Surprise rise in home sales Existing home sales recorded a marginal gain in December but are set to fall back over 2021. Mortgage rates will not decline any further and rising house prices have already reversed the boost to affordability they provided. …
22nd January 2021
Restrictions on services help boost retail sales The tightening of the coronavirus restrictions in November helped boost retail sales, as consumers substituted spending on goods for spending on services. That means the retail sales data paint too positive …
Soft inflation to allow one final rate cut The small rise in Mexican inflation, to 3.3% y/y over the first half of January, was largely driven by higher fuel prices and is unlikely to be a major concern for the central bank. We continue to expect one …
Third lockdown far less damaging than the first January’s flash composite PMI is consistent with our view that the third lockdown, like the second, was much less damaging for the economy than the first lockdown in March/April 2020. But it suggests that …
A weak start to 2021 The renewed decline in the Composite PMI in January confirms that the tighter measures imposed are taking their toll on the economy and that services are bearing the brunt. With restrictions unlikely to be lifted any time soon, the …
Budget deficit should shrink without tax rises December’s jump in borrowing is likely to set the tone for the next few months as the third COVID-19 lockdown keeps many businesses closed and will only increase talk of how to pay for the crisis. But the …
Bad January to follow poor December The tiny rise in retail sales in December shows that it wasn’t a very merry Christmas for retailers. And January’s lockdown means it won’t have been a happy start to the new year either. But at least retailers are more …
Second state of emergency far less damaging than previous one The small decline in January’s composite PMI is consistent with our view that the second state of emergency won’t throw the recovery off course . According to today’s flash estimate, the …
Inflation won’t stay negative for long While headline inflation dropped to an 11-year low in November, that was due to weaker energy and fresh food inflation. We expect inflation to recover over the coming months. Headline CPI fell from -0.9% y/y to -1.2% …
Inflation to continue its rise in 2021 The sharp rise in underlying inflation in Q4 is consistent with our view that the RBNZ will tighten policy in the years ahead. Prices in Q3 rose 0.5% q/q, well above the analyst consensus or than the RBNZ’s latest …
21st January 2021
Permit gains point to a strong start of the year for homebuilders Single-family starts rebounded in December, recording their largest month-on-month gain since June. While production constraints will continue to weigh on starts, we are relatively upbeat …
Strong demand allows banks to maintain stringent lending standards Very strong demand allowed banks to maintain tight lending standards in Q4 2020 while still increasing mortgage lending volumes. Of course, buyer demand is likely to drop sharply when the …
Unemployment Rate to continue to plunge The further decline in the unemployment rate in December is consistent with our view that the RBA will not extend its asset purchases beyond April. The 50,000 rise in employment was in December was exactly in line …
Korean export recovery to remain strong Korean exports remained elevated at the start of the year. While some of this strength may fade in the coming quarters, Korea’s external sector is still set for another decent performance in 2021. The timely nature …
Trade to help keep growth positive in Q1 While export values failed to reach pre-virus levels again in December they should remain fairly strong at the start of the year, with net trade set to provide another boost to growth in Q1. The 2.0% annual rise in …
Unexpected decline not a sign of things to come The unexpected fall in CPI inflation to 0.7% in December is not a sign of things to come. Instead, base effects linked to the steep falls in prices in the spring last year will push up inflation to 3% by …
20th January 2021
China-led increase in global output to continue in 2021 Global aluminium production grew again in December. After a stellar 2020, we suspect that China will continue to lead the way in dragging global aluminium output growth even higher in 2021 . …
Inflation to rise but stay well below target December’s final HICP release shows that core inflation remained very weak across the board at the end of last year, with no signs that prices pressures are building. Inflation will increase in the coming …
Inflation edges down, rate cut likely on Thursday The further drop in South Africa’s headline inflation rate, to 3.1% y/y in December, coming alongside the recent tightening of virus containment measures supports our view that the Reserve Bank will cut …
Inflation to temporarily rise above target later this year The rise in CPI inflation from 0.3% in November to 0.6% in December and in the core rate from 1.1% to 1.4% may represent the first step on a climb towards a peak of about 2.5% by the end of the …
Renewed supply-chain disruptions to weigh on activity Manufacturing sales dropped back again in November and renewed supply-chain disruptions suggest that the sector will continue to struggle in the coming months. The 0.6% m/m fall was worse than the …
19th January 2021
Tighter lending conditions a concern for the ECB The Q4 Bank Lending Survey revealed that the demand for bank credit fell at the end of last year, and banks tightened their lending standards as they became more worried about the economic outlook. This …
Strong end to 2020 pushes Q4 GDP above pre-virus rates On the official figures, China’s economy expanded at the fastest pace in two years last quarter. The monthly data suggest that growth dropped back slightly heading into 2021 but it remains strong. We …
18th January 2021
Commercial property debt to see slow growth in the first quarter Commercial real estate debt growth slowed in December, probably reflecting a softening in investment activity on the back of renewed lockdowns. This points to a similarly slow start to 2021 …
15th January 2021
Industrial rebound has further to run In contrast to the renewed slump in consumption, the December industrial production figures show manufacturing output continuing to rise strongly and, with inventories still lean, we expect that recovery will continue …
Fiscal stimulus unable to prevent near-term weakness The further slump in retail sales in December confirms that the continued surge in coronavirus infections is now weighing heavily on the economy and illustrates that, despite the building optimism over …
Inflation through the roof, monetary easing off the cards for now The latest jump in Nigerian inflation, to 15.8% y/y in December, on the back of mounting food price pressures will probably take monetary easing off the table in the near term. Figures …
Economy builds up some immunity to lockdowns The economy has built up a fair bit of immunity to lockdowns, as November’s second COVID-19 lockdown was much less painful for the economy than the first lockdown in March/April of last year. The same is …
Economy to rebound rapidly from Q2 onwards News that German GDP contracted by 5.0% in 2020 confirms that it withstood the lockdown well in Q4. It now seems likely that GDP will decline in Q1 this year, but it should expand rapidly after that as the …
14th January 2021
Inflation eases, but will remain high over first half of 2021 Saudi inflation dropped back to 5.3% y/y in the final month of last year as softer food and housing inflation more than offset a further rise in health inflation to a two-year high. The effects …
Drop in food inflation causes headline WPI to fall The drop in headline wholesale price inflation in December was driven by a sharp fall in food inflation, while core inflation rose. Nevertheless, taken alongside the sharp drop in CPI inflation last …
Waning momentum leads surveyors to expect a drop in prices Sales and prices rose further in December, but there were clear signs that momentum was waning even before the new lockdown was imposed. Indeed, with the end of the stamp duty holiday looming, …
Trade remains resilient amid lockdowns abroad Exports continued to do well last month, as renewed lockdowns abroad ensured the shift in consumption from services to goods persisted in many of China’s trading partners. Meanwhile, a pick-up in import growth …
Business investment to recover this year The further rise in machinery orders in November followed a record monthly surge in October and suggests that business investment was rebounding strongly at the end of last year. We expect non-residential …
US product demand to remain lacklustre in the coming weeks Crude inventories continued their downward trend, helped by the ongoing increase in crude inputs to refineries. Implied product demand picked up, but product stocks also rose . The EIA’s weekly US …
13th January 2021
Inflation to rebound sharply in the spring Inflation remained low at the end of last year, but strong base effects and rebounding energy prices will push it briefly above 3% in the spring and, even once those effects fade in the summer, we expect CPI …
Industry held up well in Q4 November’s 2.5% monthly increase in euro-zone industrial production was almost entirely due to a huge increase in Ireland. Excluding Ireland, production was roughly flat on the month. Nevertheless, the timelier surveys suggest …
Recovery still strong in mid-Q4, but will struggle to make more headway Turkey’s industrial production and retail sales figures for November indicate that the economic recovery remained strong in the middle of Q4. But more timely indicators suggest that a …
Credit growth continues to slow as bond defaults weigh The slowdown in broad credit growth gathered momentum in December. We think credit growth will drop back further in the coming months as the PBOC continues to focus on reining in financial risks now …
India’s inflation drop raises chances of rate cut The drop in India’s consumer price inflation in December strengthens our view that monetary policy will remain very loose for a long time to come, and could even be enough to trigger a policy rate cut at …
12th January 2021
Food inflation peaking, but inflation to stay above target for most of 2021 The larger-than-expected rise in Brazilian inflation, to 4.5% y/y last month, coupled with the prospect of above-target inflation for much of 2021, will prompt an increasingly …
Norway to remain ahead of the pack The smaller-than-expected fall in mainland Norwegian GDP in November shows that activity was reasonably resilient to tighter virus-related restrictions and was well placed coming into 2021. While Sweden also probably …
Conditions will get worse before they get better The sharp drop in the Economy Watchers Survey in December suggests that the third wave was weighing heavily on consumer sentiment even before the declaration of a state of emergency in Greater Tokyo last …
Stronger investment and hiring intentions bode well for 2021 The fourth-quarter Business Outlook Survey (BOS) showed that firms’ hiring and investment intentions are now back to pre-pandemic norms, which bodes well for the economic recovery this year. …
11th January 2021
Solid industrial sector likely to be resilient The solid 1.1% m/m rise in Mexican industrial output in November, coupled with more timely auto production data, suggests that the sector added around 1.5%-pts to q/q GDP growth in Q4. Moreover, we suspect …
Norwegian inflation to fall sharply this year While core Norwegian inflation edged further above target in December, it is set to fall back swiftly this year and so the Norges Bank will be in no rush to raise interest rates. The rise in Norwegian headline …
Consumer price deflation reverses as food prices rise Headline inflation returned to positive territory last month as the drag from pork prices eased. Broader price pressures also edged up on the back of stronger demand. With underlying inflation likely …
Korean exports to remain elevated Korean trade data suggest that strong export growth continued at the start of the year and reaffirm our view that exports will remain an important support to recoveries in Korea and across Asia. The timely nature of the …
Employment to fall again in January The drop in employment in December would have been even larger were it not for the early timing of the survey reference week. With further restrictions imposed across the country since December’s survey was carried out, …
8th January 2021
Slump in payrolls due to new restrictions on services The 140,000 drop in non-farm payrolls was due to a plunge in leisure and hospitality employment, as bars and restaurants across the country were forced to close in response to the surge in coronavirus …
