Base effects flatter exports, imports stronger than meets the eye The pick-up in headline export growth last month reflects base effects and masks a slowdown in levels terms. Meanwhile, imports are doing just as well as exports once price effects are …
7th September 2020
Inflation rises further, pace of easing cycle will slow Russian inflation rose to 3.6% y/y in August and we think that it will edge up a bit further over the coming months. This shouldn’t trouble the central bank too much, but the threat of sanctions and …
4th September 2020
Deterioration in the outlook for next year The latest IPF Consensus Forecasts were revised down over the forecast horizon, with notable downgrades to next year’s outlook. Our views are broadly in line with the IPF in terms of sector rankings, but we take …
Labour market recovery losing momentum The 245,800 increase in employment in August means that nearly 2 million of the 3 million jobs lost during the pandemic lockdowns have now been recouped but, with the pace of the recovery now slowing – 418,500 jobs …
Recovery continues despite fading fiscal support The slighter softer 1,371,000 gain in non-farm payrolls in August was flattered by the hiring of 238,000 temporary workers for the 2020 Census and means that more than half of those who lost their jobs …
Residential recovery outpaces commercial While the recovery in both commercial and residential construction lost momentum in August, growth in housebuilding far outperformed commercial. This trend is likely to continue, reflecting the stronger outlook for …
Surge in sales to reverse in August Retail sales were 12% above pre-virus levels in July but the closure of non-essential shops in Victoria will weigh heavily on spending in August. That means that sales won’t rise all that much in Q3, though a rebound in …
Exports and imports rebounding in unison Both exports and imports rebounded sharply in July, but the bigger gain in the latter means that the trade deficit widened to $63.5bn, from $53.5bn. Net external trade is on track to be a drag on third quarter GDP, …
3rd September 2020
Deficit widens, as both exports and imports rebound strongly The merchandise trade deficit widened to $2.5bn in July, from $1.6bn, as imports of motor vehicles rebounded by more than exports in the same category. But the good news is that, with imports …
Industry making up lost ground quickly The stronger-than-expected 8.0% m/m rise in Brazilian industrial production in July adds to signs that the economy has recovered strongly in Q3. But with fiscal austerity likely to kick in next year, the pace of …
Recoveries already losing steam, deflation to persist in the Gulf August’s whole economy PMIs from across the Middle East and North Africa all fell adding to the signs that activity in the region has plateaued amid fiscal austerity and continued virus …
More evidence that the rebound is over The recovery in euro-zone retail sales ended in July as sales fell slightly. And final PMIs for August suggest that the economy is growing only slowly, while Italy and Spain’s recovery may have gone into reverse. We …
Ongoing period of deflation limits the SNB’s options The current bout of deflation in Switzerland is likely to persist well into next year, and will continue to be a headache for the SNB, particularly given the recent rise in the franc against the US …
Inflation holds steady, lira key to next move in monetary policy Turkish inflation was unchanged between July and August, at 11.8% y/y, but the lira rather than inflation is likely to determine the central bank’s next moves. If the lira’s recent stability …
Still a very long way from normal The rise in the August PMIs pales in comparison with the falls during the lockdown and it is highly likely that output is still a very long way from pre-pandemic levels. Given the bleak economic outlook, we think the RBI …
Rebound in imports has further to run The fall in export values in July is consistent with our view that exports won’t rebound much in Q3, but the jump in import values suggests that domestic demand is now on the mend . The 4.4% m/m drop in export values …
Hurricane disruption to linger and weigh on crude stocks a little next week US crude stocks dropped sharply last week as US production collapsed by over 1m bpd. And though supply is bouncing back, we expect further drawdowns next week as output remains …
2nd September 2020
Mortgage demand stable as interest rates fall to record low Following a surge in May, mortgage applications for home purchase have since stabilised at a level around 25% higher than last year. Pent-up demand, record low mortgage rates and some evidence of …
August gain wipes out Covid losses Combined with July, August’s surge in house price growth has more than reversed the price falls seen immediately after lockdown. But with the market mainly being driven by short-term factors such as pent-up demand, the …
GDP to eke out a gain in Q3 Australia’s GDP fell by more than most had anticipated in Q2 but we think it will rebound marginally in Q3 despite the tightening of restrictions in Victoria . The 7.0% q/q plunge in Q2 GDP was weaker than the Bloomberg median …
Production still struggling to keep pace with consumption The further rise in the ISM manufacturing index in August indicates that, while manufacturing production has continued to recover, it is still badly lagging the stronger turnaround in spending. The …
1st September 2020
A slow recovery ahead The Brazilian Q2 GDP data, which showed a 9.7% q/q fall in output, confirmed that the country suffered one of the more modest downturns in Latin America. But with fiscal policy set to turn from a tailwind to a headwind, the pace of …
Manufacturing sector back on the wobbly road to recovery The jump in South Africa’s manufacturing PMI in August confirms that the sector was boosted as the country eased lockdown restrictions further. But with power cuts becoming a problem once again and …
Households resume pre-virus borrowing habits July’s money and credit data confirm the resurgence in the housing market while recovering consumer credit suggests that households’ appetite for big ticket purchases is returning. The rise in mortgage …
Core inflation to remain very weak Euro-zone core inflation fell to a record low of 0.4% in August and we think that it will remain around that level for the next year at least. Meanwhile, labour market data also published today show that there has been …
V-shaped recovery in house purchase lending July’s lending data show a v-shaped recovery in house purchase mortgage approvals. But with the economy still fragile and lenders still cautious about high LTV loans, lending is likely to fall back once the …
Negative net lending expected to continue in coming months In line with our expectations, net lending to property saw a marked decline in July as transactions remained low and banks tightened their belts. We expect banks’ willingness to grant further …
Signs of rising manufacturing backlogs bode well for the near term The positive set of August manufacturing PMIs from Switzerland and the Nordics suggests that the recovery in industrial activity continued over the summer. While the fortunes of industry …
Manufacturing sectors continue to bounce back The batch of manufacturing PMIs across Emerging Europe for August provided further signs that the economic rebound continued in Q3. Industrial sectors are likely to recover further over the coming months, …
Manufacturing recovery will prove slow and fitful The rise in August’s manufacturing PMI is cold comfort when set against the extremely weak GDP data for Q2 released yesterday. And with new coronavirus cases showing no signs of abating, we think the …
Manufacturing activity continues to strengthen The Caixin manufacturing PMI points to faster growth in manufacturing activity in August. Admittedly, the official survey released yesterday had pointed to a marginal slowdown. But taken together, they …
Gradual export recovery to continue Korean export values rose again in August and we expect a continued recovery in external demand to drive further small improvements in the months ahead. Korean trade data provide a good guide to the performance of …
Manufacturing sector improving, continued slow recovery ahead PMI readings suggest that manufacturing conditions generally improved in Asia last month, and we expect more gradual improvements as the external environment slowly recovers. PMIs for August …
Housing slump has further to run The housing downturn deepened further in Melbourne in August and continued in Sydney but seems to be abating elsewhere. We reiterate our forecast that house prices across the eight capital cities will eventually fall by 8% …
Unemployment rate to hit 4% The unemployment rate edged higher in July, and we expect it to rise further over the coming months despite a continued recovery in economic activity. Meanwhile, the further fall in the number of furloughed workers supports our …
Almighty slump to be followed by weak recovery The 24% y/y slump in Indian GDP in Q2 (Q1 of FY20/21) is one of the largest peak-to-trough falls anywhere in the world. With the country still battling with its coronavirus outbreak, the rebound in India’s …
31st August 2020
Economy accelerates as services activity rebounds The latest official PMI surveys showed that the pace of economic growth picked up in August as stronger services activity more than offset a slight loss of momentum in manufacturing and construction. The …
Activity will recover further in second half of year While retail sales fell in July, consumer spending should continue to recover over the coming months. Meanwhile, industrial production rose sharply in July and should also rebound further. The 3.3% m/m …
Record contraction to be followed by record expansion The second-quarter GDP data confirm that the lockdown caused an unprecedented record contraction of 38.7% annualised, but the larger-than-expected rise in GDP in June at least provides a strong …
28th August 2020
Rebound may have run its course The increase in the EC’s Economic Sentiment Indicator (ESI) for August was smaller than in the previous two months and left it well below its February level, while the index for Spain actually fell. The euro-zone’s economic …
Economic recovery already starting to fizzle out The small fall in the UK Economic Sentiment Indicator (ESI) in August suggests that the economic recovery might already be starting to fizzle out. What’s more, rising unemployment is likely to further …
Sentiment improves further in Q3 The further increase in the EC’s Economic Sentiment Indicators for August echoes the message from other surveys and high-frequency data that the recovery gained pace in Q3. But sentiment remains far below pre-crisis levels …
Recovery losing pace The rise in Sweden’s Economic Tendency Indicator (ETI) in August was smaller than in the previous two months and suggests that although the recovery there continued in Q3, it may already be slowing. Meanwhile, the sharp rise in retail …
27th August 2020
Swiss economy on track for a comparatively modest drop in GDP this year Data released this morning show that the Swiss economy weathered the crisis comparatively well in the first half of the year. While its fortunes are closely tied to those in the …
Capital expenditure holding up rather well Both machinery and equipment investment as well as construction investment fell less than we had anticipated in Q2 which suggests that the contraction in GDP wasn’t as deep as we thought . The 5.9% q/q drop in …
Hurricane Laura to weigh heavily on crude stocks next week US crude stocks dropped again last week owing primarily to a collapse in net imports. Stocks should decline next week too since Hurricane Laura has forced most production in the Gulf of Mexico …
26th August 2020
Pandemic hit to core orders almost entirely reversed The sharp rise in durable goods orders last month was flattered by a surge in transport orders, but core orders are nevertheless almost back to the pre-pandemic level, suggesting that the recovery in …
Higher inflation won’t prevent additional easing South African inflation will probably hover near July’s reading, of 3.2% y/y, in the coming months and, as the economic recovery wavers, we think that more monetary easing lies in store. Figures released …
Imports to remain weak for some time yet Despite a bounce-back in India’s imports of gold last month, China’s imports remained in the doldrums. Gold imports by both countries should rise in the months ahead, but a full recovery still appears to be a long …
25th August 2020
Housing market recovery gathers pace New home sales surged to a 13½-year high in July, as record low mortgage rates, pent-up demand from the spring and a shortage of existing homes for sale all boosted activity. Tight markets and rising demand have also …
