Economy came roaring out the blocks, and is getting into its stride The stronger-than-expected increase in Swedish GDP in Q1 means that the economy has already largely regained its pre-virus peak. Meanwhile, the jump in the ETI in April suggests that the …
29th April 2021
Domestic tourism could be key to spring and summer outperformance Employment growth in the three-months to March was positive in almost all metros, but those in southern states tended to be the better performers. With Miami’s hospitality sector performing …
28th April 2021
Decline in stocks should resume before long US crude commercial stocks stabilised last week, but we think they will resume their decline before long as product demand benefits from the easing of virus-related restrictions. The EIA’s weekly US Petroleum …
Retail sales to drop back again in April The gains in retail sales in February and March are likely to be reversed this month, but the high level of consumer confidence suggests spending will recover quickly once the coronavirus restrictions are lifted. …
Above target inflation won’t be sustained The weakness in underlying inflation in Q1 is consistent with our view that the Reserve Bank of Australia will announce a third $100bn round of asset purchases before long. And it suggests that the financial …
Consumer spending to flatline in Q2 The further rise in retail sales in March suggests that consumer spending was relatively strong in between the third and fourth waves of coronavirus. The strength in goods consumption in February and March won’t have …
House price growth to slow to 5% y/y by end-2021 House prices continued to climb in February, with Case-Shiller and the FHFA both reporting growth of around 12% y/y. But while annual growth rates are at record highs on the FHFA measure, month-on-month …
27th April 2021
Q1 returns point to upside risk to our forecasts, particularly for industrial All-property total returns rose again in Q1, driven by improvements in all sectors, although retail and hotel returns were again negative. But the industrial sector boom …
Rise in headline rate to keep Copom tightening The jump in Brazil’s inflation to 6.2% y/y in mid-April is likely to keep the central bank on course to hike the Selic rate by 75bp, to 3.50%, at its meeting next week. The outturn was a little lower than …
Korea’s economic recovery regained momentum in Q1, adding weight to our above-consensus growth forecast of 5% for 2021. Loose fiscal policy and strong export demand should continue to support the recovery over the coming quarters. GDP grew by 1.6% q/q in …
Surveys point to continued strength The strong rebound in underlying durable goods orders in March, which partly reflects the unwinding of earlier weather-related disruption, indicates that business equipment investment has continued to expand at a rapid …
26th April 2021
Survey suggests economy is not growing April’s Ifo Business Climate Index (BCI) is consistent with the economy treading water at the beginning of Q2 as optimism has been dented by supply bottlenecks and the Covid-19 restrictions. The small increase in the …
New home sales surge to 15-year high Following weather-related disruption in February, new home sales jumped in March to close to a 15-year high. A gradual rise in mortgage interest rates this year will weigh on demand to some extent, but the key …
23rd April 2021
Surge in activity as the economy emerges from restrictions The surge in April’s flash composite PMI suggests that the economy has begun to gather momentum. And this is probably a taste of things to come over the next few months as the shackles from the …
Supply shortages continuing to drive up input prices April’s small rise in the euro-zone Composite PMI was a bit of a surprise given the tightening of virus restrictions. But the survey has overstated the strength of activity in recent months, and the …
Retailers post strong gains even before they open March’s strong rise in retail sales showed that the economy made a fair bit of progress even before non-essential retailers reopened in April. And sales will probably leap further in April. The 5.4% m/m …
Borrowing undershoot in 2020/21 to persist The further rise in public borrowing in March rounded out the worst year for the public finances since 1947. But borrowing was £24.3bn lower than the Office for Budget Responsibility (OBR) predicted just a month …
Inflation has further to rise Inflation continued to rebound in March mainly due to a further pickup in energy inflation. We think headline inflation will rise further and break past the lofty heights of +1% y/y later in the year. Headline CPI rose from …
Nearing the peak in China’s production Global steel production continued to rise in March, no doubt incentivised by high prices. Growth in demand in some key markets, such as the US and China, has been strong, but we suspect that production in China will …
22nd April 2021
Home sales continue journey towards pre-COVID trend Tight inventory pushed existing home sales down to a seven-month low in March. Indeed, the number of homes for sale is at record lows and this will continue to constrain home sales this year. What’s …
All about the base The jump in Mexican inflation to 6.1% y/y in the first half of April was primarily linked to unfavourable base effects from low oil prices a year ago. We doubt that this will concern the central bank, and we expect it to keep its policy …
Polish economy resilient in face of third virus wave Polish industrial production and retail sales data for March were much stronger than expected in light of the third virus wave and recent tightening of containment measures across Europe. The big …
Gasoline demand to continue to rise US crude commercial stocks rose a touch last week, but we expect them to fall in the coming weeks as product demand picks up in tandem with the progressive easing of lockdowns . The EIA’s weekly US Petroleum Report, …
21st April 2021
Base effects exaggerate inflationary pressure Despite a muted monthly rise in prices, inflation jumped to 2.2% in March due to base effects. It will surpass 3% in April for the same reason. While inflation should then ease, we expect it to remain above 2% …
Rising energy inflation masks weak core price pressures South Africa’s headline inflation rate crept up to 3.2% y/y in March but this was almost entirely due to energy price effects that will become more pronounced this quarter. In contrast, underlying …
Starting the climb up to 2.0% The rebound in CPI inflation from 0.4% in February to 0.7% in March is the start of a rise to about 1.5% in the next few months and to above 2.0% by December. But as we doubt inflation will stick above 2.0% until late 2023, …
Exports to remain elevated Korean export values look set to remain well above pre-crisis levels in April, and a buoyant external sector will continue to prop up GDP even as the virus weighs on domestic consumption. The timely nature of the Korean trade …
Continued strength in inflation will support rate hikes next year We think underlying inflation will remain close to the RBNZ’s target for the foreseeable future which supports our view that the RBNZ will hike rates next year. Prices in Q1 rose 0.8% q/q, …
Retail and industry diverge, but signs of underlying strength Russian industrial production and retail sales figures showed a marked divergence in growth in March, but the big picture is that activity has picked up recently and that the economy held up …
20th April 2021
Tight supply and buoyant demand to drive acceleration in house price growth House price inflation according to the Teranet index surpassed 10% in March for the first time since 2017, and the high sales-to-new listing ratio implies it will continue to …
Global aluminium production likely to push higher before long Daily aluminium production dropped back a bit in March. But with prices currently at multi-year highs, and only very piecemeal restrictions on output in China, we doubt it will be long before …
Tighter bank lending standards a headwind to recovery The Q1 ECB Bank Lending Survey revealed that the demand for bank credit fell in early 2021, and banks continued to tighten their lending standards as the pandemic dragged on and vaccine rollouts …
Steady as she goes The slight fall in the unemployment rate in February suggests that the government’s job furlough scheme is still insulating the labour market from the worst effects of the pandemic. We still expect the unemployment rate to rise to a …
Export tailwind fading While export values rose in March, the rebound in exports slowed significantly across Q1 and external demand is unlikely to provide much of a tailwind to growth this year. The 16.1% annual rise in export values in March was stronger …
19th April 2021
Starts bounce back after winter storms Homebuilding recovered quickly from February’s adverse weather, with single-family starts rising to close to a 15-year high. If it were not for constraints on production, including soaring lumber prices, starts would …
16th April 2021
Flattering base effects mask sharp slowdown China’s GDP growth jumped to a record high in y/y terms last quarter. But this was entirely due to a weaker base for comparison from last year’s historic downturn. In q/q terms, growth dropped back sharply and, …
Supply constraints still weighing on production The relatively modest 1.4% m/m rebound in industrial production in March, which was driven by a 2.7% rise in manufacturing output, was weaker than we had expected and illustrates that global supply shortages …
15th April 2021
Return to normalcy and stimulus deliver big boost to sales The near-10% surge in retail sales in March reflects a small fraction of the windfall from the $1,400 stimulus cheques, which were largely saved. At the same time, loosening restrictions are …
Semiconductor shortage weighs on manufacturing sales The 1.6% m/m fall in manufacturing sales in February was primarily due to the negative effect on the auto sector of the global semiconductor shortage. While that shortage has persisted into March and …
Confirmation banks’ risk appetite is returning Robust house price growth and the prospect of a strong economic recovery have caused banks’ risk appetite to return. As a result, banks expect to increase the availability of high LTV loans and reduce …
Soaring inflation to increase pressure on policymakers to hike The latest jump in Nigerian inflation, to 18.2% y/y in March, will probably reinforce the views of the hawkish minority on the central bank’s MPC. Our base case is that the majority of MPC …
Inflation slows further, set to fall sharply in H2 Saudi inflation fell to 4.9% y/y in March and, while the headline rate is likely to rise in Q2, we expect it to fall sharply to 1.5-2.0% from July as the effects of last year’s VAT hike fade. Data …
Fuel-driven rise in headline WPI inflation will be short-lived The faster-than-anticipated acceleration in headline wholesale price inflation in March was driven by a surge in fuel inflation, but we think it should fall back soon enough. And with the …
Employment to keep rising even as JobKeeper ends The continued tightening of the labour market in March means that a further extension of quantitative easing isn't a done deal, but amid weak wage growth and inflation we still expect the RBA to press ahead …
US oil demand on the road to recovery Last week’s fall in crude stocks in the US was the result of higher demand rather than lower supply. This bodes well for our view that a relatively strong economic recovery in the US will boost oil demand there, …
14th April 2021
Shortages weighing on car production, but demand strong Euro-zone industrial production fell in February, reinforcing our view that the euro-zone economy has made a weak start to the year. Although the business surveys have overstated the strength of …
Nearing the Riksbank’s target Swedish inflation rose closer to the Riksbank’s 2% target in March, in line with expectations. As it should only breach the target temporarily, we continue to expect the Riksbank to keep the repo rate on hold for the …
Business investment will resume recovery soon The sharp fall in machinery orders in February poses downside risks to our view that business investment continued to rise last quarter. However, the recovery in private investment should still gather pace …
Inflationary pressures to remain strong The outsized 0.6% rise in consumer prices in March, driven in part by a 0.3% rise in core CPI, is the clearest indication so far that the signs of mounting inflation evident in business surveys and producer prices …
13th April 2021
The climb out of the latest COVID-19 hole begins Given there was no change in the lockdown restrictions in February, GDP was never going to shoot back up. But the small rise does suggest that January was probably the low point of the year. We think that …
