Absence of price pressures limits the SNB’s options The absence of price pressures in Switzerland will remain a headache for the SNB over the coming years. And with the ECB set to loosen policy again next month, Swiss policymakers’ focus will remain …
3rd November 2020
Inflation begins steady rise, adding to pressure on CBRT Turkey’s headline inflation rate edged up to 11.9% y/y in October and is likely to rise further over the coming months. This, combined with the recent sharp falls in the lira, means that the central …
Manufacturing recovery to regain some momentum The rise in the ISM manufacturing index to a two-year high of 59.3 in October, from 55.4, suggests that the rebound in production, which has so far lagged spending, should begin to catch up over the coming …
2nd November 2020
Ongoing industrial rebounds to provide limited cheer The positive set of manufacturing PMIs for October suggest that the industrial rebound gathered momentum at the beginning of Q4. However, this is of little comfort given the imposition of new lockdowns …
Strength in October to prove short-lived The PMIs for October were fairly strong across the region and suggest that industry continued to recover last month. However, they probably understated the impact of the latest virus restrictions in CEE and we …
Pick-up in headline index hides weakness in recovery The rise in South Africa’s manufacturing PMI in October was distorted by a pick-up in supplier delivery times and, if anything, the survey suggests that the recovery continued to lose steam at the start …
Manufacturing recovery gathers pace The rise in the manufacturing PMI to its highest reading in over a decade in October suggests that the recovery has been stronger than we had anticipated. But given the damage to corporate balance sheets and that …
Rebound continues to broaden The Caixin manufacturing PMI points to an acceleration in manufacturing activity in October. Admittedly, the official survey released on Saturday pointed to a marginal slowdown. But taken together, they suggest that momentum …
Industry to maintain momentum PMI readings for Asia suggest that manufacturing conditions improved further in October, and strong global demand for electronics should continue to support the sector over the coming months. PMIs for October were released …
Korean exports likely to be resilient in months ahead Korean export values picked up to above pre-crisis levels in October and grew in working-day adjusted y/y terms for the first time since late-2018. While large second waves of the virus across the …
House prices may rise by 7% next year Australia’s housing downturn came to an end last month and we reiterate our forecast that house prices will rise by 7% in 2021, led by Sydney. Across the eight capital cities, house prices rose by 0.4% m/m in October. …
Third-quarter growth to be 47% annualised The 1.2% m/m rise in GDP in August and the preliminary estimate of a 0.7% gain in September confirm that the initial recovery has been stronger than first anticipated. The latest restrictions will contribute to a …
30th October 2020
Double-digit recovery masks underlying weakness The 12% q/q rebound in Mexico’s GDP in Q3 still left output some 8% below its Q4 2019 level. And the recovery lost significant momentum throughout the quarter – a trend which we expect to continue. The …
Low inflation and lockdowns pile pressure on policymakers The post-lockdown rebound in euro-zone GDP was stronger than anticipated, which provides some hope that eventually things may get back to normal more rapidly than feared. But in the meantime, the …
Fiscal and external tailwinds kickstart recovery Hong Kong’s economy expanded for the first time in over a year last quarter, thanks to fiscal stimulus and stronger foreign demand. Output is still well below its previous peak due to the double blow from …
Economy continues to outperform, raising our GDP forecast Taiwan’s economy continued to outperform much of the rest of the world in the third quarter, with GDP rising by 3.3% y/y. With the virus eliminated at home and exports rebounding strongly, the …
Strong rebound, but a renewed downturn incoming The 6.2% q/q rebound in Czech GDP in Q3 was stronger than expected, but this predated the surge in virus infections and tightening of restrictions which we expect to cause a renewed contraction in Q4. This …
House price growth surges to five-year high House prices rose at their fastest rate in five years during October. But the housing market is mainly being driven by temporary factors such as pent-up demand and the stamp duty cut. Looking ahead, we think …
Record growth is of no comfort The massive increase in GDP in Q3 is of no comfort to French policymakers or households, who are now contending with a second national lockdown. Indeed, we expect GDP to fall by 2.5% q/q or so in Q4. The 18.2% q/q increase …
Industrial recovery picks up a bit of pace The slump in the core infrastructure industries index eased in September, and this suggests that overall industrial output contracted by 8% in Q3. That’s a slight upside risk to our GDP forecasts. The core …
Recovery may surprise to the upside The strong rise in industrial production in September is consistent with our view that Japan’s economy will rebound faster than most anticipate. Meanwhile, the unemployment rate was unchanged in September and may not …
Surveyor sentiment still weak, but industrial outlook strengthens again Occupier market sentiment remained at cyclical lows, but there was a small sign of improvement in the investment market. But we expect that only to be short-term respite, as the …
29th October 2020
GDP rebounds, but remains well below pre-pandemic level The 33.1% annualised rebound in GDP in the third quarter was unprecedented in size, but still left the economy 3.5% smaller than it was in the final quarter of last year. (See Chart 1.) The recovery …
Outlook for offices and retail remains poor, while industrial shines Despite surveyors reporting a rise in industrial occupier demand in Q3, conditions for the retail and office sectors were still poor. In turn, expectations for all-property rental and …
House purchase lending reaches new peak September’s lending data show another increase in house purchase approvals. But looking ahead, with the economy looking increasingly fragile, lending is likely to fall back once the pent-up demand from earlier this …
Recovery is over The fact that the EC’s euro-zone Economic Sentiment Indicator (ESI) was unchanged in October was a bit surprising given the surge in virus cases and associated restrictions in recent weeks. With governments ramping up curbs to slow the …
Mini-housing boom continues but consumers shun other borrowing September’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 the …
Sentiment takes a hit amid renewed virus surge The small fall in the EC’s Economic Sentiment Indicators for October is consistent with the region’s recovery stalling this month. But given that the data collection period for October predates the tightening …
Rise in net lending to be short lived Having revised up figures for August, net lending rose for the second consecutive month in September. We think this can be explained by a pick-up in investment activity, but we think a deterioration in the economic …
Recovery in consumption will slow in Q4 Retail sales were broadly unchanged in September, remaining a smidge below pre-virus levels in volumes terms. That’s consistent with our view that consumption rebounded strongly last quarter, although we think the …
Product demand likely to remain subdued The weekly surge in US commercial stocks largely reflects a return to more normal levels of crude production, after Hurricane Delta forced rigs to close. However, the product data point to stagnating demand amid the …
28th October 2020
Outperforming at the start of Q4 The rise in Sweden’s Economic Tendency Indicator (ETI) in October came as a bit of a surprise given the recent surge in COVID-19 cases there and suggests that the economic recovery – which monthly GDP data suggest had …
Rate cuts unlikely to follow slight drop in inflation The small drop in South African inflation, to 3.0% y/y in September, won’t be sufficient to prompt policymakers to resume their easing cycle. Equally, it reinforces the idea that price pressures are …
Underlying inflation to remain subdued The surge in quarterly inflation in Q3 only unwound some of the weakness in Q2 and we still expect underlying inflation to remain weak for years to come. The 1.6% q/q rise in consumer prices in Q3 was the largest …
House price growth gathers steam on back of strong demand House prices had another strong month in August, with annual growth on the FHFA measure surging to 8.1%, a 14-year high. Record low mortgage rates have given a boost to housing demand, and record …
27th October 2020
Business equipment investment recovers, but aircraft still weak The 1.9% m/m rise in durable goods orders in September demonstrates that the economic recovery isn’t entirely dependent on consumers, with business equipment investment recording a swift …
Returns improve in Q3, but significant risks to values ahead All-property total returns moved positive again this quarter, as valuation downgrades reduced markedly. A lack of forced sellers has limited transaction activity and reduced observable evidence, …
Tightening bank lending standards another headwind The ECB’s Bank Lending Survey shows that bank lending conditions tightened in Q3. And there is a growing risk that they tighten further in Q4, just as economic activity has begun to slow again. The …
Korean GDP rebounded last quarter as exports bounced back strongly, and with the economic impact of the “second wave” fading and exports picking up further, the recovery is set to continue over the coming quarters. Data released today show GDP rose 1.9% …
New home sales drop back for first time since April New home sales dropped back in September, the first contraction since the height of the pandemic in April. Pent-up demand from the spring is now dissipating and tight inventory, particularly of completed …
26th October 2020
Recovery slowing and set to get worse The small decline in the Ifo Business Climate Index provides more evidence that Germany’s recovery is running out of steam. We expect GDP to increase slightly in the fourth quarter thanks to the ongoing, slightly …
Strongest month since virus onset, but unlikely to last The RCA Commercial Property Price Index for all-property nudged higher in September, driven by improvements in the office and apartment sectors. But, with the exception of the industrial sector, …
23rd October 2020
China to remain the only bright spot for some time Growth in global steel production accelerated in September. However, all the growth was in China’s output. It looks increasingly likely that a revival in production elsewhere will have to wait until 2021 …
Food inflation continues to surge The jump in Brazilian inflation, to a seven-month high of 3.5% y/y in the middle of October, was driven almost entirely by the ongoing spike in food inflation. This is likely to keep inflation high in the next few months. …
Heading for a double-dip The fall in October’s Flash activity PMI comes before the full force of the latest COVID-19 restrictions are felt and supports our view that GDP will stagnate, if not contract, in the last three months of the year. If the economy …
Services sector dragging the economy down The further decline in the euro-zone Composite PMI in October is consistent with our view that the second wave of COVID-19 infections, and the new raft of containment measures, will cause the economy to stagnate …
Slowing recovery to weigh on spending The further rise in retail sales in September means that retail sales are now 5.5% above their pre-virus level. But total consumer spending will probably start to stutter over the next few months as the furlough …
Recovery shifting into slower gear The composite PMI only edged up marginally in October, consistent with our view that the recovery will slow in the fourth quarter . The manufacturing PMI recorded the fifth consecutive improvement and climbed from 47.7 …
Japanese inflation to remain around zero Headline inflation dropped to zero September, and we think it be negative over the coming months before hovering around zero throughout most of next year. Headline CPI fell from +0.2% y/y to 0.0% y/y last month …
Inflation to ease further in the months ahead The further easing in headline and underlying inflation in Q3 are consistent with our view that weak inflation will prompt the RBNZ to cut rates into negative territory next year. Prices rose by 0.7%q/q in Q3, …
