Industrial recovery strong in late 2020 but headwinds building The solid 1.2% m/m rise in Brazilian industrial production in November, coupled with strong surveys for December, suggests that the sector may have added some 0.5-0.6%-pts to q/q GDP growth in …
8th January 2021
Dark clouds gathering over recovery The fall in South Africa’s manufacturing PMI in December points to the recovery grinding to a halt at the end of 2020. The recent tightening of virus containment measures, and the slow and limited access to vaccines …
The year the housing market ignored the economy 2020 may well have been the strangest year for the housing market since the Halifax house price index began in 1983. Despite the biggest drop in GDP since 1709, house prices rose by 7% y/y in Q4, the largest …
Resilient in Q4 but likely to contract in Q1 German manufacturers withstood the restrictions imposed in November much better than many feared, meaning the economy almost certainly expanded in Q4 last year. However, we suspect that it will contract in Q1 …
Further rise in exports won’t be enough to prevent fall in first-quarter GDP Exports rose in November and the recent improvement in the business surveys bodes well for growth in the coming months, but the lockdowns suggest that GDP will still edge down in …
7th January 2021
Import growth remains strong as firms rebuild inventories The widening of the trade deficit in November came as import growth continued to outpace export growth and means net trade will be a significant drag on fourth quarter GDP growth. Those additional …
Weakening inflation to allow one final rate cut The further fall in Mexican inflation, to 3.2% in December, was largely driven by a drop in food inflation. With headline inflation likely to stay within Banxico’s 2-4% target range in the coming months, we …
Q4 not as bad as we feared, but Q1 will be worse than expected Activity data published this morning suggest that the euro-zone economy performed better in Q4 than we had anticipated. But the recent extensions of lockdowns make it more likely that the …
Construction continues to recover…for now The seventh consecutive construction PMI reading of over 50 in December mainly reflected a continued strong recovery in housing activity. The rebound in construction of commercial property has already all but …
Sentiment rebounds as virus restrictions ease The EC’s Economic Sentiment Indicators rebounded strongly in Central Europe in December and suggest that the slump in GDP in Q4 was smaller than we feared. But large virus outbreaks through the winter and …
Trade was a modest drag on growth in Q4 A surge in imports meant that the trade balance narrowed in November so we now think that trade was a modest drag on growth in Q4. The decline in the trade balance from $6583mn in October to $5022mn in November was …
Wage growth will still turn positive later this year While wage growth weakened sharply in November it should recover strongly this year as overtime hours and bonuses recover and the labour market begins to tighten again. According to today’s preliminary …
Weakness in product demand could last for some weeks yet Crude stocks plummeted at the beginning of 2021, explained by an increase in refinery activity and persistently robust exports. However, rising product stocks point to subdued consumption . The …
6th January 2021
Home purchase demand starts to drop back Even as mortgage rates stayed close to record lows, applications for home purchase declined in each of the last three weeks of December. With interest rates not set to fall further and the boost to affordability …
Weak December bodes ill for start of 2021 The downward revision to the euro-zone’s Composite PMI for December suggests the economy ended 2020 on a slightly weaker note than previously thought. With restrictions being extended and tightened in many …
Third wave weighing on activity The recovery in consumer confidence flipped into reverse in December amid surging coronavirus infections. We think confidence will deteriorate further this year as tighter restrictions damage economic activity. That said, …
PMIs consistent with a continued recovery in Q4 India’s PMI readings were a mixed bag in December but are still consistent with a continued economic recovery across Q4 as a whole. Further improvements should follow, especially given promising COVID-19 …
Factory sector remains resilient to virus surge The jump in the ISM manufacturing index to a two-and-a-half year high of 60.7 in December, from 57.5, is at odds with the wider evidence that the economic recovery is slowing and suggests the manufacturing …
5th January 2021
Vaccine rollout boosts Gulf economies December’s whole economy PMIs suggest that the Gulf economies have been boosted by improved sentiment on the back of the rollout of COVID-19 vaccines. But activity in Egypt weakened as the country struggles with a …
Deflation on the way out, but SNB will keep policy unchanged Swiss inflation is likely to climb out of deflationary territory over the coming months. However, it is still set to remain very weak over the coming years, and does not change the picture for …
Households in a good position to spend, but small businesses struggling November’s money and credit figures highlighted the divergence between households who continued to pay back credit and invest in property, and small businesses who were once again …
4th January 2021
Industrial sector carried momentum into 2021 The strong set of December manufacturing PMIs from Switzerland and the Nordics indicates that industry started 2021 on the front foot, supported by robust activity in Asia. This bodes well for Q1 and will have …
Surge in lending to pre-financial crisis levels will be fleeting The increase in mortgage approvals for house purchase to over 100,000 for the first time since August 2007 underlines the remarkable strength of housing market activity. If moving house …
Negative net lending likely to continue in the coming months Consistent with soft investment activity and a return to more regular loan repayments, net lending was negative for the second consecutive month in November. Looking ahead, we think a weaker …
Supply chain disruptions intensify as lockdown measures bite The manufacturing PMIs for December provided encouraging signs that output and new orders continued to rise strongly. However, the surveys also provide evidence that supply chain disruptions and …
Inflation rises further, but further rate hikes seem unlikely The further rise in Turkey’s headline inflation rate, to 14.6% y/y in December, is unlikely to be enough to push the central bank (CBRT) towards additional monetary tightening. Even so, with …
Manufacturing recovery continues India’s manufacturing PMI reading for December points to a continued rebound in the sector at the end of last year. And the recovery could gain further momentum if COVID-19 vaccines are successfully distributed in India …
Industrial rebound peaking The latest manufacturing surveys suggest that factory activity remained strong in December but that the pace of expansion has started to ease. The official non-manufacturing PMI suggests that growth elsewhere also softened, with …
Recovery to continue at decent pace in 2021 Advanced GDP data show that Singapore’s economy continued to rebound at the end of 2020 – buoyant global demand for electronics and pharmaceuticals, strong fiscal support, and widespread vaccination should see …
House prices may rise by 10% in 2021 House prices continue to rise strongly in Australia and we now think they will rise by 10% between the end of 2020 and the start of 2021. Across the eight capital cities, house prices rose by 0.9% m/m in December. …
Strong end to 2020 to continue into this year Manufacturing PMIs and Korean trade data suggest that regional industry and exports saw another sharp improvement at the end of the year. While some of this strength may fade in the coming quarters, we still …
House price boom continues, for now Record low mortgage rates, surging home sales and tight inventory pushed annual house price growth to a 6½-year high in October, but we doubt the boom in prices will last for long. The past gain in prices has already …
29th December 2020
Implied product demand to remain steady, for now Crude stocks sank a little last week as exports rose. Meanwhile (and more encouragingly), implied gasoline and distillate demand were up in the face of rising COVID-19 restrictions, which suggests that …
23rd December 2020
New home sales constrained by tight inventory New home sales fell 11.0% m/m in November, driven by a lack of inventory and pent-up demand from earlier in the year coming to an end. But easing demand is yet to feed through to house price growth, which …
Business investment solid, but consumption & job gains heading into reverse The solid gains in durable goods orders and shipments last month underline the continued strength of business equipment investment, but the bigger story for the overall economy is …
Recovery to go into reverse in December and January The economy continued to recover at a decent pace in October and November despite the various restrictions imposed on high-risk services, but the broader lockdowns coming into effect in Ontario and …
Soft inflation will allow Banxico to resume easing cycle The further fall in Mexico’s headline inflation, to 3.2% y/y in the first two weeks of December, was largely driven by a drop in food inflation. Nonetheless, underlying price pressures remain muted …
Sales fall as inventory constraints bite Existing home sales fell for the first time in five months in November, as record low inventory and the exhaustion of pent-up demand from the spring put a dampener on activity. Record low mortgage rates have …
22nd December 2020
Peaking inflation should ease pressure on Copom The softer-than-expected Brazilian mid-month inflation figure for December, of 4.2% y/y, suggests that the earlier spike in inflation has now passed its peak. Coupled with rising new COVID-19 cases that may …
China steel production to bounce back soon Growth in global steel production fell in November, in part because cold weather in China weighed on construction activity there. Nevertheless, we expect global output to remain high in 2021 as elevated prices …
Second lockdown sends borrowing soaring again November’s surge in borrowing is unlikely to be reversed much over the next few months as the ongoing COVID-19 restrictions keep many businesses closed. This will only increase talk of how to pay for the …
High savings rate paves the way for solid rebound in 2021 While a double-dip recession is a clear possibility if the Tier 4 COVID-19 restrictions are extended into 2021, Q3’s high saving rate provides optimism that as long as vaccines are effective and …
Blue Christmas Euro-zone consumer confidence rose in December despite the tightening of virus containment measures in many countries. But it remained very low, and with the virus spreading quickly and a new threat emerging from the UK virus mutation, …
21st December 2020
China production boom will continue Global aluminium production held up well in November and, given the recent surge in prices, will almost certainly increase in the coming months . According to the International Aluminium Institute (IAI), global …
Strong Korean export growth to continue Korean exports remain remarkably strong, despite renewed waves of the virus at home and abroad, and we expect this to continue over the coming months. The timely nature of the Korean trade data makes them a good …
Industry boosts activity in November Russian activity data for November suggest that, despite the sharp rise in new COVID-19 cases and tightening of virus restrictions, the economy may come through Q4 suffering only a minor slowdown. Data published this …
18th December 2020
