Industrial recovery strong in late 2020 but headwinds building The robust 0.9% m/m rise in Brazil’s industrial production caps off a strong recovery in the sector over the second half of 2020. But the unwinding of fiscal stimulus and the rampant second …
2nd February 2021
Downside risks growing Given that all of the major economies have already published their Q4 data, it came as no surprise that euro-zone GDP contracted by 0.7% q/q. With strict containment measures still necessary to control the virus, and vaccination …
Stronger-than-expected performance in Q4 set to continue into 2021 The surprise 0.3% q/q growth in Czech GDP in Q4 was much better than expected as strength in industry more than offset weakness in services. This suggests that, despite being hit hard by a …
Delayed winter sales drive up headline inflation The surprisingly big jump in France’s headline inflation rate in January was primarily driven by a surge in manufactured goods inflation as winter sales were postponed by two weeks. This will be reversed in …
First drop in prices since June is a sign of things to come The small drop in Nationwide house prices in January, the first since June last year, is an early sign of the reversal in the 2020 house price surge we expect to see this year as the stamp duty …
Modest decline in GDP, economy looks to have held up well in Q4 The full-year decline in Russian GDP of 3.1% in 2020 suggests that the economy expanded slightly in Q4 as the authorities opted for light-touch containment measures in response to the second …
1st February 2021
Strong recovery to continue The fall in the ISM manufacturing index to 58.7 in January was a little weaker than we had expected, but it remains close to the three-year high of 60.5 reached in December and at a level consistent with manufacturing output …
Jobless rate unlikely to rise much this year The stability of the euro-zone’s unemployment rate at just 8.3% in December highlights once again the extent to which government policies have protected jobs during the pandemic. And as this support will …
Easing in the rush for cash The easing in the COVID-19 restrictions meant that businesses did not rush as fast to take on more debt in December. And with households investing in property and strengthening their balance sheets, there is scope for household …
Industrial sector resilient at the start of the year The strong set of January manufacturing PMIs from Switzerland and the Nordics indicates that industry continued to cushion the blow from virus restriction-driven declines in services activity at the …
Lenders make up for lost time in late 2020 The strongest December since 2006 took total mortgage approvals in 2020 above their 2019 level. We still think that approvals will slump when the stamp duty holiday ends, but there are some tentative signs the …
Negative net lending likely to continue in the near-term In line with our expectations, net lending was negative again in December and we expect it to remain so in the coming months. After all, we think a weaker near-term economic outlook will restrict …
Economy not out of the woods The rise in South Africa’s manufacturing PMI in January appears to hide underlying weakness in activity on the back of virus-related restrictions. Even with some signs of a break in the clouds over South Africa’s economy, we …
Industry resilient in Russia, Turkey and Poland The manufacturing PMIs for January were encouraging in Turkey and Russia and strong export performance continued to support Poland’s manufacturing sector. That said, there are further signs that prolonged …
PMI rises but policymakers can still do more India's manufacturing PMI reading edged up in January but, given signs elsewhere that the industrial recovery has lost a bit of steam, policymakers should still be aiming to provide support to the economy. Like …
Exports to remain elevated Korean exports remain elevated at the start of this year, buoyed by shipments of electronics and autos. While some of this strength may fade later in the year, Korea’s external sector is still set for another decent performance …
Industrial rebound shifts down a gear The latest surveys suggest that the pace of expansion in the manufacturing sector slowed in January. But that’s not too surprising given that output was already well above trend – capacity utilisation rates in …
Strong start to 2021 to continue PMI readings for Asia suggest that manufacturing sectors improved further in most places. Buoyant global demand for electronics should continue to support the sector for at least the next few months. PMIs for January were …
House prices to rise by 10% in 2021 House prices are already rising at a solid pace but forward indicators suggest that the pace of gains is set to increase in the months ahead. Across the eight capital cities, house prices rose by 0.7% m/m in January, …
Economy shrugs off latest coronavirus wave A strong rise in GDP in November and an unexpected gain in December suggest that the economy carried far more momentum into the new year than expected. Nevertheless, as a result of the latest lockdowns, growth …
29th January 2021
Industrial recovery lost some steam in Q4 India’s core infrastructure industries index didn’t improve much in December, which suggests that the industrial rebound lost some steam in Q4 and underscores the need for policymakers to provide further support …
A robust Q4 but recovery to halt in Q1 The solid 3.1% q/q rise in Mexico’s GDP in Q4 meant that the economy had recouped over 70% of its losses from the first half of 2020. However, the recent surge in new COVID-19 cases will cause the recovery to grind …
Recovery sputters due to renewed virus outbreak Hong Kong’s economy was treading water at the end of 2020 as the re-imposition of containment measures weighed on consumption. Unless authorities bring the ongoing outbreak under control soon, the recovery …
Resilience in Q4 will not last Confirmation that Germany avoided a contraction in GDP in Q4 last year is of little comfort given that its economy will almost certainly shrink in Q1 this year. A strong recovery is still likely further ahead, but the slow …
A better-than-expected end to a terrible year Tough restrictions imposed in France and Austria last autumn to curb the spread of COVID-19 caused both countries’ GDP to fall in Q4. Spain’s laxer approach meant its economy actually grew. But for all three, …
Figures consistent with relatively modest contraction in Q4 The 2.8% decline in Polish GDP over 2020 was the worst performance since the collapse of communism and is consistent with the economy contracting by around 1.3% q/q in Q4. While prolonged …
Figures released today show Taiwan’s economy continued to outperform last quarter, thanks to continued strong demand for the island’s exports. Although the economy will continue to slow in q/q terms over the coming year, we are raising our forecasts for …
Economy should avoid contraction in Q1 While industrial production and capital goods shipments fell in December, firms’ ultra-upbeat production forecasts for January support our view that GDP will rise this quarter. Meanwhile, the unemployment rate was …
Big rise in share of surveyors who think the worst has passed Market sentiment remained close to cyclical lows, with rental and capital value expectations deeply negative for office and retail. But there are signs that the market is nearing a turning …
28th January 2021
New home sales lose momentum The small gain in new home sales in December continues the run of falling or weak sales seen since August of last year. That moderation in sales is set to persist in 2021, as worsening affordability, the exhaustion of pent-up …
Growth temporarily dragged down by coronavirus resurgence The more modest 4.0% annualised gain in fourth-quarter GDP was mainly due to some temporary weakness in consumption, which was dragged down by the resurgence in coronavirus infections. With …
Methodological change may boost inflation sharply for a year The jump in German HICP inflation appears to reflect methodological changes as well as the VAT hike. If a similar approach is adopted throughout the euro-zone, which at face value seems likely, …
Apart from industrial, the outlook for property values remains poor The RICS survey for Q4 showed that occupier demand and investment enquiries continued to fall. Though there was a slight improvement on Q3, this was largely due to the industrial sector. …
Third virus waves weigh on sentiment across the region The EC’s Economic Sentiment Indicators were mixed across Central Europe in January but broadly point to a weak start to activity in Q1. The services sector in particular continued to struggle amid …
Economy to contract again in Q1 January’s fall in the EC’s Economic Sentiment Indicator (ESI) for the euro-zone supports our view that the economy will contract again in Q1. The survey also suggests that inflationary pressure remains absent. With the …
Bucking the weak trend at the start of 2021 The rise in Sweden’s Economic Tendency Indicator (ETI) in January was a welcome surprise and shows that the manufacturing sector remains in rude health. That said, retail is struggling, and with deeper …
Recovery will continue to disappoint The Philippines saw another lacklustre rebound in GDP in Q4 and big improvements will be hard to come by in the quarters ahead. Output is unlikely to regain its pre-crisis level until the end of 2021. The economy grew …
Consumer spending to fall in Q1 The small fall in retail sales in December suggests that consumer spending only weakened slightly before the declaration of a state of emergency. However, it’s still consistent with our view that consumption will fall this …
Vaccine progress means stocks have further to fall US commercial crude stocks sank last week, as net imports plummeted. Assuming that progress on COVID-19 vaccines continues, we expect a pick-up in demand will weigh on stocks from Q2 onwards . The EIA’s …
27th January 2021
Business equipment investment already back above pre-pandemic levels The weaker 0.2% gain in headline durable goods orders in December was mainly due to ongoing problems among aircraft manufacturers and a drop off in defence orders. The bigger story is …
Underlying inflation to strength this year The rise in inflation in Q4 was partly driven by volatile movements but we think inflation will rise in earnest before long. The 0.9% q/q rise in consumer prices in Q4 was higher than the consensus forecast of …
Slower production growth in China on the cards in 2021 Growth in global steel production climbed in December, once again led by a rise in China’s output. We expect growth in China’s output to slow in 2021, while ex-China output should recover lost ground. …
26th January 2021
House price growth surges to record high House price growth continued to surge in November, with both Case-Shiller and FHFA reporting strong gains. At 11% y/y, the rise in the FHFA index is the highest since records began in 1992. But the current boom in …
Nascent signs of investors returning pose an upside risk to the outlook All-property total returns strengthened in Q4, broadly as we had expected. And the data continued to point to the importance of sector selection to returns. Perhaps the real surprise …
Inflation set to jump in Q2 The above-target Brazilian mid-month inflation reading for January, of 4.3% y/y, is likely to be followed by a jump in the headline rate in the coming months, keeping Copom in hawkish mood. But while Brazil’s central bank will …
Unemployment to continue its slow climb The rise in the unemployment rate in November is another step up on the climb towards the 6.5% peak we expect by the end of the year. But with the rollout of vaccines going well, the jobless rate may be back at its …
Korea’s recovery lost a little steam last quarter as a third wave of infections weighed on private consumption, but with cases now on a downward trend, the recovery should regain momentum over the coming quarters. Data released today show GDP rose 1.1% …
Weak start to the year The fall in the headline Ifo Business Climate Indicator for January is consistent with our view that, having proved resilient in Q4, Germany’s economy will contract in Q1. Tougher Covid-19 restrictions are beginning to bite and may …
25th January 2021
Industry booming and retail rebounds as virus restrictions eased Polish activity data for December showed that industry continued to boom and the easing of virus restrictions supported a rebound in retail sales, with the result being that any contraction …
Build in stocks rounds off a gloomy week for oil Following five consecutive weeks of declines, commercial crude stocks in the US rose last week. Together with still-high rates of new COVID-19 infections, this points to a gloomy near-term outlook for oil …
22nd January 2021
