Massive slump to be followed by weak recovery The 17.3% q/q slump in Mexico’s GDP in Q2 is likely to be one of the largest peak-to-trough falls in the emerging world. With the country still battling with its coronavirus outbreak, and the US recovery …
30th July 2020
Further signs the recovery continued in July The jump in the UK Economic Sentiment Indicator (ESI) in July is an encouraging sign that the recovery continued at a decent pace at the start of Q3. Even so, rising unemployment is likely to put a brake on the …
Further recovery but outlook very uncertain The further increase in the EC’s Economic Sentiment Indicator for July echoes the message from other surveys that the recovery continued at the start of Q3. But it tells us little about how far activity remains …
The outlook for property deteriorates further The RICS survey confirmed demand for property declined again in Q2 and the outlook for rents and capital values worsened across all sectors. While surveyors were most pessimistic about retail and offices, …
Sentiment improves further, but services lag behind The further rise in the Economic Sentiment Indicators in July adds to the evidence that the economies of Central and Eastern Europe are steadily recovering from the sharp downturn in Q2. That said, …
Huge fall, but activity has already rebounded The double-digit fall in quarterly GDP confirms that the coronavirus crisis delivered a huge blow to the Germany economy. Monthly and high frequency data show that activity bounced back since April, so Q3 …
Barometer suggests recovery continued at start of Q3 While the flare-up in cases in Europe is a key downside risk, the sharp increase in the KOF Economic Barometer in July suggests that the Swiss economy continued to bounce back at the start of Q3. The …
Consumer spending should continue to recover The surge in retail sales in June suggests that consumer spending will rebound across Q3 even if some restrictions on activity are reimposed to curb the renewed spread of the virus. The 13.1% m/m rise in retail …
Product demand on the road to recovery A drop in net imports, combined with rising refinery throughput led to a huge fall in crude stocks last week. Although unlikely to be of the same magnitude, we suspect that stocks will continue to decline in the …
29th July 2020
Easing in the rush for cash The signs that firms did not rush quite as fast to take on more debt in June and that households started to borrow again rather than pay down debt suggest that the economy is moving back towards normal. But as the road to …
Renewed virus outbreak to delay city’s recovery Hong Kong’s economy stabilised last quarter as fiscal stimulus and stronger demand in mainland China offset weaker consumption and investment. But with the city facing its worst COVID-19 outbreak yet, hopes …
Slowing net lending likely to turn negative in H2 As expected, net lending to property eased in June from the sharp rise in May. As the recovery in transaction activity is likely to be slow, we expect demand for new lending to be weak for the rest of the …
Lending recovery off to a strong start House purchase mortgage approvals saw a strong initial recovery in June. Lending is likely to strengthen further this year, as the stamp duty cut supports demand and lenders bring back higher LTV loans. All this …
Inflation edges up but rate cuts still likely South African inflation edged up to 2.2% y/y in June and, while it will rise further over the coming months, it is likely to stay close to the lower bound of the central bank’s (SARB’s) target range. The SARB …
Recovery continues apace The rise in Sweden’s Economic Tendency Indicator (ETI) in July suggests the recovery there continued to gather pace at the start of Q3. That said, the rise in consumption appears to be slowing, and the external sector would suffer …
Inflation will return in Q3 but will be weak for years The deflation experienced in Q2 is not likely to be a lasting feature of the Australian economic landscape. But we think underlying inflation is likely to remain depressed for years to come. The 1.9% …
House price growth slowdown begins House prices rose by just 0.1% m/m in May on the Case-Shiller index, which together with a slowdown on the FHFA index indicates that the collapse in sales caused by the coronavirus is now weighing on prices. The rapid …
28th July 2020
Returns fall sharply in Q2, with more pain expected in H2 As expected, all-property total returns turned negative in Q2, led lower by sharp markdowns in the retail and hotel sectors. And, while rental values and capital values fell in all sectors last …
27th July 2020
Investment continuing to rebound Another solid rise in durable goods orders in June left core orders just 3.7% below February levels, underlining how the hit to business investment during the pandemic has been relatively mild . Surveys suggest that …
Further encouraging signs from German business The message from the Ifo Business Climate Index chimes with that from the PMIs published last week and suggests that the rebound in the German economy continued at a steady pace in July. The increase in the …
New home sales reverse all their COVID-related drop New home sales have now more than reversed the drop seen earlier in the year, reaching a 13-year high in June. The sales outlook is positive - new home buyer traffic has returned to 22-year highs, and …
24th July 2020
Weak inflation leaves door open to another rate cut The softer-than-expected Brazilian mid-month inflation reading for July, of 2.1% y/y, suggests that there is still scope for another interest rate cut in the current cycle. We expect a 25bp reduction in …
Encouraging, but economy still well below pre-crisis levels The surge in the composite PMI to 57.1 in July is an encouraging sign of further recovery, but it is not an indication that GDP has recovered to its pre-virus level. We don’t expect that to …
Strong rebound might not be sustained The sharp rise in the euro-zone Composite PMI in July is an encouraging sign that the economic recovery continued at a decent pace at the start of Q3. But we suspect that activity will remain below pre-crisis levels …
Retail spending back to pre-pandemic levels Retail sales rose back to pre-pandemic levels in June. But since the sector has benefitted disproportionately from online spending and a switch away from other types of spending, this overstates the extent of …
China’s bounce-back won’t be replicated elsewhere The contraction in global steel production eased for the second month in a row in June, offering further evidence that the worst of the downturn is now behind us. But global steel production will take much …
23rd July 2020
Recovery in consumption losing momentum The small fall in euro-zone consumer confidence in July is consistent with the message from high frequency data that the recovery in spending may already be slowing. The slight decline in the European Commission’s …
Rising inflation unlikely to stop further Banxico easing We don’t think that the further rise in Mexican inflation to 3.6% y/y in the first half of July will be a major cause for concern for the central bank. Policymakers are likely to focus on the …
Korean GDP shrank sharply in Q2 on the back of the largest drop in exports since 1963, but output probably bottomed out in the middle of the quarter. The recovery, which is already underway, is set to be slow going as the external environment only …
US production unlikely to rise much further An increase in crude oil production and a reduction in refinery throughput led to an increase in crude stocks last week. However, we think that stocks will fall back in the coming weeks as product demand picks …
22nd July 2020
Home sales bounce back, but recovery will be slower from here The reopening of the economy and pent-up demand from the spring helped existing home sales bounce back in June. However, with a second wave of infections leading to renewed shutdowns and …
Core inflation likely to edge down in July following unexpected rise The re-opening of the economy and the rise in Hydro prices in Ontario caused inflation to increase by more than expected in June. An average of the three core inflation measures ticked …
Recovery set to be slow going Both the manufacturing and the services PMI only improved a little bit in July which suggests that the recovery from the pandemic will be more protracted than elsewhere. The flash estimate of the manufacturing PMI edged up …
Sales appear to have surpassed pre-virus levels in June The 18.7% m/m rebound in retail sales in May still left them 20% below the pre-virus level, but Stats Can also said today that its preliminary data point to a further 24.5% m/m rise in June. While …
21st July 2020
V-shaped recovery after all? The rebound in Polish industrial production and retail sales in June suggests that the contraction in GDP in Q2 may be in the order of 4% y/y, much smaller than the 8-9% y/y we had expected. Activity in other parts of the …
Cash outflow starts to ease The smaller rise in public sector borrowing in June compared to May suggests that government support is starting to wind down as the economy reopens. However, government borrowing is still exceptionally high and we suspect that …
More signs of recovery Korean trade data for the first 20 days of July suggest that the recovery in exports has continued this month. But the initial rebound has still been weak and the recovery in external demand in the quarters ahead is also likely to …
Underlying inflation to weaken much further While headline inflation was unchanged for the third-straight month in June, we expect it to fall much further over the medium-term. We think inflation will turn consistently negative in the second half of the …
House prices to remain resilient House prices have continued to edge up in recent months despite the lockdown and, as the economy recovers, we think they will remain resilient over the rest of the year. The 0.7% m/m increase in the Teranet House Price …
20th July 2020
Downside risks to output growing, but market to remain oversupplied Global aluminium output growth slowed slightly in June. However, given the colossal hit to demand seen in the first half of the year, we still expect the market to be hugely oversupplied …
Trade to rebound soon Export volumes were little changed in June but they should rebound soon as many of Japan’s trading partners are on the mend. By contrast, import volumes never fell much despite the slump in domestic demand and we think they will …
Housing starts surge on back of strong new home demand Housing starts bounced-back in June, and are now down only 4% y/y. A surge in housing demand to 10-year highs, and a lack of existing home inventory, has boosted new home sales and reversed all the …
17th July 2020
Spending almost back to pre-pandemic level The better-than-expected 7.5% m/m increase in retail sales in June suggests that the resurgence in coronavirus infections in the South and the West hadn’t yet had an impact on consumers. Admittedly, the high …
16th July 2020
Credit crunch for mortgage lending Mortgage credit availability collapsed in Q2, while commercial loan conditions improved on the back of government loan guarantees. Looking ahead, lenders expect both commercial and residential property lending to fall, …
Reassuring despite largest fall in employment since 2011 The smaller-than-expected fall in employment in May and evidence that the first wave of joblessness in the coronavirus crisis ended in June shows that the furlough scheme has been effective in …
Strong end to Q2 pushes GDP above pre-virus levels After a sharp contraction in Q1, the economy bounced back strongly in Q2, with the level of GDP reaching a new high. What’s more, the monthly activity and spending figures show that growth was still …
Unemployment rate close to its peak The labour force rose faster than employment in June, pushing up the unemployment rate. However, we think that employment will soon pull ahead so unemployment probably won’t rise any further . The 218,000 rise in …
Inflation to fall below RBNZ’s target this year The plunge in headline inflation to 1.5% in Q2 is just the start of the weakness in inflation which is why we expect the RBNZ to launch negative rates early next year. Prices in Q2 fell by 0.5% q/q , in line …
Localised lockdowns will keep a lid on gasoline demand in coming weeks Crude stocks in commercial storage fell last week, though this was primarily a result of the collapse in net imports. Gasoline demand actually slipped back as some states moved to …
15th July 2020
Production catching up with stronger demand The 5.4% rise in industrial production last month was driven by an even stronger 7.2% gain in manufacturing output as producers, particularly in the auto sector, reopened factories to catch up with the …
