Manufacturing recovery likely to lag Following the 10.7% m/m rise in May, manufacturing sales are set to record further strong gains in the next few months. But given the likelihood that demand will remain weak, we doubt they will return to their …
15th July 2020
Sharp drop in inflation to herald in further rate cuts South African inflation plunged to 2.1% y/y in May, which probably takes it near the trough. But even as price pressures start to pick up, the headline rate will remain very subdued, allowing the …
Inflation eases, but VAT hike will cause it to jump this month Saudi inflation eased to its lowest level this year in June as weak demand dampened underlying price pressures and fuel inflation dropped further. But this is likely to mark the low-point and …
A dip into deflation lies ahead The small rise in CPI inflation from +0.5% in May to +0.6% in June probably won’t be sustained for long as the effects of the Chancellor’s VAT cut for the hospitality/tourism sectors and the “Eat Out to Help Out” restaurant …
Initial disinflationary hit starting to reverse The rebound in consumer prices last month confirms that the disinflationary impact of the lockdowns in March and April is now going into reverse, but inflation is likely to remain muted over the coming …
14th July 2020
Industrial recovery lagging retail sales The double-digit increase in industrial production in May was a little short of expectations. Output should increase further in June but will remain significantly below pre-crisis levels throughout this year. This …
Tighter lending conditions to come, but no repeat of 2008 credit crunch The ECB’s latest Bank Lending Survey suggests that bank lending conditions will tighten in Q3, but by nowhere near as much as during the global financial crisis. This should mean that …
Inflation set to stay stubbornly low The pick-up in Swedish inflation in June was a bit larger than expected but it was driven mainly by energy effects and is not a game changer. And while core inflation also edged up from May, against a backdrop of …
Not so “V” after all The 1.8% m/m rise in GDP in May is a disappointing first step on the road to recovery and suggests that hopes of a rapid rebound from the lockdown are wide of the mark. Indeed, the path to full economic recovery will probably be much …
WPI inflation rebounds but remains low The wholesale price index is not the preferred measure of inflation for policymakers, but the broad-based rebound in the headline rate challenges our view that price pressures will ease this year. Nevertheless, given …
Surge in imports signals strong domestic recovery Inbound shipments jumped the most in m/m terms in years, adding to evidence that domestic demand was strong at the end of Q2. Exports also strengthened as slower shipments of products related to COVID-19 …
Sharp contraction, fiscal spending to support recovery Singapore’s economy contracted by the most on record in Q2, but with many restrictions to economic activity now lifted and strong government support, output is set to rebound over the second half of …
India’s inflation receding after surge during lockdown Inflation in India appears to be easing after an initial surge when the lockdown first came into effect. We expect headline inflation to continue falling towards the RBI’s 4% target, which should …
13th July 2020
Economy starts to recover Turkish activity data for May show that industrial production and retail sales recovered from their low point in April but it still looks like Turkey suffered one of the largest contractions in Q2 across major EMs. The economic …
Tentative signs of further recovery Korean trade data for the first ten days of this month suggest that the recovery in external demand gained a little momentum at the start of July. This should carry on over the coming months, albeit slowly. The timely …
Commercial property lending weaker again as transactions slow markedly Total debt secured against real estate nudged lower again in June. More timely weekly data point to signs that residential lending has already begun to grow again as housing demand has …
10th July 2020
A positive result but a long road ahead The 950,000 rise in employment in June supports our view that the majority of the pandemic-related job losses will be regained by the end of the summer. That said, while we expect the unemployment rate to be below …
Industrial collapse continues The further fall in Mexico’s industrial production in May reinforces our view that GDP suffered a double-digit slump in Q2 (in q/q terms), and suggests that the recovery is lagging those in the rest of the world. After a …
Acceleration in credit growth has further to run Broad credit growth hit a two-year high in June and the recent uptick in interest rates is unlikely to prevent a further acceleration in the coming months. Chinese banks extended RMB1,810bn in net new local …
Krone-driven boost to inflation to peak in H2 Previous falls in the krone will ensure that inflation stays above the Norges Bank’s target throughout H2. Nonetheless, this effect will fade in early-2021 and policymakers will be in no rush to raise interest …
Rising inflation shouldn’t worry Banxico The further rise in Mexican inflation to 3.3% y/y in June, from 2.8% y/y in May, was largely driven by higher fuel prices. We think this trend has a bit further to run, although it is unlikely to deter the central …
9th July 2020
Inflation rise unlikely to prevent CBE resuming easing cycle later this year Egypt’s headline inflation rate picked up to 5.6% y/y in June and will probably rise a bit further over the coming months. Crucially, though, we expect inflation to remain below …
Activity rebounds in June The latest RICS survey suggest activity is increasing at its fastest rate since 2013, though these results should still be read with caution as the UK moves out of lockdown. Nonetheless, market sentiment is clearly recovering …
Factory-gate deflation starts to ease Producer prices rose last month for the first time since the outbreak of COVID-19, adding to evidence that industrial demand had mostly recovered by the end of Q2. Core inflation fell to its weakest in a decade but …
Business investment to fall sharply despite slight rise in orders The slight rise in machinery orders in May suggests that non-residential investment may have slumped a little less than we were anticipating in Q2. However, with business sentiment …
Rising inflation should not prevent further easing Russian inflation rose to 3.2% y/y in June and we think that it will rise a bit further over the coming months. But this increase should prove temporary and inflation is likely to remain below the central …
8th July 2020
High import volumes unlikely to be sustained An unexpected surge in net imports pushed up US commercial crude stocks this week. But we think imports will fall back soon given the sharp drop in oil production outside the US in recent months . The EIA’s …
House prices broadly flat in June According to the Halifax index, house prices were broadly stable in June. Looking ahead, with the furlough scheme due to end soon and lenders increasingly risk averse, further house price falls are likely. But there are …
7th July 2020
Industry rebounding much more slowly than retail May’s increase in German industrial production left it still well below pre-crisis levels. But with retail sales rising more rapidly, overall economic activity is picking up a little more quickly than we …
Wage growth to weaken further even as household incomes rebound Wage growth weakened further in May, but we think household incomes are recovering as furloughed workers either return to work or receive their mandatory leave allowance. According to today’s …
More recent surveys show signs of improvement The Bank of Canada’s second-quarter business and consumer surveys were downbeat, but more recent surveys suggest that both business and consumer confidence is starting to improve. The Business Outlook Survey …
6th July 2020
Region set for a bumpy recovery June’s batch of whole economy PMIs from across the Middle East and North Africa were mixed but the big picture is that, even as lockdown measures are eased, the region’s economic recovery is set to be extremely sluggish. …
Economy rebounding but worse to come for the labour market While the PMIs are tricky to interpret at the moment, the recovery in the all-sector PMI from a trough of 13.4 in April to just shy of 50 in June is another sign that there has been a strong …
Consumption recovering, industry taking longer to find its feet Euro-zone retail sales rebounded sharply in May, but spending will still have collapsed in Q2 as other types of spending remained weak. Meanwhile, industrial production is recovering more …
Construction rebound outstrips expectations June’s PMI construction jumped back above 50 for the first time in four months, confirming that activity is starting to return to normal. The improvement was driven by both commercial and residential sectors and …
Activity increasing but job prospects look grim The sharp increases in the euro-zone PMIs in June suggest that activity is bouncing back quite quickly, but remains far lower than before the crisis. The PMIs also point to continued declines in employment. …
3rd July 2020
Inflation jump reinforces idea that easing cycle is over The jump in Turkish inflation in June, to 12.6% y/y, as well as last week’s surprise decision by the central bank to leave interest rates unchanged, reinforces our view that the easing cycle is …
Economic recovery underway but set to remain lacklustre The rebound in June’s services and composite PMIs suggests the economy is now on the long road to normality. But the recovery will be slow and fitful . India’s services PMI rose from 12.6 in May to …
Consumption to surge in Q3 Retail sales rose above pre-virus levels in May and probably kept rising in June. As such, a sharp rebound in consumption in Q3 following Q2’s slump is all but guaranteed. However, services spending will probably fare worse and …
Partial rebound still leaves exports down 30% on pre-pandemic level The merchandise trade deficit unexpectedly narrowed to $0.7bn in May, from $4.3bn, as exports were boosted by the reopening of motor vehicle production plants and the rebound in crude oil …
2nd July 2020
Job gains to slow significantly from here The 4.8 million increase in non-farm payrolls in June provides further confirmation that the initial economic rebound has been far faster than we and most others anticipated. But that still leaves employment 14.7 …
Recovery weak in May, but strengthened in June Brazil’s industrial sector only recovered a small share of its coronavirus-related losses in May, with continued weakness the auto sector one key factor. While surveys suggest that the data for June will be a …
Bigger rises in unemployment lie ahead The trivial rise in unemployment in the euro-zone reflects the success of short-time working schemes in protecting jobs but also an increase in “inactivity” as people have been unable to look for work. As these …
Switzerland set for a prolonged period of deflation The lack of price pressures in Switzerland is nothing new, but will ensure that the SNB remains poised to combat bouts of upward pressure on the franc for the foreseeable future. The headline inflation …
Trade may have been a drag on growth in Q2 The trade balance was broadly stable in May but given significant price effects, trade may have been another drag on GDP growth in Q2. The small rise in the trade balance from $7830mn in April to $8025mn in May …
US commercial crude stocks likely to fall further A fall in imports and another increase in refinery throughput meant that US commercial crude stocks plunged last week. We expect crude stocks to drop over the coming months as imports decline . The EIA’s …
1st July 2020
Factories quick to ramp up production as lockdowns ease The jump in the ISM manufacturing index to 52.6 in June, from 43.1, adds to the evidence that factory sector activity has recovered fairly quickly as the initial wave of lockdown measures has been …
Home purchase demand flattens out as country reopens Mortgage applications for home purchase dropped back over the last two weeks of June, even as mortgage rates fell to record lows. The pent-up demand from the spring buying season now looks to have …
Swiss manufacturing struggling to shake off crisis The manufacturing PMIs from June add to the evidence that activity in Sweden and Norway has recovered comparatively quickly, but suggest that Swiss manufacturing is taking longer to find its feet. The …
Manufacturing sector on the mend South Africa’s manufacturing PMI reading offered mixed messages once again in June, but the business activity component suggests that activity in the sector continued to recover from April’s standstill. Figures released …
