly to be related to temporary factors. Policymakers at the central bank will probably continue to adopt …
Factory-gate inflation hits twelve-year high Producer price inflation continued to surge and reached its highest level since September 2008 last month, on the back of a further rise in global commodity prices. That said, there are some signs in the data …
Net trade switching from a drag to a small boost The sharp drop in the trade deficit, to $68.9bn in April from $75.0bn a month earlier, largely reflects cooling demand for consumer goods now the boost from fiscal stimulus is fading and demand is switching …
8th June 2021
Semiconductor shortage weighs heavily on trade The global semiconductor shortage weighed heavily on exports and imports of motor vehicles in April and this disruption continued in May. While exports elsewhere performed better, the broad-based weakness of …
Smaller-than-expected hit from second wave South Africa’s economy weathered a second virus wave relatively well, but with cases rising again and other headwinds hanging over the outlook, the recent strength of the recovery is unlikely to last. As measured …
Mortgage boom reflects home mover demand rather than generous lending The rise in mortgage lending to its highest level since the financial crisis in Q1 was driven by a huge increase in existing homeowners moving. As a result, the 9% y/y increase in house …
Upward revision to Q1 and activity is now recovering Euro-zone GDP fell in Q1 and official data for April have been weak, but timelier data suggest that the recovery is now underway. We have pencilled in a 1% q/q rise in GDP in Q2, with risks to the …
Disappointing start to Q2 The decline in German industrial production in April underlines that the German economy was performing well below normal at the start of the second quarter. But things should have improved since then, so we still expect GDP to …
Wage growth to stay strong While the marked acceleration in wage growth in April was largely down to favourable base effects, we think wage growth will remain strong throughout this year as the labour market tightens and overtime hours recover further as …
Sharp rise in inflation, 50bp rate hike now a real possibility on Friday The larger-than-expected rise in Russian inflation to 6.0% y/y in May was driven by broad-based increases in both food and non-food goods and we think that the balance of factors is …
7th June 2021
Stamp duty extension ushers in further house price gains House prices recorded another large increase in May as the extension to the stamp duty holiday continued to turbocharge house purchase demand. Timely indicators show that the end of the tax break is …
Rising inflation won’t faze the SNB Inflation in Switzerland is likely to keep climbing over the coming months, but we still expect it to fall back next year. So the SNB looks set to keep interest rates on hold for a very long time. The rise in headline …
