House prices make further strong gains House prices made further strong gains in January, although there are tentative signs that month-on-month growth is starting to ease. With mortgage rates now rising, and set to increase further over the year, that …
30th March 2021
Inflation to rise further before it falls The increase in German HICP inflation to 2.0% in March is not the end of the upward trend. We expect rising energy prices and some further unwinding of the factors which suppressed it last year to push the …
Sentiment increases in March, but unlikely to last The EC’s Economic Sentiment Indicators (ESIs) showed an improvement across most of Central and Eastern Europe in March, despite a surge in virus cases across the region. That said, sentiment in Czechia …
Rise in ESI unlikely to be sustained March’s jump in the EC’s Economic Sentiment Indicator (ESI) for the euro-zone took it to above its long-run average. But it was still below its pre-pandemic level and with virus restrictions now in place for longer, a …
Ending Q1 on the front foot The latest business surveys indicate that Sweden and Switzerland ended Q1 on strong footings, helped by buoyant conditions in their manufacturing sectors. The rise in Sweden’s ETI in March, from 103.8 in February to 105.3, …
Economy may not have contracted in Q1 The strong rise in retail sales in February to their highest level since September 2019 supports our view that the economy just about avoided a contraction in Q1. And while the unemployment rate was unchanged in …
Net lending to turn negative again despite February’s rise The increase in February’s net lending total was the first rise since September last year. We think this can be explained by the extension of payment holidays rather than a rise in new loans. …
29th March 2021
Households still saving, small businesses still borrowing The COVID-19 lockdown pattern of households paying back credit and investing in property but small businesses loading up on debt continued in February. We doubt much changed in March, but this …
Stamp duty deadline pushes lending to a five-year high The rush to beat the original stamp duty holiday deadline in March pushed mortgage advances up to their highest level since 2016 in February. And while approvals for house purchase did start to cool, …
Recovery already back on track Vietnam’s economy lost a little momentum in the first quarter due to a renewed virus outbreak, but with the latest wave quashed and most restrictions now lifted, the economy should bounce back strongly over the coming …
Jump in Ifo overstating strength of the economy The strong Ifo Business Climate Index (BCI) for March provided further evidence that, the auto sector aside, Germany’s manufacturers are flourishing. But the rest of the economy is faring less well, and the …
26th March 2021
Third COVID-19 lockdown capping the extent of the rebound The fairly modest rise in retail sales volumes in February affirmed that the third COVID-19 lockdown has been tough for retailers, keeping sales suppressed following the plunge in January. But that …
Inflation starts to surge The surge in Brazilian inflation to 5.5% y/y in the middle of March – its highest rate in over four years – has further to run and the headline rate looks set to reach 7.5% y/y in Q2. That will result in further interest rate …
25th March 2021
US commercial crude stocks to fall soon The pace of builds in US crude stocks continued to slow last week as refinery activity surged. However, we expect stocks to ease back in the coming weeks as refinery capacity utilisation steadily bounces back . The …
24th March 2021
Rise in confidence unlikely to be sustained The sharp increase in euro-zone consumer confidence in March came as a big surprise given tighter restrictions across the bloc and ongoing difficulties with the AstraZeneca vaccine. That said, confidence is low …
Weather disruption will be reversed in March The fall in durable goods orders in February was mainly due to the disruption caused by the severe winter storms, which we already know weighed heavily on manufacturing output last month. The latest surveys …
Above-target inflation spells end of Banxico’s easing cycle The continued rise in Mexican inflation to 4.1% y/y over the first half of March, above the central bank’s 2-4% target range, will almost certainly put an end to Banxico’s easing cycle. We think …
PMIs rise as some businesses prepare to reopen The rise in the IHS Markit/CIPS composite activity PMI in March suggests that the economy has started to pick up. And once the COVID-19 shackles start to be released next month, activity will probably rebound …
Supply problems continue to boost prices March’s rise in the euro-zone Composite PMI pushed it back above the 50 mark for the first time in six months, but the recent tightening of restrictions in a number of countries suggests the improvement will not be …
Drag from lockdown won’t last The drag on CPI inflation in February from the COVID-19 lockdown will delay the rebound in inflation to 2.0% and perhaps prompt the markets to reconsider their view that interest rates will rise next year. The fall in CPI …
Soft inflation reading another reason to expect Reserve Bank to hold The fall in South Africa’s headline inflation rate, to 2.9% y/y, in February almost certainly rules out a hike in interest rates at Thursday’s MPC meeting. We think that the repo rate …
Recovery from state of emergency slow going The slight rise in the composite PMI in March was a little disappointing given that most state of emergency declarations had been lifted and suggests that the economy may not be entering Q2 with much momentum. …
Headwinds to China’s steel output growth on the rise Growth in global steel production declined in February y/y. And though base effects will distort growth rates for a while yet, we reckon that China’s steel output growth will start to slow before long . …
23rd March 2021
Winter storms hit new home sales Severe weather, tight inventory and worsening affordability pushed new home sales down to 775,000 annualised in February. And with mortgage rates likely to rise to 4.0% by the end of the year, home sales face strong …
Continuing to hold up well The drop in the unemployment rate from 5.1% in December to 5.0% in January highlights once again the extent to which the government’s job furlough scheme has protected jobs during the pandemic. We still expect the unemployment …
Home sales start to come back to earth The boom in housing market activity started to moderate in February, with existing home sales recording a substantial drop. Record low inventory will be constraining activity, as will worsening affordability. Looking …
22nd March 2021
Global aluminium output growth shows no signs of slowing Average daily global aluminium production inched up in February. And with ShFE and LME prices at multi-year highs, we expect production to continue growing in 2021 . According to the International …
Exports to drive renewed pickup in growth this quarter Korea’s external sector looks to have had its strongest quarter since 2018 and with semiconductor demand set to remain elevated in the short term, exports are likely to continue to provide an …
Economy struggling to gain momentum Russian industrial production and retail sales figures for February are consistent with GDP falling by around 4.0% y/y at the start of the year. The economy is struggling to gain momentum and, with the vaccine rollout …
19th March 2021
Preliminary estimate points to strong February The fall in retail sales in January was smaller than first indicated and the preliminary estimate for February suggests that, as lockdowns were lifted, most of the decline over the prior two months was …
Industry disruptions and virus waves stall the recovery The latest Polish activity data for February were a little weaker than expected which, combined with the growing headwinds to the industrial sector and the reimposition of virus containment measures, …
Borrowing set to end the financial year on the up February’s public finances figures showed that borrowing may come in a little below the OBR’s 2020/21 forecast of £355bn. But if we are right in thinking the economic recovery will be faster and fuller …
Headline inflation could briefly hit 1% Headline inflation recovered further in February due mainly to a pickup in energy inflation and should continue to rebound over the coming months as energy becomes a significant tailwind. Headline CPI rose from …
Latin America’s shining light The 6.8% q/q rise in Chile’s GDP in Q4 shows the economy headed into 2021 with significant momentum. And the outlook is bright given the country’s swift vaccine progress. As a result, we are revising up our 2021 GDP growth …
18th March 2021
Services will continue to hold back trade recovery The euro-zone’s goods trade surplus narrowed in January, partly reversing some of the widening since last April. Looking ahead, goods exports should grow fairly steadily this year on the back of the …
Tightening in the labour market has further to run The surge in employment in February is consistent with our view that the Australian labour market is tightening much faster than most expect. The 89,100 rise in employment in February much stronger than …
Second technical recession all but confirmed The solid decline in activity in Q4 means that a second recession is imminent as GDP is bound to decline in Q1. The 1.0% quarterly fall in production GDP was larger than the Bloomberg consensus of a 0.2% q/q …
17th March 2021
Rising refinery output to weigh on commercial crude stocks Even with the continued recovery in refinery activity, US crude stocks rose last week. However, we suspect that stocks will fall soon as refinery activity rises further and crude production holds …
Winter storms and record high lumber prices delay housing starts Single-family starts fell for the second consecutive month in February, as winter storms and record high lumber prices disrupted construction. But as those constraints ease, housing starts …
Inflation to surpass 3% in April The modest rise in inflation to 1.1% in February is set to be followed by much sharper increases to more than 2% this month and to more than 3% in April, as energy inflation surges. The increase to 1.1%, from 1.0% in …
Inflation to resume its upward path The detailed breakdown confirmed that the drop in core inflation in February was largely due to the reversal of temporary factors which pushed it up in January. Looking ahead, we think higher energy inflation and the …
Net trade starting to drag on growth While some of the weakness in exports last month was due to the later timing of the lunar new year, export growth may have been outpaced by import growth this quarter. That suggests that net trade may have been a small …
Weather wreaks havoc The 2.2% drop in industrial production in February was largely a result of the severe storms that battered the country in the second half of the month and should be mostly reversed in March. But there were also signs that global …
16th March 2021
January surge only partly reversed The 3.0% m/m fall in retail sales in February reflects the fading of the boost from the $900bn fiscal stimulus and disruption caused by the severe winter weather. Regardless, sales remain more than 4% higher than they …
Record-high food inflation pushing up headline rate The latest jump in Nigerian inflation, to 17.3% y/y in February is unlikely to prompt the central bank to tighten monetary policy as concerns about a weak recovery mount. Figures released today showed …
Manufacturing sales surpass pre-pandemic level The manufacturing sector made a strong start to 2021, despite the major disruption to the auto industry from the global microchip shortage, as sales across the natural resource sectors rose sharply. The 3.1% …
15th March 2021
Unlikely to rise much further Swedish inflation came in weaker than expected in February, and we continue to expect the Riksbank to keep the repo rate on hold for the foreseeable future. The fall in the headline CPIF inflation rate in February, from 1.7% …
Inflation dips, but set to rise again over the coming months Saudi inflation dropped to an eight-month low of 5.2% y/y in February and while, it is likely to rise again over the next few months, we expect it to fall sharply to 1.5-2.0% from July as the …
Rise in headline WPI inflation won’t trigger a rate hike The acceleration in headline wholesale price inflation in February to a two-year high will do little to dampen growing market expectations of rate hikes in the very near future. However, we still …
Travel restrictions weigh on consumption, boost industry Economic growth surged in y/y terms in January and February. But the picture is more mixed after accounting for favourable base effects. Travel restrictions weighed on retail sales but boosted …
