Recovery strong in Q3, but next phase will be tougher Turkey’s industrial production and retail sales data for September add to the evidence the recovery was strong over Q3, although prolonged weakness in the tourism sector and the recent sharp tightening …
13th November 2020
Strong recovery to continue next year Malaysia’s economy rebounded strongly in Q3 and while a second wave of infections will weigh on growth in Q4, we don’t think it will be long before the recovery is back on track. Malaysia’s economy rebounded by 18.2% …
Chunky rise in stocks highlights the headwinds still facing prices The rise in US commercial crude stocks last week is a stark reminder that, despite the recent optimism surrounding a potential COVID-19 vaccine, the recovery in oil prices still has a long …
12th November 2020
Sharp fall in output followed by a strong rebound The stronger-than-expected improvement in Russian GDP growth to -3.6% y/y in Q3 means that the economy has come through this crisis in better shape than many other EMs. But the recovery lost a lot of steam …
Price pressures moderating again The unexpected drop back in core inflation to 1.6% last month, from 1.7%, reflects continued subdued demand in the services sector. With the explosion in virus numbers likely to put further downward pressure on demand in …
Headline inflation jumps unexpectedly Headline consumer price inflation jumped in October further above the RBI’s 4% target, which removes the remote possibility of a rate cut at next month’s MPC meeting. But there are still reasons to think that headline …
Industrial recovery gaining some momentum Industrial production rose above its level a year ago for the first time in seven months in September, suggesting that the recovery in Q3 will have been better than we had been expecting. Adding to the encouraging …
Industrial production should increase in Q4 despite new lockdowns September’s decline in euro-zone industrial output was largely due to the reversal of temporary effects in Italy, rather than a result of the second wave of COVID-19. We expect industrial …
Weak core inflation set to persist The October inflation data from Sweden do not move the needle for policymakers. However, the persistent weakness of underlying price pressures is likely to remain a headache for the Riksbank over the coming years. CPIF …
Recovery already over, but hope on the horizon We now know that the record breaking fall in GDP of 19.8% q/q in Q2 was followed by a record breaking rise of 15.5% q/q in Q3. But meagre growth in September shows that the recovery was rapidly running out of …
Housing market boom continuing for now The housing market remains exceedingly buoyant, with both the number of sales and house prices rising further in October. But like us, surveyors are increasingly doubtful that the price gains and activity witnessed …
Recovery in business investment unlikely until next year Machinery orders fell in September and we expect non-residential investment to have weakened last quarter and to be flat across Q4. Further ahead, we think business investment will be weak link in …
Recovery lost momentum, rate cut likely The Mexican headline industrial production figure for September, which showed that output was flat from August, masks a welcome pick-up in growth in the key manufacturing sector. Even so, it’s clear that the …
11th November 2020
Acceleration in credit growth continues Broad credit growth hit is highest level in nearly three years as faster growth in direct financing and shadow credit more than offset slower bank lending. We think this acceleration will continue until the turn of …
Korean export recovery to remain strong Korean exports remained buoyant in the first ten days of November and there are few signs that large second waves of the virus are weighing on demand for Korean exports. We expect continued strong export growth in …
Stronger inflation to temper CBE rate cuts The rise in Egyptian inflation to 4.5% y/y in October adds to the reasons why we think that policymakers will hold off on cutting interest rates when they meet on Thursday. Further out, we think that the easing …
10th November 2020
Norwegian inflation set to fall back next year While Norwegian inflation edged further above target in October, it is set to fall back sharply in H1 2021 and so the Norges Bank will be in no rush to raise interest rates. The small increase in the …
Slow recovery gets underway The first ever “flash estimate” of Saudi GDP released today showed that the easing of virus containment measures supported an economic recovery in Q3. But the rebound was weak and the latest monthly activity figures suggest …
Previous unwinding of furlough scheme hurts employment and worse to come September’s rise in the unemployment rate from 4.5% in August to 4.8% suggests that the previous scaling back of the furlough scheme took its toll. And the unemployment rate may yet …
Rapid recovery set to continue The further surge in the Economy Watcher’s Survey (EWS) in October suggests that Q4 could surprise to the upside. However, further ahead the recovery will slow as the economy gets closer to pre-virus levels. The rise in …
Weak recovery to lose momentum The Philippines saw a lacklustre rebound in GDP in Q3 and improvements are likely to be harder to come by in the quarters ahead. Output is unlikely to regain its pre-crisis level until late next year. The contraction in GDP …
Food price drop drags inflation to eleven-year low Headline consumer price inflation fell sharply in October, to its lowest since 2009. But this was almost entirely due to falling food prices – core inflation and factory gate inflation held steady last …
Core inflation stabilising, Banxico still likely to cut Mexican headline inflation inched up further, to 4.1% y/y last month, but that mainly reflects a rise in food inflation and underlying price pressures are stabilising. Taking that together with the …
9th November 2020
Exports and imports remain near record highs Exports continued to do well last month thanks to a shift in consumption, from services toward goods, in many of China’s trading partners. Meanwhile, inbound shipments held up better than the decline in …
Weaker ruble feeding into stronger price pressures Russian inflation jumped to 4.0% y/y in October as the weakness in the ruble continued to feed into stronger consumer prices. There’s now a greater chance that inflation peaks at a higher level than we …
6th November 2020
Employment recovery hindered by new restrictions Employment growth slowed sharply in October, but the 84,000 gain was still impressive given that the renewed coronavirus-related restrictions caused employment to fall in some sectors. Moreover, the easing …
Labour market recovery still carrying plenty of momentum The 638,000 rise in non-farm payrolls in October is stronger than it looks as it included a 147,000 drop in temporary Census employment and, alongside the big fall in the unemployment rate, it …
Surging food inflation unlikely to concern Copom The further rise in Brazilian inflation to 3.9% y/y in October, from 3.1% y/y in September, was (again) mostly driven by higher food inflation. We don’t think that the central bank will be too concerned …
2020 surge in prices starts to ease The smallest monthly increase in house prices since June shows that the surge in house prices was losing steam even before the second lockdown was announced. With the economic outlook deteriorating and policy support …
Industry should be resilient during second lockdown Germany’s manufacturing sector should be able to continue its recovery in the fourth quarter, even as much of the hospitality sector is closed down again. The 1.6% m/m increase in industrial production …
Household incomes should rebound further Wage growth improved in September and should recover further over the coming months as overtime hours continue to rebound – besides a hit from a fall in end-of-year bonus payments. Meanwhile, the rise in “core” …
Recovery in construction waning The fall in the headline construction PMI to its lowest level since May shows that the recovery in activity was waning even before the second lockdown began. Admittedly, construction sites will remain open this time around. …
5th November 2020
Upbeat expectations to be short-lived While the RICS Construction Survey still points to a small decline in output in Q3, there was a marked improvement in the share of surveyors reporting a fall in construction workload. Expectations have become more …
Retail sales fall before new restrictions introduced September’s data show that euro-zone retail sales were coming off the boil even before many non-essential retailers were forced to shut up shop. Online spending will probably pick up again, but by …
Rebound set to shift into reverse in Q4 The 4.3% q/q increase in Swedish GDP in Q3 was below both our and the consensus forecast, but leaves the economy on track for a comparatively shallow drop in output this year – broadly in line with the record …
Signs of recovery, but a long road ahead The y/y contraction in Indonesian GDP eased in Q3, and the economy is likely to experience a slow recovery over the coming quarters. Indonesian GDP contracted by 3.5% y/y last quarter. (See Chart 1.) This is an …
Trade may a remain a drag on growth in the coming months The widening of the trade balance in September was not enough to prevent trade from being a significant drag on growth in Q3. The rise in the trade balance from $2617mn in August to $5629mn in …
Large fall in stocks unlikely to be repeated in coming weeks The plunge in US commercial stocks largely reflects a hurricane-related drop in output, rather than strong demand. And with virus cases rising, demand should remain subdued in the coming weeks . …
4th November 2020
Employment growth still slowing; exports rebounding Although the markets remain firmly focused on the fallout from the election, the 365,000 rise in the ADP measure of private employment in October indicates that the labour market recovery is starting to …
Recovery in mortgage applications likely a false dawn Mortgage applications recovered some ground in October, as an upturn in refinancing offset a fall in home purchase demand. But the underlying trend is broadly flat since June and we don’t expect any …
Net trade a drag on third-quarter GDP Exports and imports both rose at a similar pace in September and we expect them to continue to edge up over the rest of the year, despite the recent reimposition of domestic restrictions and in key export markets like …
Solid end to Q3 September’s solid 2.6% m/m rise in Brazilian industrial production took output above its pre-crisis level, and suggests the economy continued to fare well at the end of Q3. The latest surveys point to further strong gains in October, …
A bleak winter ahead The final Composite PMIs suggest that economic activity in the euro-zone flat-lined in October. But with countries throughout the region entering new lockdowns or substantially tightening restrictions in November, the euro-zone …
Economic recovery gaining momentum The rise in the October PMIs suggests that the economy has been rebounding a little faster than we had thought. However, there are still plenty of headwinds to the recovery. Over recent months, the PMIs have been more …
Rebound in consumption has much further to run The strong rebound in retail sales in Q3 was probably matched by a rebound in services consumption and has further to run as Victoria reopens . The 1.1% m/m drop in retail sales values in September was …
Unemployment rate won’t rise as much as most believe The rise in the unemployment rate to 5.3% in New Zealand in Q3 means the unemployment rate is close to its peak and we expect the labour market to tighten next year. The 0.8% q/q decline in employment …
3rd November 2020
A mixed bag, but recoveries to remain sluggish October’s whole economy PMIs from across the Middle East and North Africa were a mixed bag but, against the backdrop of renewed lockdowns across the globe and low oil prices, recoveries are likely to remain …
