Sales holding up for now Retail sales rose by 0.4% m/m in October, although the sharp falls in gasoline and clothing sales imply that the worsening coronavirus outbreak was beginning to bite. Even if retail sales continue to hold up relatively well, …
18th December 2020
Buoyed by strength in industry The increase in the Ifo Business Climate Index for December supports our view that Germany will avoid a contraction in Q4. But the new tightening in coronavirus restrictions, which came into effect this week, means that …
Second lockdown has much smaller impact than the first The relatively small drop in retail sales in November indicates that the second COVID-19 lockdown didn’t change households spending behaviour by anywhere near as much as the first. And it suggests …
Underlying inflation should soon start to recover While headline inflation fell sharply again in November due to weaker fresh food and energy inflation, we think it will recover early next year. Headline CPI fell from -0.4% y/y to -0.9% y/y last month …
Supply constraints weigh on housing starts Single-family starts rose for the seventh consecutive month in November, but at a slower pace. And with production constraints starting to weigh on homebuilder confidence, we think that gains will slow further …
17th December 2020
House prices to keep rising throughout 2021 House price inflation rose to 9% in November and is likely to surpass 10% in the first quarter. We expect house price inflation to slow sharply after that, but prices should keep rising throughout 2021. It was …
Inflation pressures remain very subdued The breakdown of November inflation showed that falling prices for tourism-related services remain a major drag on headline and core inflation, which were unrevised from the flash estimates. Looking ahead, inflation …
Upside surprise is under way The fall in the unemployment rate to 6.8% in November leaves it on track to fall to 6% by the middle of next year and is consistent with our view that the RBA won’t expand quantitative easing any further. The 90,000 rise in …
Strong rebound sets the stage for solid 2021 The extraordinary rebound in New Zealand’s GDP was probably driven, in part, by the release of pent-up demand, but we still expect output to rise further in the months ahead. The 14.0% quarterly rise in …
16th December 2020
Stocks dip, but are likely to remain inflated for some time US crude stocks declined in the latest data as net imports plummeted. But refinery activity remains subdued and the latest virus-related restrictions could see lower product demand in the coming …
Inflation spike a statistical quirk The higher-than-expected rate of inflation in November was mainly a statistical quirk resulting from continued difficulties in collecting price data for travel tours. The same effect could cause inflation to rise by a …
Sales hit by new lockdowns The latest surge in coronavirus infections, which has forced a number of states to re-impose lockdowns, resulted in a worse-than-expected decline in retail sales in November. With case numbers still trending higher and …
Welcome recovery in PMIs, but activity still depressed The rebound in the Composite PMI in December to just below 50 primarily reflected the partial lifting of virus restrictions in France. But with Germany now imposing tougher measures, the big picture …
PMIs understating both the fall in GDP and the rebound The small rebound in the composite PMI in December suggests that GDP did not make much of a recovery after the hit to activity from the COVID-19 lockdown in November. But it is probably understating …
Low inflation won’t prompt the MPC to act The sharp fall in inflation from 0.7% in October to 0.3% in November (consensus 0.6%) and in the core rate from 1.5% to 1.1% came as a bit of a surprise. However, some of these moves were driven by one-off …
PMI suggests third wave not derailing recovery The rebound in the composite PMI in December is consistent with our view that the third virus wave will slow the recovery but won’t derail it. The survey for the December flash PMI was conducted a week …
Tailwind from net trade to fade While export values edged down again in November, they should rise above pre-virus levels. That said, due to the weakness in services exports, overall exports won’t return to pre-virus levels until the middle of next year. …
Production still catching up with consumption The solid 0.8% increase in manufacturing output last month underlines that production is continuing to catch up with the recovery in consumption. Production will continue to rise, even as consumption drops …
15th December 2020
Manufacturing sales recovering only slowly Manufacturing sales only edged up in October and the disruption from the coronavirus at home and abroad is likely to hold back growth in the next few months, but we are more positive about prospects beyond then. …
Inflation holds steady Saudi inflation held steady at 5.8% y/y in November as a rise in transport inflation was offset by weaker price pressures elsewhere. The effects of July’s VAT hike will continue to keep the headline rate elevated until the middle of …
Higher and higher Another jump in Nigerian inflation, to 14.9% y/y in November, is likely to be followed by elevated readings in the coming months. But as the headline rate peaks, probably in early 2021, we think that policymakers will resume their …
Steady drip-feed of weaker news The smaller-than-expected fall in employment in October shows that the government’s furlough scheme has minimised the labour market damage from COVID-19 so far and provides encouragement that there will be a steady trickle, …
Activity goes from strength to strength China’s economy continued to accelerate across all fronts in November. We expect output to remain above-trend in the coming quarters, even as tailwinds from stimulus and exports start to ease. Industrial production …
Price pressures finally easing The drop in India’s consumer price inflation in November is likely to mark the start of a broader easing of price pressures. That would allow the RBI to keep monetary policy loose for some time to come. Headline CPI …
14th December 2020
Industry to hold up well in Q4 October’s increase in euro-zone industrial output marked a decent start to the quarter and we think that production will rise in Q4 as a whole. Industry has been largely unaffected by the more targeted second-round lockdown …
Recovery still strong at start of Q4, but headwinds mounting Turkey’s industrial production and retail sales data for October suggest that the economy carried a lot of momentum into the start of Q4 but the recent tightening of virus containment measures, …
Core inflation showing no signs of easing The rise in headline wholesale price inflation in November was driven by a further acceleration in core inflation but this could go into reverse soon, especially if a COVID-19 vaccine is successfully distributed …
Recovery to surprise to the upside The sharp rebound in the Q4 Tankan supports our view that the economy will rebound relatively swiftly from the dislocation caused by the pandemic. And while firms’ capital spending plans point to weakness in business …
Rise in commercial property debt at risk from new lockdowns Commercial real estate debt growth accelerated in November. However, renewed lockdowns in many states may slow the recovery in investment activity, limiting debt growth in the next few months. …
11th December 2020
A solid start but weak end to Q4 The robust 2.0% m/m rise in Mexican industrial production in October suggests that the economy started Q4 on a solid footing. But more timely indicators imply that the recovery struggled over the rest of the quarter, which …
Industrial recovery again surprises on the upside Industrial production rose by more than most had anticipated in October. Output is now growing as fast in y/y terms as it was before the pandemic hit. A near-term slowdown is a possibility but the outlook …
Korean export recovery to remain strong Korean exports were buoyant in the first ten days of December, with no sign that renewed waves of the virus are weighing on external demand. We expect exports to remain strong in the coming months. The timely nature …
Inflation muted for now, but will climb above 2% next spring Both headline and core consumer prices increased by 0.2% m/m in November, as the rebound in the prices of the goods and services that fell the most in the early stages of the pandemic continued. …
10th December 2020
Core inflation in Norway to drift lower next year The sharp fall in Norwegian inflation in November was skewed by energy effects, but the decline in the core rate underlines that policymakers will be in no rush to raise rates. Meanwhile, the persistent …
Inflation rises, but still scope for further monetary loosening The jump in Egyptian inflation to 5.7% y/y in November still leaves it below the lower bound of the central bank’s target range, leaving the door open for interest rates to be lowered further …
GDP barely grew at all in October, but hope further ahead The economy continued to grow in October, but at a snail’s pace. And with the COVID-19 restrictions likely to remain in place for some time, the economy is in for a difficult few months yet. But …
Surveyors report that activity peaked in November After mortgage approvals hit a 13-year high in October, surveyors reported that sales rose yet further in November to what they expect to be the high-water mark. With the outlook for employment shaky and …
US crude stocks to remain elevated for a little while yet The huge counter-seasonal build in US commercial crude stocks last week was driven by a surge in net imports. We expect that it will take some time before stocks fall back to more “normal” levels . …
9th December 2020
Weakening inflation to allow one final policy rate cut The sharp drop in Mexican inflation to 3.3% in November was largely driven by a drop in food and fuel prices, although underlying price pressures also remained soft. With inflation likely to settle …
Credit growth starts to slow as bond defaults weigh After accelerating in recent months, broad credit growth slowed slightly in November. We think this marks the start of a slowdown in credit growth as the PBOC turns its attention to tackling financial …
Norway to get away lightly in Q4 The stronger-than-expected increase in mainland Norwegian GDP means that the economy will avoid contracting in Q4 and confirms that it will experience a comparatively modest drop in output in 2020. However, the increasing …
Inflation edges down and will remain subdued The slight drop in South African inflation, to 3.2% y/y in November, will probably be followed by similarly soft readings in the near term. This, coming alongside a lacklustre economic recovery, means that …
Slip into deflation no cause for alarm Consumer prices fell year-on-year for the first time since 2009 last month. But this was almost entirely driven by a rebound in pork supply and isn’t evidence of faltering demand. To the contrary, broader price …
Business investment on the road to recovery The surge in machinery orders in October supports our view that non-residential investment began to recover this quarter. We expect them to rebound further over the coming months. The 17.1% m/m rise in machinery …
Food inflation surges, but core inflation may have softened The further rise in Brazilian inflation, to 4.3% y/y last month, was (again) the result of higher food inflation. But inflation in most other price categories fell last month which may help to …
8th December 2020
