Recovery to continue despite stagnation in PMIs The September flash PMIs didn’t improve much further even as Japan’s second virus wave has abated. Nevertheless, the survey points to a continued pick-up in consumption, exports and industrial output. The …
23rd September 2020
Growth in existing home sales moderates Existing home sales rose again in August, although at a more modest pace compared to June and July. With pent-up demand from the spring having now worked itself through, unemployment elevated and inventory at record …
22nd September 2020
Consumer caution to hold back recovery Even though virus cases are rising sharply and restrictions are being tightened, euro-zone consumer confidence rose in September. But we doubt this will be sustained. Further restrictions are being imposed and look …
China to continue to prop up global supply Global aluminium output remained strong in August. Production should rise in the coming months as new capacity comes on stream in China, which should act as a lid on prices . According to the International …
21st September 2020
Recovery stalls in the middle of Q3 The batch of Polish activity data for August show that the pace of the recovery slowed as pent-up demand following the loosening of lockdown measures eased. The recovery will probably continue over the coming months, …
Recovery in external sector picks up pace Exports rebounded to pre-crisis levels for the first time in the first 20 days of September and, while we don’t necessarily think export values will keep going from strength to strength, today’s data add weight to …
Mining sector provides a helping hand The batch of Russian activity data for August show that the economic recovery continued throughout the middle of Q3 as mining output recovered strongly, but activity in the retail and manufacturing sectors lost …
18th September 2020
Drop in core retail sales not a sign of weakness The modest decline in core retail sales in July was partly because households transitioned back to spending on services following the re-opening of the economy. We do not interpret the drop as a sign of …
Retail spending rises further above pre-pandemic levels The further rise in retail sales in August was particularly encouraging as we know non-retail spending picked up at the same time, suggesting that consumer spending has rebounded strongly. The 0.8% …
Underlying inflation to weaken much further While headline inflation fell in August, excluding the government’s domestic travel subsidy scheme it showed a renewed pick up. However, we still think inflation will fall much further into negative territory …
Single-family starts return to pre-COVID levels on back of strong demand At 1.021m annualised, single-family starts have now fully reversed their COVID-related drop. And, with building permits hitting a 13-year high in August and homebuilder confidence at …
17th September 2020
Core inflation to fall close to zero in September Euro-zone core inflation fell to a record low in August and we suspect that it will fall even further in September. Looking ahead, underlying price pressures are likely to remain weak. As expected, …
Rebound in employment has further to run August’s labour market data were much stronger than most had anticipated and we think that employment will continue to rise . The 111,000 rise in employment in August was much stronger than the Bloomberg median of …
Growth will rebound strongly in Q3 New Zealand’s GDP fell by 12.2% q/q in Q2 but while the second lockdown should weigh on the recovery in Q3 we still expect growth to rebound by more than 10% in Q3. The 12.2% q/q plunge in GDP was broadly in line with …
Hurricanes continue to distort the US crude demand picture The restart of refineries following Hurricane Laura explains last week’s fall in crude stocks. With another hurricane on its way, it will be some time before a clear picture emerges of the state …
16th September 2020
Core inflation rises despite unchanged headline rate Although headline inflation remained close to zero in August, that weakness was mainly due to sharp falls in the prices of a few items. Underlying core inflation is edging back up, as firms begin to …
Sales growth inevitably slowing after rapid recovery The 0.6% m/m rise in retail sales in August was a bit weaker than we had expected, but isn’t a huge concern given that sales are now nearly 2% above their pre-pandemic level. (See Chart 1.) The expiry …
Inflation bottoms out The sharp drop in CPI inflation in August probably represents the low point for inflation. But a sustained rise to 2.0% seems unlikely within the next few years. The plunge in inflation from +1.0% in July to +0.2% in August …
Huge boost to GDP growth from net trade in Q3 Exports continued to recover in August while import volumes fell. Indeed, we expect net trade to provide a sizeable boost to growth this quarter following a huge drag in Q2. The 14.8% annual fall in export …
Recovery in manufacturing begins to wane The muted 0.4% m/m increase in industrial production in August wasn’t quite as bad as it looks, with Hurricane Laura causing a temporary 2.5% m/m drop off in mining production and the return to seasonal …
15th September 2020
Strong auto sales mask weakness elsewhere A strong increase in auto production helped drive a 7.0% m/m rise in manufacturing sales in July, but the weakness in some other sectors supports our view that the overall manufacturing recovery will lag. The 7.0% …
Wage growth set to collapse in Q3 The jump in nominal hourly labour costs growth in Q2 is hardly a sign of a healthy labour market as total hours worked slumped by even more than employee compensation. The pick-up in activity since the end of the …
Jump in inflation to prevent rate cut… for now The increase in Nigerian inflation in August, to 13.2% y/y, will probably stay the hand of policymakers at next week’s MPC meeting. But, with a weak economic recovery, there may still be scope for an interest …
Inflation edges up as effects of VAT hike dominate Saudi inflation edged up to 6.2% y/y in August as the effects of the VAT hike at the start of July continued to dominate. Inflation will remain elevated until the middle of next year and, combined with …
No fallout from unwinding of the furlough scheme…yet It’s encouraging that the start of the unwinding of the furlough scheme in August has not led to a surge in job losses. But we think it is only a matter of time before that happens and the unemployment …
Recovery continues as consumption rebounds Economic growth in China accelerated further in August as sentiment improved among consumers and private firms. Retail sales surpassed 2019 levels for the first time since the COVID-19 outbreak, while investment …
High core inflation to delay next rate cut Following the greater-than-expected rise in wholesale price inflation last month, it will come as some relief to policymakers that consumer price inflation held steady in August. That said, core inflation is …
14th September 2020
Pace of rebound slowing The further increase in industrial production in July confirmed that the sector is continuing to recover. But output is still some way below its pre-crisis level and the pace of the rebound has slowed. We doubt that industry will …
Activity rebounds strongly at the start of Q3 Turkish industrial production and retail sales posted a strong recovery in July as the continued easing of lockdown measures and rapid credit expansion boosted activity. The tightening of monetary conditions …
WPI inflation rises by more than expected Wholesale price inflation rose by more than most had expected in August, due mainly to a jump in the core component. A similarly sharp rise in core consumer price inflation last month – data will be released later …
Non-bank lending may explain drop in outstanding residential debt Total real estate debt held its ground in August, as a rise in commercial debt was offset by a drop in residential. The rise in the former can be explained by rent arrears, particularly in …
11th September 2020
Dwindling inventory pushes vehicle prices sharply higher The outsized 0.4% m/m increase in core CPI in August was principally due to a 5.4% m/m surge in used motor vehicle prices which, unusually for this very early stage of the recovery, reflects …
Industrial recovery running out of steam The contraction in industrial output eased a little further in July but was still well below pre-virus levels. With India now on course to becoming the epicentre of the coronavirus, restrictions are likely to …
Industrial rebound losing momentum The marked slowdown in Mexico’s industrial production growth from 17.9% m/m in June to 6.9% m/m in July suggests the economic recovery was losing momentum at the start of Q3 – a trend which we expect to continue. This …
Acceleration in credit growth continues Broad credit growth hit its highest level in two and a half years as growth in direct financing and shadow credit picked up amid steady bank lending. We think that this acceleration has further to run. Chinese …
The last of the big rises The strong 6.6% m/m rise in GDP in July suggests that the record-breaking negative growth rate of GDP in Q2 will be followed by a record-breaking positive growth rate in Q3. However, July was probably the last of the big step ups …
Slow export recovery continues Korean exports rose in levels terms in the first 10 days of September and, with trading-partner economies still getting back on their feet, we expect further gradual improvements in external demand. The timely nature of the …
Gasoline demand to face downward pressure in the weeks ahead US crude stocks snapped a six-week falling streak to increase last week as refinery activity fell. And as seasonal factors weigh, we expect gasoline demand to make little further headway this …
10th September 2020
Norwegian inflation pressures set to ease before long Signs of rising domestic price pressures in Norway raise the chance of a hawkish shift by the Norges Bank at the next meeting. However, with imported price inflation set to peak soon, and services …
Inflation slows to nine-month low, but CBE likely to keep rates on hold The fall in Egyptian inflation to a nine-month low of 3.4% y/y in August increases the likelihood that the central bank will resume its easing cycle when it meets later this month. …
Housing market maintains its upward momentum The housing market strengthened further in August. But as pent-up demand from lockdown dries up over the coming months, conditions will soon cool. We expect house price growth to stagnate next year, while we …
Business investment hasn’t bottomed out yet While machinery orders rose in July we still expect non-residential investment to weaken further in Q3. And with business sentiment set to remain weak for the forseeable future, any rebound in business …
Inflation rises, but central banks won’t be too alarmed Brazilian inflation remained well below the central bank’s target last month, at 2.4% y/y, confirming that price pressures are soft and supporting our view that the Selic rate will stay low for a …
9th September 2020
Core inflation bottoming out Headline consumer price inflation slipped last month on the back of easing food price inflation. But core consumer prices rose for the first time since the COVID-19 outbreak and the ongoing recovery in economic activity …
Weak recovery lies in store after massive Q2 hit The huge fall in South Africa’s GDP in Q2 confirms our pessimistic outlook for the economy and, with fiscal austerity on the horizon, the recovery will be weak. Policymakers at the central bank will …
8th September 2020
Investment at the forefront of Q2 decline, slow recovery ahead The third estimate of euro-zone GDP showed that the plunge in economic activity in the second quarter was broad-based, with investment and exports faring particularly poorly. The rapid rebound …
Recovery shifts down a gear Data released this morning show that the rebound in economic activity in Norway lost a bit of steam in July, which is in keeping with signs elsewhere in Europe. Nonetheless, given that the plunge in output in Norway was much …
Rebound in household incomes to continue Wage growth improved in July and household incomes are likely to rebound further as more workers who lost their jobs during the state of emergency find employment again. Meanwhile, the second estimate of Q2 GDP …
House prices bounce back strongly House price growth in August exceeded expectations, surging to 5.2% y/y. But pent-up demand will soon be expended, while a weak economy, cautious lenders and the end of the stamp duty cut will weigh on prices. We think …
7th September 2020
Industrial rebound slowing German industry eked out a meagre increase in production in July, leaving output still well below its pre-crisis level. Production is likely to have increased again in August, but we now seem to be past the period of rapid …
