Manufacturing sectors rebound strongly at the end of Q2 The rise in the manufacturing PMIs in June provide further signs that economic output recovered strongly at the end of Q2 as lockdown measures were lifted. While we would caution that the PMIs may …
1st July 2020
House prices fall sharply again in June House prices saw another steep fall in June, but low transactions volumes cast doubt on the accuracy of the figures. Looking ahead, there are signs of a recovery in demand, but lenders remain cautious. We think …
Activity picking up but recovery will be protracted Despite remaining below 50, the rise in June’s manufacturing PMI reading suggests to us that activity has picked up further as containment measures have been scaled back. However, the lasting damage …
Highest reading in 2020 signals robust recovery The Caixin manufacturing PMI suggests that the pace of the recovery increased in June, echoing the official survey which was released yesterday. This supports our view that GDP growth likely turned positive …
Exports bottom out, slow recovery ahead Korean export values nudged up very slightly in June, after collapsing in April and May, but while external demand is probably now past the worst, it is only likely to recover slowly in the coming months. Korean …
House prices to continue their decent in the coming months The further decline in house prices in June is likely to continue in the coming months even as economic activity recovers. We expect house prices to fall by 5-10% over the coming year. House …
Manufacturing sector rebounding, but slow recovery ahead The PMIs point to an improvement in manufacturing conditions last month, although many readings are still low and suggest that overall manufacturers continue to struggle. PMIs for June were released …
Business investment to hold up well While business conditions collapsed in the Q2 Tankan, with economic activity now recovering that probably marks the trough. And surprisingly resilient investment forecasts for the upcoming fiscal year suggest weak …
House price growth accelerates, but slow down on the way The further acceleration in annual house price growth on the Case-Shiller measure in April reflected the strength of the housing market at the start of the year, when the impact of the coronavirus …
30th June 2020
Record plunge to be followed by partial rebound in May GDP fell by a record 11.6% m/m in April, but the drop was better than the 15% we assumed and means we have upgraded our estimate of second-quarter GDP to a still-weak 40% annualised contraction. The …
Industrial recovery will be slow and protracted The contraction in India’s core infrastructure industries index eased a little in May, suggesting that the slump in industry has bottomed out. But activity is still very weak and, given the damage that has …
Signs of severe economic hit emerging The fall in South Africa’s GDP in Q1 provides an early sign of the massive economic hit from the country’s severe lockdown measures and supports our view that further interest rate cuts lie in store. As measured by …
Inflation to remain far below target The increase in euro-zone headline inflation in June was entirely due to higher energy inflation, while the core rate edged down and looks likely to fall further over the rest of the year. Headline inflation rose …
Barometer underwhelms but retail sales bounce back The underwhelming increase in the KOF Economic Barometer in June is at odds with the chunky rise in the euro-zone PMIs. Nonetheless, the surge in Swiss retail sales in May shows that the economy has …
Drop in Q1 GDP a taste of things to come The 2.2% q/q drop in GDP in Q1 2020 was the joint largest fall since 1979 and sets the stage for an unprecedented 15-20% fall in Q2, despite evidence that the economy rebounded in May and June. The National …
Activity ends Q2 on a strong note The latest survey data suggest that economic growth accelerated in June thanks to a faster recovery in manufacturing and services, alongside continued strength in construction activity. The recovery should remain robust …
Household incomes will continue to rebound The sharp drop in the number of furloughed workers in May supports our view that household incomes will rebound in the second half of the year. And while industrial production plunged again in May, it should also …
SMEs don’t hesitate to take advantage of bounce back loans The Bounce Back Loan Scheme (BBLS) restored access to credit for small and medium-sized enterprises (SMEs) in May. That increases the chances of a swift recovery but will also raise the fiscal …
29th June 2020
Confidence rebounds but still weak The increase in the EC’s Economic Sentiment Indicator for June was the largest one-month rise on record. However, it was not as big as expected and leaves the index consistent with activity remaining well below its …
Output recovering but employment intentions wavering The rise in the UK Economic Sentiment Indicator (ESI) in June suggests that the economy is continuing to recover after its nadir in April. But firms and households are becoming more downbeat on the …
Surprise fall in mortgage approvals Despite the housing market reopening half-way through May, house purchase mortgage approvals once again fell sharply. But signs of a bounce back in buyer demand in June, combined with resilient mortgage availability …
Lending likely to turn negative in the coming months The notable rise in net lending in May was probably due to lenders allowing for payment holidays rather than an increase in new loans to investors. But, these measures can only continue in the …
Sentiment picks up further in June The broad-based rise in June’s Economic Sentiment Indicators provide further signs that the economies of Central and Eastern Europe started to get back on their feet at the end of Q2. That said, the rebound in sentiment …
Economy to outperform after strong Q2 performance Vietnam’s economy slowed sharply in the second quarter, but the numbers were stronger than expected, and put the economy on course to be one of the few countries in the world to grow this year. The fact …
Rebound in consumption will continue to disappoint The subdued rise in retail sales in May suggests that the lifting of the state of emergency didn’t provide a big boost to consumption and we reiterate our forecast of a 9% q/q plunge in Q2 GDP . And the …
Recovery in physical gold demand to take some time Imports of gold into China and India in May were little changed from the previous month and continue to paint a grim picture for physical demand in the world’s top gold importing nations . We expect …
25th June 2020
Investment rebounds, but exports and inventories continue to fall Consumption and investment rebounded strongly in May, as the lockdowns were eased, but the recovery in production has lagged behind, as manufacturing plants gradually reopened through the …
Below-target inflation leaves room for another rate cut Brazil’s broadly steady mid-month inflation reading for June, of 1.9% y/y, masked the fact that a rise in food inflation offset falls in inflation in most other price categories. Weak price pressures …
US commercial crude stocks will soon fall US commercial crude stocks rose again last week as some production came back online after being hit by Tropical Storm Cristobal. Nevertheless, we expect that stocks are nearing their peak as refinery activity …
24th June 2020
Slower house price growth but no slump on the horizon Following a gain of 0.1% m/m in March, the modest 0.2% m/m rise house prices in April shows a marked weakening in house price growth. It is too soon to tell how much of an impact the coronavirus has …
Rising inflation doesn’t preclude further rate cuts The rise in Mexican headline inflation to 3.2% y/y in the middle of June will keep policymakers in a cautious mood – something that’s likely to be reflected in the tone of the statement from tomorrow’s …
Downturn shorter than feared but will still cast a long shadow The Ifo for June echoes the message from the PMIs published yesterday that the rebound in Germany has been a little faster, and the slump in GDP probably smaller, than we had anticipated. …
Inflation eases, but will jump in July on back of VAT hike Saudi inflation edged down to 1.1% y/y last month as a further jump in food inflation was more than offset by weaker price pressures in other major categories. But the hike in the VAT rate means …
Plummeting inflation keeps door open to more easing The plunge in South African inflation to just 3.0% y/y in April is likely to be followed by further declines, allowing the central bank to cut interest rates further. We expect another 75bp of cuts in …
New home sales benefit from reopening New home sales reversed most of their coronavirus related decline in May, helped by the gradual reopening of the country. A healthy level of inventory means new sales are well-placed to take advantage of the recent …
23rd June 2020
Activity on the climb but still well below normal The nature of the PMIs makes them tricky to interpret at the moment, but the rise in the composite PMI from 30.0 in May to 47.6 in June (consensus 41.0) suggests that the additional easing in the lockdown …
Rapid recovery but still below pre-virus levels The rise in the euro-zone flash Composite PMI in June confirms that economic output in the region is continuing to recover rapidly from April’s nadir as restrictions are progressively eased. But economic …
Services sector set to recover further While the manufacturing PMI weakened a little further in June, the rebound in the services PMI has further to run as virus-related restrictions are eased . As usual, the surveys were conducted since the middle of …
Past the worst, but output still likely to contract this year In a pattern that has become all too familiar, steel output grew in May in China but fell sharply elsewhere. We expect steel output both in and outside China to pick up in the months ahead, but …
22nd June 2020
Existing home sales bottom-out Existing home sales saw another substantial decline in May but with the country reopening, and housing demand surging on the back of record low mortgage interest rates, we suspect they have now bottomed out. That said, …
More evidence of a rebound in consumption Consumer confidence in the euro-zone increased for the second consecutive month in June, adding to the evidence that household consumption rebounded sharply after the lockdowns were eased. The rise in the EC …
Stronger than expected Chinese recovery to keep market well-supplied Global aluminium output growth picked up a little pace in May. With demand in China now increasing quicker than we had previously expected, it is likely that Chinese aluminium output …
Activity bounces back strongly Polish activity data for May show that activity in the retail sector bounced back more quickly than in the industrial sector as lockdown measures were lifted. Even so, the figures support our relatively optimistic view that …
More signs of recovery Korean trade data for the first 20 days of June suggest that the slump in exports is probably past the worst. But the recovery in external demand in the quarters ahead is likely to be a protracted one. The timely nature of the …
Sales rebounded strongly from May Retail sales fell by far more than expected in April and suggest that the plunge in GDP was in the region of 15% m/m. More encouragingly, Stats Can also said today that sales bounced back strongly in May. The 26% m/m drop …
19th June 2020
Online sales and DIY stores drive the recovery The bigger-than-expected rebound in retail sales in May, was driven by another big step up in online sales and the reopening of DIY stores, and is a sign that the economy started to get back to its feet. But …
Borrowing peaked but will remain high for years The double whammy of the precipitous fall in economic activity and the government’s measures to combat the crisis has already pushed the debt to GDP ratio above 100% for the first time in over 50 years. …
Underlying inflation will be negative across H2 Headline inflation was unchanged last month but the slow recovery in demand over the coming months should cause excess capacity to rise further. As such, we expect inflation to turn consistently negative in …
Unemployment rate should start to fall soon Employment fell further in May but with the economy opening up again it should start to rebound in June. As such, the unemployment rate probably won’t rise any further . The 227,700 plunge in employment in May …
18th June 2020
Growth was subdued even before the virus outbreak Just one week of New Zealand’s strict lockdown to curb the spread of Covid-19, fell in the first quarter. We therefore expect the hit to GDP to be concentrated in Q2 when the bulk of the lockdown occurred. …
