Households continued to repay consumer credit, 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 was repeated in January. And we expect a …
1st March 2021
Lending remained strong as buyers hoped to elude stamp duty Mortgage approvals remained at very high levels in January as buyers hoped to take advantage of the stamp duty holiday. But there are growing signs that demand may be resilient to the end of the …
Industry in top gear, as supply constraints come into view The strong set of manufacturing PMIs for February indicates that industry remains in rude health. That said, as elsewhere, there are signs of supply problems and rising price pressures. The …
South Africa’s economic pain easing The rise in South Africa’s manufacturing PMI in February suggests that the economy bounced back from around the turn of the year, and the recent easing of lockdown measures should support activity this month. But slow …
Supply problems cause input price pressures to build The manufacturing PMIs for February showed strong increases in output and new export orders in Poland and Russia, while manufacturing conditions deteriorated in Turkey and Czechia. The survey also …
Recovery faltering at tail end of 2020 Turkey’s economy continued to recover in Q4 2020 and was one of the few economies around the world to grow over last year as a whole. But there are signs that activity faltered at the tail end of the year and this …
Manufacturing sector holding up well India’s manufacturing PMI reading was virtually unchanged in February and remains consistent with a strong recovery in the sector so far this quarter. That should continue over the coming months, helped by looser …
Spring Festival restrictions failed to lift industry The latest manufacturing surveys suggest that factory activity didn’t receive the boost we had anticipated from travel restrictions over the Spring Festival. Nevertheless, we think activity will remain …
Exports to boost growth again in Q1 Korean export values were close to a record high last month, and the external sector should provide another boost to GDP growth this quarter. The timely nature of the Korean trade data makes them a good bellwether for …
House prices to continue rising this year House prices are now surging which poses an upside risk to our forecast that prices will rise 10% between January and December this year. Across the eight capital cities, house prices rose by 2.1% m/m in February, …
Consensus more optimistic after this year Though February’s IPF Consensus Forecasts were upgraded for 2021, we remain somewhat more upbeat on UK commercial property performance. Further ahead, our gloomier view for the office sector means that we expect …
26th February 2021
GDP returns to pre-virus level India’s Q4 GDP data confirm that the economy continued to perform well at the end of 2020 and the outlook for this year has improved too as fiscal policy has been loosened substantially. Even so, we doubt that GDP will be …
Activity proving resilient to lockdown The 0.3% q/q expansion in Swiss GDP in Q4 was slightly better than expected and means that output was just 1.6% smaller than in Q4 2019. (See Chart 1.) Tighter virus-related restrictions and a renewed slump in the …
Economy may avoid contraction this quarter The strong rise in industrial production and only tiny fall in retail sales in January suggest that the economy may not contract this quarter. And with the state of emergency set to end everywhere next Sunday, …
Steel output outside China to revive further in coming months Growth in global steel production slowed in January, as China’s output growth fell back. However, output ex-China picked up and we expect further gains in the coming months, not least because …
25th February 2021
Equipment investment growth still unusually strong The stronger-than-expected rise in durable goods orders in January lifted them decisively above their pre-pandemic level, which is even more impressive given the still-subdued level of aircraft orders. …
Renewed rise, but still depressed February’s renewed rise in the EC’s Economic Sentiment Indicator (ESI) for the euro-zone still left it at a depressed level by pre-pandemic standards and supports our view that activity will remain weak in Q1. Echoing the …
Rise in sentiment to be short-lived as third virus waves take hold The EC’s Economic Sentiment Indicators (ESIs) showed an improvement in sentiment across Central and Eastern Europe in February. A broad-based pick up in services sentiment drove the …
Capital investment set to surge this year We estimate that private investment rose by 2.6% q/q in Q4, and firms’ expectations of future capital expenditure suggest investment is set to surge this year. Today’s private capital expenditure survey showed a …
Subdued refinery activity to bolster stocks in the coming weeks Despite the plunge in crude oil production, US crude stocks rose last week as refinery throughput plummeted. We expect the former to recover more quickly, which will support stocks in the …
24th February 2021
New home sales rise, but slowdown on the horizon New home sales rose for the second consecutive month in January to 923,000 annualised. But rising mortgage interest rates and tight inventory point to a slowdown over 2021. Indeed, mortgage applications for …
Rising inflation probably won’t push Copom to hike … yet The rise in Brazilian inflation, to 4.6% y/y, in the middle of this month shifts the balance a bit further an interest rate hike at the next Copom meeting in March, but there are reasons to think …
Wage growth will need to strengthen much further for RBA to hike The jump in wages in Q4 was partly due to temporary wage cuts implemented during the pandemic unwinding, but it supports our view that wage growth will rebound more sharply than most …
Rising mortgage rates to weigh on house prices The house price boom continued in December, with month-on-month gains exceeding 1.0% on the FHFA measure for the seventh consecutive month. However, rising mortgage interest rates will weigh on affordability, …
23rd February 2021
Inflation set to rise further this year but drop in 2022 January’s jump in inflation is likely to be followed by further increases to over 2% later this year. But we think that much of this is temporary and expect it to fall back sharply in 2022. The …
Earnings growth not as strong as it looks The rise in the unemployment rate in December is another step up on the climb towards the 6.5% peak we expect by the end of the year. But if the government follows the roadmap that it laid out on Monday and …
Manufacturing sector shrugging off lockdown The increase in the Ifo Business Climate Index in February suggests that the German economy is weathering the lockdown better than anticipated. It also points to some upside risk to our forecast that GDP will …
22nd February 2021
Korean exports to remain buoyant in next few months Korean exports are performing very strongly so far this month, even accounting for the seasonal distortions from the Lunar New Year. This strength is likely to continue in the short term at least, as …
Home sales continue to surprise on the upside Existing home sales managed to eke out a small gain in January, even as inventory fell to new record lows. But the lack of supply means activity will fall back to earth later in 2021, reinforced by rising …
19th February 2021
Retail sales should start rising again this month Lower-than-usual holiday spending caused retail sales to fall by more than 3% m/m in December and, amid the latest lockdowns, the preliminary estimate shows sales fell by almost as much again in January. …
GDP unlikely to bounce back much from January’s lockdown decline The rise in the IHS Markit/CIPS composite activity PMI in February suggests that the economy didn’t deteriorate further after the probable fall in GDP in January triggered by the current …
Supply problems pushing up prices February’s small increase in the Composite PMI left it still below 50 and consistent with our view that euro-zone GDP will probably edge down again in Q1. The survey also suggested that price pressures are building in the …
Industry resilient, but prolonged restrictions hit retail again Polish activity data for January suggest that the economy broadly stagnated at the start of the year as the extension of virus containment measures hit the retail sector while industry …
Lockdown adds to retailers’ January blues The sharp fall in retail sales in January suggests that the third COVID-19 lockdown hit the economy harder than the second lockdown in November. Retailers may have to endure a few more months of depressed sales, …
Third lockdown leads to highest January borrowing figure on record January’s poor borrowing figures are likely to set the tone for the next few months as the third COVID-19 lockdown keeps many businesses closed. But the Chancellor should resist the urge …
Impact of state of emergency starting to fade The rebound in the composite PMI in February supports our view that the economy is coping with the second state of emergency better than most had anticipated . According to the flash estimate, the …
Inflation will continue to recover Headline inflation recovered substantially in January due to the removal of the artificial drag from the Go To Travel campaign, and we think it will rebound further over the coming months. Headline CPI rose from -1.2% …
Deep freeze could boost crude stocks next week US commercial crude stocks plunged last week owing primarily to a rebound in exports. Next week, inventories could rise as the deep freeze in the southern parts of the US has knocked out several million bpd …
18th February 2021
Tepid recovery as industry weakens Russian activity data for January show that industry came off the boil at the start of the year while activity in the retail sector picked up strongly. The fall in virus cases and relaxation of some restrictions should …
Sustained pick up in sentiment some months away Euro-zone consumer confidence rose in February but it remained very low. Unless vaccine programmes accelerate to allow restrictions to be lifted soon, a sustained pick up in confidence remains months away. …
Housing starts fall as construction constraints weigh heavy January’s 12.2% m/m decline in single-family housing starts reversed the solid gains seen in December. Record low inventory is supporting homebuilder confidence, and that points to a decent year …
Tightness of supply points to further house price gains The further slowdown in the monthly pace of gains in January suggests house price inflation will soon peak at a little more than 10%. The 0.3% m/m rise in the Teranet House Price Index equated to a …
Oil and non-oil sectors diverge as economy rebounds Nigeria’s Q4 GDP data showed that a poor performance in the oil sector was more than offset by a continued rebound in the non-oil economy. While we think that some of the headwinds facing the economy …
Rising above target, but only temporarily Swedish inflation rose sharply, as expected, in January and is set rise above the Riksbank’s 2% target in Q2. In any case, policymakers have signalled that they will look through any temporary breach of the …
Unemployment to keep falling rapidly While employment growth slowed in January, it should remain strong enough to lower the unemployment rate to 5.5% by the end of this year . The 29,100 rise in employment in January was a bit weaker than the consensus of …
Manufacturing output closing in on pre-pandemic level The stronger-than-expected 0.9% m/m rise in industrial production in January, driven by a 1% rise in manufacturing output, means that production is still lagging behind the recovery in goods …
17th February 2021
Fiscal stimulus turbocharges recovery The 5.3% m/m surge in retail sales in January underlines how quickly reopenings and the $600 stimulus cheques have fed through to stronger spending. The faster than expected fiscal boost means we now forecast first- …
Inflation to rise to 3% by April Inflation rebounded to 1.0% in January and is set to rise to 3% or higher in April. That spike will mainly reflect base effects linked to the sharp falls in energy prices early last year but, as the economy re-opens, we …
Brace for a jump to 2% in April The rise in CPI inflation from +0.6% in December to +0.7% in January (consensus forecast +0.6%) was trivial given that leaps to around +2.0% in April and to around +2.5% by the end of the year appear to be baked in the …
Inflation edges up and set to rise further, but SARB to stand pat The rise in South Africa’s headline inflation rate, to 3.2% y/y in January, is likely to be followed by further increases over the next few months but, with the economic recovery still …
