Business investment to rebound further The fall in machinery orders in January is not particularly surprising given that they had surged significantly above pre-virus levels in December. We still expect business investment to have risen a little further …
15th March 2021
Fall in commercial property debt not the start of a sharp decline After a stronger than expected increase in January, commercial real estate debt fell back in February. This suggests that last month’s gain was a one-off and not the start of a rapid …
12th March 2021
Easing of restrictions boosts employment The strong rebound in employment in February almost fully made up for the losses in December and January. While the pace of gains is now likely to slow, employment should continue to rise as the vaccination program …
Rebound in headline inflation won’t trigger a rate hike Headline CPI inflation rebounded in February, but we doubt that this will lead to a rate hike at the upcoming MPC meeting in April. The renewed contraction in industrial output in January clearly …
Industry to be a drag on GDP in Q1 The small 0.2% m/m rise in Mexican industrial production in January masks a concerning 0.5% m/m fall in manufacturing output. The sector will have also fared poorly in February following the disruption caused by power …
Shortages weighing on car production, but demand strong Industrial production rose in January and the business surveys suggest that, despite some supply-chain problems, the outlook is fairly bright. While domestic demand looks set to grow slowly by …
January probably the low point for the year The good news is that the 2.9% m/m fall in GDP during January’s COVID-19 lockdown will probably be the low point for the year. The bad news is that while the plunges in exports and imports weren’t entirely due …
Industry going strong The Turkish activity figures for January suggest that the economy held up relatively well despite the tightening of COVID-19 containment measures around the turn of the year. And there are encouraging signs that the rise in interest …
Inflation jump seals the deal on a rate hike next week The jump in Brazilian inflation to a stronger-than-expected 5.2% last month makes it almost certain that Copom will begin a tightening cycle next week. While we’ve pencilled in a 50bp rate hike (to …
11th March 2021
Survey points to further gains in house prices The rebound in the RICS survey balances in February suggest that home sales were sustained at a very high level even before further policy support was announced in the Budget. Strong sales and limited stock …
Korean exports will boost growth again this quarter Korean trade data suggest that the external sector will have its strongest quarter since 2018. With semiconductor demand set to remain elevated, at least in the short term, exports are likely to continue …
Refinery throughput to revive further in coming weeks US commercial crude stocks soared again last week as refinery throughput remained well below normal levels. Given that production has almost entirely recovered, stocks will probably rise further next …
10th March 2021
Weakness in core inflation unlikely to last much longer The rise in CPI inflation to 1.7% in February, from 1.4%, was largely due to higher energy prices, with core inflation still subdued. But base effects will push core inflation above 2% by April and …
A pause in the credit slowdown After four months of consecutive declines, broad credit growth accelerated in February. But we think the slowdown in lending will resume before long given the hawkish signals out of the National People’s Congress (NPC). This …
Inflation will continue to drift higher, rates on hold for now The slight pick-up in Egyptian inflation to 4.5% y/y in February still leaves the headline rate below the lower bound of the central bank’s (CBE’s) target range but, if we’re right in …
Core inflation to fall but remain high Core inflation in Norway came in above target again in February, and while we expect it to fall in the coming months, home-grown price pressures should support the rate later in the year as activity picks up pace. …
Consumer price deflation unlikely to persist A drop in food inflation caused by shifts in the timing of the Lunar New Year meant that headline consumer price inflation remained in negative territory last month. That said, broader price pressures continued …
Rising inflation signalling end to Banxico’s easing cycle The further rise in Mexico’s headline inflation, to 3.8% y/y in February, was largely driven by higher fuel prices. This trend has further to run in the coming months which, alongside the recent …
9th March 2021
Slow vaccine rollout casts shadow over 2021 The third estimate of euro-zone Q4 GDP confirmed that the economy contracted a little in Q4 2020, driven by weaker consumer spending. Ongoing restrictions mean that another fall in GDP is likely in Q1, while the …
Home movers drive strong lending Very high home mover activity and resilient first-time buyer demand pushed mortgage lending up to its highest level since the financial crisis at the end of last year. It’s become clear that the stamp duty holiday is only …
Recovery losing momentum The slowdown in the pace of South Africa’s recovery in Q4 was less sharp than expected, but the economy is unlikely to gather much momentum over the coming quarters and we still expect GDP to be around 2% below its pre-virus trend …
Norway well placed, despite weak patch The latest tightening of virus-related restrictions in Norway will weigh on domestic activity in the near term. However, Norway remains comparatively well placed, and we expect the Norges Bank to be the first major …
GDP may still avoid a contraction in Q1 While the downward revision to Q4 GDP and the sharp fall in “core” household spending in January suggest that the economy faired a little worse than initially reported over the winter, we continue to expect the …
Fall in output to contribute to decline in Q1 GDP The decline in German industrial production in January was largely due to a slump in construction and semi-conductor shortages in the auto sector, both of which should prove temporary. But the poor January …
8th March 2021
Economic activity bouncing back fast from third wave The sharp rebound in the Economy Watchers Survey in February suggests economic activity is ending the quarter with some momentum. That supports our non-consensus view that the state of emergency won’t …
Exports benefit from overseas lockdowns and domestic travel restrictions Export and import growth surged in y/y terms in January and February. Even accounting for favourable base effects, shipments look strong. Exports continued to be buoyed by …
Acceleration in inflation poses a serious question to the CBR The larger-than-expected rise in Russian inflation to a more than four-year high of 5.7% y/y in February is likely to be followed by another increase in March which poses a serious challenge to …
5th March 2021
Temporary factors behind rare trade surplus The 8.1% m/m surge in exports in January was partly due to temporary factors but, amid strong global demand for commodities, exports are doing better than we expected a few months ago. The sharp improvement in …
Employment surges as COVID-related restrictions lifted The 379,000 increase in non-farm payrolls in February reflects the lifting of coronavirus containment measures (with a helping hand from the $600 stimulus cheques), with the reopening of restaurants …
Signs of a slowdown The 0.4% m/m rise in Brazilian industrial production in January, down from 0.8% m/m in December, confirms that momentum in the sector is easing. Moreover, with services sector being harder hit by the second wave of COVID-19 this year, …
Cooling but resilient The easing off in Halifax house price inflation in February marks a contrast with Nationwide’s more upbeat figure. Nonetheless, house prices appeared to be holding onto their 2020 gains even when buyers could no longer expect to …
Retail’s resilience to restrictions fading January’s data show that euro-zone retail sales fell very sharply at the start of this year, despite the strength of online sales. As lockdowns have been extended in many economies and daily virus cases are …
4th March 2021
Construction sector’s strong innings resumes after rain delay The rebound in the construction PMI in February suggests that the dip in activity in January was due to heavy rainfall rather than any deterioration in demand. While residential activity …
Trade should support GDP growth in Q1 Retail sales and the trade balance rose in January and while we expect retail sales to be subdued in the months ahead, export values may have further to rise. The trade balance widened in January from $7133bn to a …
Crude stocks to march higher as refinery activity remains in the doldrums US commercial crude stocks skyrocketed last week as refinery activity plunged and net imports surged. We expect stocks to a rise a bit further in the coming weeks as refinery …
3rd March 2021
Higher mortgage rates and lean inventory hit housing demand The mortgage market came off the boil in February, with home purchase applications recording their largest month-on-month decline since the height of the pandemic last April. A rise in mortgage …
Strong H2 2020 recovery, but slowing in 2021 The larger-than-expected 3.2% q/q rise in Brazilian GDP in Q4 confirms that the economy had one of the better performances in Latin America last year. But there is strong evidence to suggest that the recovery …
Non-oil sector recoveries sluggish as restrictions tightened February’s batch of whole economy PMIs suggest economic activity in non-oil sectors across the region eased last month on the back of tighter virus containment measures. Aside from the UAE, …
Activity still very weak The small upward revision to the euro-zone’s Composite PMI for February still leaves it consistent with another contraction in GDP in Q1. And while Italy’s PMI rose above the 50-mark, that is unlikely to be sustained given that a …
Looming pick-up in inflation won’t faze the SNB Swiss inflation surprised on the downside in February, but temporary forces look set to push it higher over the coming months. However, with underlying price pressures likely to remain much weaker, the SNB …
Inflation at its peak, but a fresh lira sell-off could prompt rate hikes The stronger-than-expected rise in Turkey’s headline inflation rate, to 15.6% y/y in February, is likely to mark the peak and we expect inflation to fall steadily over the next six …
PMIs point to a continued economic recovery India’s PMI readings for February suggest that output has rebounded further above pre-virus levels so far this quarter. With fiscal policy turning more supportive and new virus cases remaining low, the recovery …
Output to return to pre-virus levels by middle of the year The 3.1% q/q rise in Q4 GDP left output just 1.1% below pre-virus levels and we think it will surpass that threshold by Q2. The increase in GDP was stronger than the Bloomberg median of 2.5% and …
Economy continues to outperform expectations The 9.6% annualised gain in fourth-quarter GDP was three times as strong as the consensus forecast from just a couple of months ago. The preliminary estimate that GDP grew by 0.5% m/m in January confirms that …
2nd March 2021
Inflation to rise above 2% After euro-zone inflation held steady in February, it looks set to rise over the rest of the year, taking it above the near-2% target. But this will be driven largely by temporary forces so we think it will drop back to around …
Surprise rise suggests market could shrug off end of stamp duty holiday The unexpected rise in the Nationwide house price index in February adds to the growing pile of evidence that the stamp duty holiday is just one of several reasons behind the recent …
Strong start to 2021 gathers momentum February PMI readings suggest that manufacturing sectors improved further in most places in Asia. Global demand for electronics should continue to support the sector for at least the next few months. PMIs for February …
Unemployment rate will fall further The unemployment rate fell in January despite the state of emergency, and it should fall further over the course of this year as employment rebounds in line with the economic recovery. Meanwhile, capital spending data …
Supply shortages putting upward pressure on prices The further increase in the ISM manufacturing index last month to 60.8, from 58.7, highlights that the recovery in the sector remains red-hot, with the jump in the prices paid component suggesting that …
1st March 2021
Weak start to the year Net lending remained negative in January and we think this is explained by weak transactions and renewed UK lockdown. Looking ahead, any recovery in lending to commercial property is likely to be slow. After all, the weak near-term …
