Copom unlikely to ease further despite weak inflation The further rise in Brazilian inflation, to 2.3% y/y in the first half August, was relatively modest and we expect the headline rate to remain well below the central bank’s 2020 target of 4% over the …
25th August 2020
Strong rebound in Q3 is already slowing The second estimate of Q2 German GDP confirms that all elements of domestic demand except government spending fell sharply. A big rebound in Q3 is already baked in the cake, but survey evidence, including from the …
Norway outperformed light-touch Sweden in H1, despite locking down While Sweden’s light-touch response to Covid has hogged the headlines, data released this morning show that the Norwegian economy outperformed its Nordic cousin in the first half of the …
Boom in Chinese production to continue The contraction in global steel production continued to ease in July. This improvement remains led by a surge in Chinese production resulting from a state-sponsored rise in infrastructure spending, which is set to be …
24th August 2020
Banxico set to slow pace of easing The rise in Mexican inflation to 4.0% in the first half of August, the upper end of Banxico’s target range, will probably prompt the central bank to slow the pace of its easing cycle. But with inflation set to drop back …
Plunge in output in Q2 to be followed by weak recovery Nigeria’s GDP nose-dived in Q2 and we think the recovery will be held back by continuing oil production cuts, losses in employment and income and limited fiscal stimulus. National accounts figures …
Existing home sales surge to 13½-year high Existing home sales had another strong month in July, surging to a 13½-year high. Pent-up demand from the spring, record low mortgage rates and some impact from households moving to the suburbs has helped drive …
21st August 2020
Rebound already fading With the number of confirmed virus cases rising and employment support schemes being run down, it comes as no surprise that the EC’s measure of consumer confidence levelled off in August. That is consistent with other evidence that …
Sales surpassed pre-virus level The rise in retail sales in June, to above their pre-virus level, reflects higher spending on goods at the expense of lower spending on services. Nevertheless, with the government further boosting income support for …
Further signs recovery continued at a strong pace in August The sharp rise in the composite IHS Markit/CIPS Flash PMI in August provided further evidence that the recovery continued at a strong pace in Q3. Even so, we expect rising unemployment to put a …
Recovery petering out The fall back in the euro-zone Composite PMI in August suggests that the initial V-shaped rebound following the lifting of the lockdowns is already fizzling out. We suspect that activity will remain below pre-crisis levels for at …
Activity recovering quickly to pre-pandemic levels July’s batch of Polish activity data provides further evidence that industrial production and retail sales have rebounded quickly towards pre-virus levels. The rise in localised virus cases does not yet …
Rise in debt ratio beyond 100% unlikely to panic the Chancellor July saw the fourth biggest monthly deficit in history behind only the first three months of this fiscal year. A massive increase in debt to over £2 trillion for the first time ever and above …
Retail spending rises above pre-pandemic levels Retail sales rose above their pre-pandemic levels in July as non-essential shops were allowed to open for the whole month. But the sector has benefited disproportionately from online spending and a switch …
Economy to pick up again over the coming months The stagnation in Japan’s composite PMI in August is consistent with our view that the second virus wave has brought the recovery to a standstill but won’t cause a renewed downturn . According to today’s …
Gradual recovery continues While exports dropped back a little in the first 20 days of August, we suspect this was mainly due to the impact of widespread flooding at the start of the month. Looking at the data more recently, they suggest a continued …
Underlying inflation to turn negative Inflation excluding fresh food and energy was just over zero in July and we think it won’t be long before it turns negative. We expect sluggish demand to overwhelm the impact of social distancing measures. The pick-up …
Economy gaining momentum at the start of Q3 The batch of Russian activity data for July suggest that the economy gained a bit of momentum at the start of Q3 following the 8.5% y/y fall in GDP in Q2 as retail sales continued to rebound. But the overall …
20th August 2020
Modest house price decline likely to be reversed soon House prices fell in seasonally-adjusted terms in July, but the surge in home sales to a record high last month suggests this move will soon be reversed and house prices will resume their march higher. …
Robust supply to continue to weigh on the aluminium price The continued increase in production in July helps to explain why the price of aluminium has been a relative underperformer so far this year. And with yet more additions to China’s smelting …
Moderating product demand unlikely to derail future stock drawdowns US crude stocks declined for the fourth week in a row, although by less than the market expected. We expect that total crude stocks will continue to head towards their five-year average …
19th August 2020
Travel-related items weigh on inflation Improved data collection following disruption related to Covid-19 contributed to declines in inflation for travel-related items in July, which weighed on both headline and core inflation. This effect is likely to be …
Jump in core inflation a one-off July’s jump in euro-zone core inflation was entirely due to delayed summer sales, so it should reverse in August now that those sales have begun. Meanwhile, social distancing rules appear to have had a limited effect on …
Inflation still set to fall close to zero, despite July jump The sharp rise in CPI inflation from +0.6% to +1.0% came as a bit of a surprise, but it is unlikely to mark the start of an upward trend. CPI inflation still looks on track to fall to within a …
Net trade to boost growth in Q3 The July trade data are consistent with our view that net exports will provide a large boost to Q3 GDP growth. However, the fall in machinery orders to a seven-year low bodes ill for business investment The 19.2% annual …
Homebuilder confidence hits record high and starts surge Housing starts surged for the second consecutive month in July, and single-family starts are now only 10% below their pre-COVID level. Flight to the suburbs may explain some of the increase in …
18th August 2020
Recovery set to strengthen The 13.2% q/q contraction in Chile’s economy in Q2 appears to have been followed by a only a weak rebound in July but, with policymakers finally starting to get a grip on the coronavirus, the recovery from Q4 should be the …
VAT hike triggers inflation jump Saudi inflation jumped to 6.1% y/y in July on the back of the tripling of the VAT rate from 5% to 15% and we expect it to hover around this level over the next twelve months. This, combined with the suspension of the Cost …
17th August 2020
Massive slump in Q2, tourism to hold up recovery The drop in Thai GDP last quarter was not as huge as some other economies in the region, but Thailand’s dependence on tourism will weigh on the recovery in the quarters ahead and means the economic outlook …
Japan to recover faster than most Despite its less severe restrictions on activity, Japan’s economy was hit just as hard by the virus in Q2 as many other large economies. However, we think GDP will converge to its pre-virus path rather quickly. According …
Loan payment deferrals in worst-hit sectors could be clouding the picture July’s increase in real estate debt was mostly driven by residential loans, but commercial property debt also ticked higher. However, with investment totals weak in Q2, this could …
14th August 2020
Manufacturing boosted by recovery in autos sector Despite the 3.0%m/m rise in industrial production in July, it remained 8.4% below its pre-pandemic February level, illustrating that the industrial recovery is still lagging behind the more impressive …
Slowdown in consumption growth not as bad as it looks The details of the July retail sales report were rather better than the modest 1.2% headline gain let on and suggest that, while the recovery has lost pace, the slowdown has not been as sharp as we had …
Record rise, but remaining lost ground will take longer to make up The manufacturing sector has bounced back faster than most expected, but it is likely that the pace of gains will now slow sharply, and that output will remain below pre-virus levels until …
Recovery underway but at different speeds The preliminary estimate of euro-zone GDP was unchanged in today’s release, but new data showed that the variation between countries was, if anything, larger than previously thought, while there was a record drop …
A mixed bag across the region with Poland the star performer The Q2 GDP data for Central and Eastern Europe confirmed that the region’s industry-heavy economies suffered the largest hit in the crisis, while Poland and Bulgaria managed to escape …
Turkey suffers one of world’s largest slumps in Q2 Turkish industrial production and retail sales continued to rebound strongly in June but even so it looks like the slump in GDP over Q2 as a whole is likely to have been in the region of 20% q/q or so – …
Headline WPI inflation rises but remains low While the rise in headline wholesale price inflation was expected, underlying price pressures appear stickier than we had initially thought. We think these will still ease over the coming months, but the next …
Malaysian economy rebounding strongly after massive slump in Q2 Malaysia’s economy contracted by much more than we had expected in Q2, but monthly GDP data suggest that most of the slump had unwound by the end of the quarter. We think the economy will …
Recovery slows at the start of Q3 The latest data suggest that China’s economy continued to recover in July, though less quickly than expected. But a slowdown in the recovery was always likely at some point as the initial boost from re-opening faded. And …
High core inflation to delay next rate cut The unexpected jump in headline inflation last month was the result of core inflation being higher than we had anticipated. We suspect core inflation will eventually ease back due to the weakness of domestic …
13th August 2020
Further strong pick-up in activity in July The latest RICS survey confirms that housing market activity strengthened further in July. This reinforces other evidence that the recovery may be stronger than expected, but in our view this doesn’t yet signal …
Employment will fall again in coming months The pick-up in employment in July is likely to unwind in the coming months as the stricter lockdown in Victoria weighs on the labour market. The 114,7000 rise in employment in July was much stronger than the …
Lower US output to add further downward pressure to crude stocks US crude stocks declined for their third straight week, although by less than in previous weeks. As demand continues to revive and US production treads water, we expect stocks to fall in the …
12th August 2020
Inflation rebounds as pandemic-related prices recover The 0.6% m/m surge in core consumer prices in July, which pushed the annual core CPI inflation rate back up to 1.6%, from 1.2%, should end any speculation that the pandemic-related slump in demand will …
Recovering but a long way to go The second successive chunky increase in industrial output in June left it a long way below normal. Output will have risen more slowly in July, and we expect it to stay subdued during the next two years. Euro-zone …
Inflation to remain anchored at low levels Swedish headline inflation would have fallen further in July had it not been for temporary effects related to car rental prices. And while core inflation edged up from June, against a backdrop of falling resource …
GDP recovering, but it will feel like a recession for a long time The rises in GDP in May and June mean that in some ways the largest recession on record is already over. But as the full scale of the fallout in unemployment has yet to be felt and as GDP …
Sharp fall in output, weak recovery to follow The smaller-than-expected fall in Russian GDP of 8.5% y/y in Q2 confirms that the downturn in Russia’s economy wasn’t as bad as had been feared as the crisis unfolded earlier this year. The early signs are …
11th August 2020
Industrial rebound taking shape The solid 17.9% m/m rebound in Mexican industrial production in June was largely driven by the reopening of auto factories. While production appears to have strengthened in July, further gains will probably be more muted. …
