Fresh downturn in Q1, but cause for optimism Saudi Arabia’s economy recorded a slight contraction in Q1 as the impact of the Kingdom’s additional voluntary output cut more than offset a further rebound in non-oil sectors. With oil output cuts now being …
10th May 2021
Inflation falls, raising possibility that CBE moves sooner to cut rates Egypt’s headline inflation rate fell to a seven-month low of 4.1% y/y in April, leaving it well below the lower bound of the central bank’s (CBE’s) target range. We think the headline …
House prices get a second wind A renewed surge in house prices following the extension of the stamp duty holiday drove annual growth in the Halifax house price index up to a five-year high in April. Demand remains very strong, so house prices are likely …
Exchange rate effects mask pockets of home-grown price pressures Exchange rate effects pulled Norway’s core inflation rate back down to target in April, and will continue to exert downward pressure over the coming months. However, pockets of home-grown …
Consumption may only return to pre-virus levels in second half The drop in real retail sales in Q1 suggests that the recovery in consumption slowed last quarter. And with the vaccination drive still slow, we think that consumption will only return to …
Inflation falls but underlying pressures remain strong The fall in Russian inflation to 5.5% y/y in April was largely driven by base effects that pulled down food inflation as underlying price pressures remained strong. The central bank will continue to …
7th May 2021
Payroll gains to reaccelerate in coming months The more muted 266,000 increase in non-farm payrolls last month is a clear disappointment but, with much of the high-frequency data – including jobless claims – still improving rapidly, we doubt it signals …
Slump in hours worked implies GDP fell in April The third coronavirus wave caused the labour market recovery to go into reverse in April and, with no imminent sign of the restrictions being eased, there is little chance of a meaningful rebound this month. …
Banxico unlikely to be concerned by inflation jump The surge in Mexico’s inflation to 6.1% y/y in April was mainly driven by unfavourable base effects linked to fuel prices and this impact should unwind over the coming months. We think that Banxico will …
Construction activity stays strong, though growing signs of cost pressures Strong demand for new projects brought further growth in output during April, according to the latest construction PMIs. But there is also growing evidence of cost pressures, …
Supply problems to continue in Q2 The small increase in German industrial production in March shows that factories are still not back to normal, despite the strength of demand. This seems to be primarily due to supply problems, notably the global shortage …
Trade values remain elevated but fail to gain further ground Headline trade growth picked up last month thanks to favourable base effects. But in seasonally-adjusted terms, exports continued to level off and the rebound in imports stalled. This partly …
Wage growth has further to rise Wage growth turned positive for the first time since the pandemic began in March and we think it will accelerate further next month due to favourable base effects. Further ahead wage growth should remain strong due to the …
Construction recovery well underway as optimism builds The RICS Construction Survey points to a rise in output at the start of this year, with the highest workload reading since Q1 2016. Looking ahead, respondents are more optimistic about the outlook but …
6th May 2021
Sales back above pre-pandemic levels Euro-zone retail sales rose again in March to back above their pre-pandemic levels. The planned lifting of restrictions should allow sales to improve further in the coming months, so household consumption should start …
Crude oil export surge unlikely to last for long US crude stocks plummeted last week primarily because net imports nosedived to a record low. While net imports will probably recover in the coming weeks as exports ease back, we think that crude stocks will …
5th May 2021
Slump in industry unlikely to deter further rate hikes The 2.4% m/m drop in Brazil’s industrial production in March is a clear sign that the severe virus outbreak has put the economic recovery into reverse and the data for April may be worse still. But …
Easing credit conditions won’t stop home purchase demand from falling Despite a small fall in mortgage interest rates, home purchase and refinance demand edged back in April. The reopening of the economy and easing credit conditions will provide some …
End to deflation won’t faze the SNB April marked the end of the recent bout of deflation in Switzerland, and the headline rate is likely to climb higher over the coming months. Meanwhile, further confirmation that the Swedish economy is firing on all …
PMIs overstating growth The PMIs may be a less reliable guide to activity growth than normal, but recent progress on vaccinations suggests that the euro-zone economy will start to recover in Q2. And price pressures are intensifying. April’s Composite PMI …
Indonesia’s economy struggled to gain any momentum in the first quarter of the year and a failure to contain the virus will hold back the recovery in the quarters ahead. Today’s figures show the economy contracted by 0.7% y/y in Q1, which was close to …
Limited economic impact so far, but more to come still India’s PMI readings for April suggest that economic activity has held up fairly well despite the latest set of containment measures. But with virus cases still extremely high, tighter and …
Tighter labour market to herald RBNZ hikes next year The fall in the unemployment rate to 4.7% in New Zealand is consistent with our view that a continued tightening in the labour market will prompt the RBNZ to hike rates next year. The 0.6% q/q rise in …
Exports and imports to continue rising strongly Although both exports and imports rebounded strongly in March, the former are still 5% below pre-pandemic levels whereas the latter are about 8% higher. As virus restrictions in other advanced economies are …
4th May 2021
Net trade made positive contribution to first-quarter GDP growth The much stronger rise in imports than exports in March partly reflects the unwinding of temporary factors that weighed on imports in February. Net trade contributed positively to …
Green shoots of a consumer revival March’s money and credit data provides some signs that a consumer revival was underway even before the COVID-19 restrictions were eased in mid-April. But even if consumers’ willingness to borrow remains limited, they …
Second consecutive rise in net lending but lenders to act cautiously We think the extension of payment holidays boosted net lending again in March. But as the economy bounces back in H2, lenders are less likely to allow for these concessions and we expect …
Mortgage advances set record ahead of original stamp duty deadline The surge in mortgage advances to an all-time high in March reflected the rise in housing transaction volumes to their highest level on record in the same month. Meanwhile, despite the …
Price pressures mount as supply problems bite April’s robust manufacturing PMIs for Czechia and Poland were artificially boosted by longer supplier delivery times and there were further signs that supply chain issues have caused price pressures to build. …
Shortages putting massive upward pressure on prices The drop back in the ISM manufacturing index, to 60.7 in April from 64.7, appears to reflect intense and widespread supply constraints rather than a moderation in demand, a view which is underlined by …
3rd May 2021
External tailwinds continue to boost recovery Hong Kong’s y/y GDP growth turned positive in Q1 for the first time since Q2 2019. Even after accounting for base effects, the economy expanded impressively thanks to the strength of exports. With the virus …
Manufacturing PMI holds up, but headwinds are mounting India’s manufacturing PMI held up well in April, reflecting the fact that the containment measures in response to the surge in COVID-19 cases have been very light touch compared to last year. But the …
Buoyant export growth to continue Korean export values were well above pre-pandemic levels in April, and with semiconductor demand set to remain elevated, at least in the short term, exports are likely to stay strong. The timely nature of the Korean trade …
Industry going from strength to strength The April PMI readings suggest that manufacturing improved further in most places in Asia after a strong Q1. Global demand for electronics should continue to support the sector over the next few months. PMIs for …
Q1 growth could be stronger than US, but third wave to weigh on Q2 At 0.4% m/m in February, GDP growth was a bit weaker than Stats Can first thought but, with the preliminary estimate pointing to a much larger 0.9% m/m rise in GDP in March, first-quarter …
30th April 2021
Rebound in industry overtaken by second wave India’s core infrastructure industries index rebounded in March, but this is old news given the dramatic surge in virus cases and renewed tightening of containment measures since then. The core infrastructure …
Recovery slowed in Q1 but back on track in Q2 The modest 0.4% q/q rise in Mexico’s GDP in Q1 largely reflects the economy’s poor performance at the start of the year. The good news is that the recovery got back on track at the end of the quarter and in …
Another fall, but outlook brightening Confirmation that the euro-zone economy contracted again in Q1 means that the region suffered a second technical recession in just over a year. But the good news is that things should get better towards the end of Q2 …
Headline inflation to exceed 2% soon Euro-zone inflation continued on its upward trend in April and we think that it will soon rise above 2%. But that should only be temporary and we expect it to fall back below the ECB’s target in 2022. The increase in …
Taiwan has been the star performer of the pandemic, with figures today showing the economy grew by 8.2% y/y in the first quarter of the year. Surging demand for semiconductors and booming investment mean growth should remain strong over the coming …
Temporary setback before strong recovery The 0.3% q/q drop in Czech GDP in Q1 was slightly better than expected and, with authorities now moving to relax virus restrictions, we expect a strong recovery to take hold in the second half of this year. The …
Rising case numbers don’t stop economy growing The unexpected increase in French GDP in Q1 suggests that the economy has been more resilient to the poor health situation and restrictions than we had thought. Nevertheless, with France in a full national …
Stamp duty extension provides renewed impetus House prices regained momentum in April following the extension to the stamp duty holiday. As a result, an acceleration in annual house price growth into double digits over the summer is now all but …
A weaker start to Q2 The latest surveys suggest that growth edged down this month. Supply-side disruptions appear mostly to blame for a slower rise in manufacturing output. But there are also signs of a demand-led slowdown in construction and services. …
Economy held up in Q1, but Q2 may yet be weaker The rebound in industrial production and the sharp drop in the unemployment rate in March are consistent with our view that the economy held up much better than most had anticipated during the second state …
Industrial has strong start to 2021; office and retail fall further behind Weakness in office and retail occupier demand weighed heavily on market sentiment in Q1. Commercial property agents are therefore downbeat about rental and capital values in these …
29th April 2021
Boosted by stimulus and reopening, GDP almost back to pre-pandemic peak Buoyed by the two rounds of stimulus cheques sent out in the first three months of the year, first-quarter GDP growth accelerated to 6.4% annualised, driven by a massive 10.7% surge …
Surveyors less downbeat about office and retail, more bullish on industrial The Q1 RICS survey showed that while occupier demand continued to fall, investment enquiries picked up, mostly due to rising industrial activity. Looking ahead, surveyors are less …
Surge in ESI suggests activity held up at start of Q2 April’s jump in the EC’s Economic Sentiment Indicator (ESI) for the euro-zone was surprising given the restrictions still in place. Although the surveys have been too optimistic about activity in Q1, …
Record-breaking rise in sentiment, strong recovery to soon take hold The EC’s Economic Sentiment Indicators (ESIs) recorded their largest ever monthly aggregate improvement across Central and Eastern Europe in April. Sentiment remains below its …
