Surge in mortgage advances comes despite reduction in riskier lending The surge in mortgage lending to its highest level since before the financial crisis has come despite banks curbing riskier loans. If we are right to think that house prices will dip, …
8th December 2020
Strong Q3 provides grounds for optimism about 2021 The third estimate of euro-zone Q3 GDP confirmed that the economy staged a rapid rebound from the first lockdowns. This provides grounds for optimism about growth prospects for next year. In Q2, GDP was …
Headwinds on the horizon following decent Q3 recovery The stronger-than-expected rebound in South Africa’s GDP in Q3 is overshadowed by more recent data pointing to a stuttering recovery. And concerns about a second wave of COVID-19 as well as harsh …
Recovery to slow but not reverse The drop in the Economy Watchers Survey in November still leaves it consistent with solid growth in consumer spending. As such, the survey is consistent with our view that the third wave will slow rather than derail the …
Recovery to surprise to the upside The sizeable upward revision to Q3 GDP and the sharp rise in “core” household spending in October support our view that Japan’s economy will recover from the pandemic faster than the consensus expects. Meanwhile, wage …
House prices continue to rise strongly, but for how much longer? There was no sign whatsoever of the surge in house prices abating in November as annual growth in the Halifax index rose to a fresh four-year high. Tight market dynamics suggest that prices …
7th December 2020
Manufacturing to keep economy expanding in Q4 Germany’s manufacturing output rose again in October and the signs are that it held up well after the lockdown-lite came into force in November. It now looks as if Germany will be the only major euro-zone …
Exports at record high while imports remain resilient Exports jumped last month largely due to a surge in consumer goods exports as renewed COVID-19 flare-ups kept consumption in many of China’s trading partners skewed towards goods rather than services. …
Jump in inflation takes easing off the table … for now The jump in Russian inflation to a 16-month high of 4.4% y/y last month takes the prospect of further interest rate cuts off the table for the next few months at least. That said, with underlying …
4th December 2020
Payroll gains at risk of stalling in December The slowdown in the pace of non-farm payroll gains to 245,000 in November underlines how the renewed surge in virus cases and restrictions is weighing on services demand, which will only intensify this month . …
Employment to fall in December Employment outperformed expectations last month, but the additional coronavirus restrictions imposed since the November LFS survey was carried out lead us to think it will fall back in December. The 62,000 rise was more than …
No double dip in construction The rise in the headline construction PMI in November showed that the industry continued to recover even as overall economic activity probably contracted again. But builders’ optimism that this will continue for the …
Rebound in retail sales to continue in November The rebound in retail sales in October is likely to be overshadowed by an even larger increase in November as Victoria reopens . The 1.4% m/m rise in retail sales values in October was smaller than the …
Regional outperformer The 7.7% q/q rise in Brazilian GDP in Q3 was a bit weaker than had been expected, but the data still confirm that the economy has fared better than other major Latin American countries so far during this crisis. It looks like …
3rd December 2020
PMIs highlight differing effects of national lockdowns October’s increase in euro-zone retail sales took them well above their level in February, but they are almost certain to have dropped back in November. And the PMIs suggest that activity in the wider …
Recoveries still struggling to gather momentum November’s whole economy PMIs from across the Middle East and North Africa showed a mixed performance and, despite the global economic backdrop improving amid the rollout of COVID-19 vaccines, economic …
Inflation jumps, raising risk that CBRT is forced to hike rates again Turkey’s headline inflation rate jumped to a stronger-than-expected 14.0% y/y in November and, while the lira has rallied strongly over the past month and the economy looks set to …
PMIs consistent with continued recovery in November India’s PMI readings edged down in November but still point to a continued economic recovery last month. This is likely to remain the case over the coming months as COVID-19 restrictions gradually get …
Trade won't big a big drag on growth again in Q4 The trade balance widened in October but the widening was partly driven by price effects so we estimate that net exports made little contribution to GDP growth in Q4. The rise in the trade balance from …
Implied product demand unlikely to make significant turnaround until March Crude stocks dipped last week as net imports sank. Meanwhile, with COVID-19-related restrictions now present in a number of large states, we suspect that demand will remain low for …
2nd December 2020
Thanksgiving holiday skews purchase applications higher Issues with seasonal adjustment over the Thanksgiving holiday, when many more people stayed home and perhaps applied for a mortgage, led to a spike in home purchase mortgage applications in the final …
Industry keeping the recovery going The 1.1% m/m rise in Brazilian industrial production in October confirms that, after what looks to have been a very strong Q3, the economy held up well at the start of Q4. Surveys suggest that this continued into …
Large revisions cloud labour market picture Unusually big revisions to the back data show that the euro-zone labour market was in worse shape over the summer than previously indicated. The jobless rate now appears to be falling, but the recent tightening …
Deflation on its way out, but SNB will keep policy unchanged The current period of deflation in Switzerland will start to ease in early 2021, and the headline rate is likely to edge back into positive territory by March. However, this won’t be a …
Output to return to pre-virus levels by Q2 2021 The rebound in Q3 GDP reversed around 40% of the decline during the first half of the year and we expect output to return to pre-virus levels by mid-2021. The 3.3% q/q rise in Q3 GDP was stronger than most …
Manufacturing recovery little affected by new virus restrictions The fall in the ISM manufacturing index to a still-solid 57.5 in November, from 59.3, suggests that manufacturing production will continue to catch up with the broader economic recovery …
1st December 2020
Growth to slow sharply GDP expanded by a record 40.5% annualised in the third quarter, as the first lockdowns were lifted, but that still left it 5.3% below its pre-pandemic level. Some more lost ground appears to have been made up in the fourth quarter, …
Core inflation rate to remain well below target The stability of euro-zone core inflation at just 0.2% in November is further evidence that the decline in inflation this year has not been primarily due to temporary factors. Both headline and core …
Industrial boom to help offset services slump The strong set of manufacturing PMIs from Switzerland and the Nordics in November suggests that the industrial rebound gathered momentum in Q4, in keeping with the picture in German industry. This will help to …
Recovery on ice The sharp fall in South Africa’s manufacturing PMI in November points to the recovery hitting the brakes in the middle of Q4 and, while recent developments regarding vaccines have brightened the outlook, harsh austerity will act as a key …
Easing of COVID-19 restrictions in CEE to support industry The manufacturing PMIs for November point to a slowdown in the region but, overall, the sector has held up much better than services. Encouraging signs that Central & Eastern Europe has brought …
Surge in house prices to reverse in 2021 Despite GDP being set for its biggest fall in 300 years this year, annual house price growth accelerated to its highest rate since January 2015 in November. The divergence has only been possible due to …
Manufacturing recovery still on the mend The drop in India’s manufacturing PMI in November comes as no surprise given that it hit a decade high in October. The big picture is that the reading is still consistent with a decent recovery in manufacturing …
Korean export outperformance to continue Korean export growth continued to gather momentum in November and is set to remain strong in the months ahead, buoyed by foreign demand for electronics. Korean trade data provide a good guide to the performance of …
Industry goes from strength to strength The Caixin manufacturing PMI hit a decade high in November. The official survey released yesterday also rose, to its highest in three years. While the rebound in industry will eventually lose steam, policy stimulus …
House prices may rise by 7% next year House prices are now rising in Australia and we reiterate our forecast that house prices will rise by 7% in 2021, though the risks look skewed to the upside. Across the eight capital cities, house prices rose by 0.8% …
Strong industry performance to continue PMI readings for Asia suggest that manufacturing conditions improved significantly in November. Buoyant global demand for electronics should continue to support the sector over the coming months. PMIs for November …
Unemployment rate close to peaking While the unemployment rate rose in October, with the job-to-applicant ratio edging up , it’s unlikely to rise much further. Meanwhile, capital spending data suggest that business investment may have fallen a little less …
Households in a good position to start spending once restrictions lifted October’s money and credit data showed that the mini-boom in the housing market continued, but a fall in consumer credit suggests that consumer spending was already faltering before …
30th November 2020
Net lending likely to remain negative in coming months Net lending turned negative in October. We think this can be explained by weaker investment activity and a return to more regular loan repayments after earlier payment holidays. Looking ahead, we …
Approvals stay high despite evidence of a cut back in high LTV lending Very strong demand allowed mortgage approvals to surge yet higher in October even as banks cut back on high LTV lending. Approvals are likely to rise even further in the run up to end …
Is Switzerland “doing a Sweden” in Q4? The decline in the KOF Economic Barometer in November adds to signs that the rebound in Swiss GDP shifted into reverse in Q4. However, given the government’s decision to resist a nationwide lockdown, activity in the …
Rapid rebound, but next stage of recovery to be tougher Turkey’s economy recorded a strong 15.6% q/q rebound in Q3 from its collapse in Q2, but lingering weakness in the tourism sector as well as the recent tightening of both virus containment measures …
Rebound continues to strengthen The latest official PMI surveys show that the pace of economic growth picked up in November on the back of a broad-based improvement in both services and manufacturing. The official manufacturing PMI rose from 51.4 in …
Third wave may weigh on consumer spending Retail sales rose in October, but as both values and volumes are now above pre-virus levels they’re unlikely to rise much further and could edge down amidst the third wave. Meanwhile, industrial production rose …
Outlook for 2021 deteriorates The latest IPF Consensus Forecast saw a marked downgrade to next year’s outlook. Although we expect values to decline next year too, we are less pessimistic when it comes to the size of those falls. Further ahead, our …
27th November 2020
Output still 9% below pre-virus level in Q3 The y/y slump in Indian GDP eased substantially in Q3 (Q2 of FY20/21), but output was still 9% below its pre-virus level last quarter. Looking ahead, encouraging news on vaccines has brightened the outlook, but …
New lockdowns take their toll on sentiment The fall in the EC’s Economic Sentiment Indicator (ESI) for the euro-zone in November was hardly a surprise given the tightening of restrictions. But the ESI is higher than it was in the spring, reflecting both …
