Surprise recovery in home purchase demand Mortgage applications for home purchase were down overall in April, but saw a decent recovery over the second half of the month. Record low mortgage rates will have supported demand to some extent, but we also …
6th May 2020
Construction PMI slumps to record low April’s Construction PMI collapsed to a record low of just 8.2. That was driven by the commercial and residential sectors, which both saw record falls in activity. But looking ahead, with signs that housebuilders are …
Survey at a record low, but still not capturing collapse in GDP The collapse in the construction PMI in April confirms that no sector of the economy has been spared from the slump in activity. We already knew that the composite activity PMI, which covers …
It will take a long time for output to return to “normal” Euro-zone retail sales plummeted in March and the PMIs fell to new record lows in April. Output should pick up again now that containment measures are being lifted, but it will remain very low for …
Services faring far worse than manufacturing The extraordinary plunge in the services PMI highlights that services is faring far worse than the manufacturing sector in the current crisis. Looking ahead, the services sector is likely to suffer for longer. …
Consumption to slump in Q2 A large share of the surge in retail sales values in Q1 reflected soaring prices and sales volumes only rose modestly. With spending on many services plummeting, consumption probably fell in Q1. And with the lockdowns starting …
Unemployment rate will surge in Q2 The small rise in the unemployment rate to 4.2% in New Zealand in Q2 largely predates the impact of Covid-19 on the New Zealand economy. We expect the unemployment rate to surge in Q2 as the lockdown weighs on the labour …
Exports and imports set for even bigger falls The widening in the trade deficit to $44.4bn in March, from $39.8bn, came as a further fall in imports was outpaced by a plunge in exports, with both driven by a collapse in international travel and tourism. …
5th May 2020
Trade volumes fell much further in April Business closures from the middle of the month contributed to the sharp falls in trade in March. As many manufacturers remained closed for the whole of April and oil prices fell even further, exports and imports …
Q1 data underplay scale of economic disruption in Sweden The comparatively small fall in Swedish GDP in Q1 appears to owe as much to a strong January and February as Sweden’s lighter-touch lockdown. Accordingly, today’s data underplay the scale of the …
Activity severely weak, slow recoveries to follow as lockdowns eased Whole economy PMIs from across the Middle East and North Africa were at, or close to, record lows in April as efforts to contain the coronavirus outbreak severely dented economic …
Economy to contract in Q2 GDP growth in Indonesia held up better than most in Q1, but we doubt this resilience will last. Indonesia was later than other countries to lockdown its economy, meaning more of the hit will have fallen in the second quarter. We …
Manufacturing sector to wake up only gradually from April standstill The business activity indicator of South Africa’s manufacturing PMI crashed to just 5.1 in April, highlighting the severity of the country’s lockdown. With the lockdown now easing, …
4th May 2020
Epidemiological success, economic pain Hong Kong’s economy contracted by the most on record last quarter as tourism collapsed, trade flows slowed sharply and social distancing weighed on domestic spending. The city’s GDP fell 5.3% q/q in …
Sweden’s light-touch lockdown offers limited solace for industry While Sweden’s less stringent lockdown has received a lot of attention, today’s data add to the evidence that economic activity there has not fared much better than elsewhere in Europe. The …
Activity grinding to a halt April’s manufacturing PMIs for Emerging Europe fell off a cliff and point to industrial production declining at a record pace in Q2. With lockdown measures being lifted in the Czech Republic, activity is likely to bounce back …
Fall in inflation may tempt CBRT to cut rates, but lira risks abound The fall in Turkish inflation in April, coupled with growing evidence of a sharp economic downturn, may tempt the central bank to cut interest rates further. But this would severely test …
Manufacturing PMI plunges to record low The astounding plunge in India’s manufacturing PMI to a record low in April strongly indicates that the nationwide lockdown has caused activity to collapse. Looking ahead, with the shutdown now extended for another …
Industry conditions unlikely to improve much soon The manufacturing PMIs for Asia sank sharply in April and are unlikely to have bottomed out yet in many places. Any recovery in industry thereafter is set to be very slow going. PMIs for April were …
Surveys not capturing full extent of the downturn The drop in the ISM manufacturing index to 41.5 in April, from 49.1, was more modest than we and the consensus expected and leaves it at a level consistent with GDP falling at a 5% annualised pace , …
1st May 2020
Net lending rockets but expected to fall back in coming months The sharp rise in net lending figures in March was probably due to banks permitting payment holidays rather than a significant boost in new loans to investors. Given that these are likely to …
Shutdown and uncertainty hits lending Mortgage approvals for house purchase slumped by a hefty 24% in March. And with the coronavirus likely to have only cut lending in the second half of the month, we expect an even larger fall in April. House purchase …
House prices are somehow still rising April’s rise in annual house price growth won’t last. We suspect it reflects both low transaction volumes and delays to processing mortgage applications. As the economic hit to employment from the pandemic continues, …
Slumping external demand taking its toll Korean export values fell sharply in April and with global demand collapsing, trade is likely to remain very weak. Indeed, we wouldn’t be surprised if the May data worsened further still. Korean trade data provide …
Sharp deterioration in activity and expectations, but worse to come Commercial property agents reported a dramatic deterioration in activity in Q1 and a commensurate fall in expectations for both rents and capital values. But with lockdowns extending deep …
30th April 2020
Industrial activity to remain in the doldrums India’s core infrastructure industries index contracted sharply in March, suggesting that overall industrial output will have fallen by a similar magnitude. The lockdown only began towards the end of the …
Bad Q1 to be followed by Q2 slump The 1.6% q/q drop in Mexico’s GDP in Q1 was slightly better than many had expected, but the outturn in Q2 is likely to be much worse. We expect an 8% fall in GDP over this year as a whole – one of the worst in the …
Economy to recover only slowly from April trough Italy’s economy experienced a bigger contraction than the euro-zone average in Q1. And the closure of non-essential businesses at the end of March means that it is set for a much deeper downturn in Q2. The …
Shocking data boosts case for more ECB support The blizzard of depressing economic data released this morning confirms that the euro-zone economy was in freefall at the end of March, with GDP dropping by a record amount throughout the region. This should …
Conditions expected to deteriorate further The Q1 RICS survey confirms fears for the outlook for property. Yet, while a sharp decline in both occupier and investment market conditions was reported, there was a marked deterioration in responses received …
The calm before the storm The drop in both the number of corporate and individual insolvencies in Q1 is unlikely to be maintained over the next few months as the collapse in revenues and employment caused by the coronavirus pushes many more firms and …
GDP contracts in Q1, much worse to come in Q2 Taiwan’s economy contracted by 1.5% q/q in the first quarter of the year, and things are likely to get much worse before they get better. Despite containing the virus at home, a slump in global growth will …
Barometer underplays scale of economic damage Despite registering its largest monthly fall on record in April, the KOF Economic Barometer appears to underplay the havoc that has been wreaked on the Swiss economy. While the government has begun to ease the …
Historic collapse in activity and worse to come Lockdown measures to contain the coronavirus caused unprecedented quarterly contractions in GDP in France and Spain in Q1. And with the restrictions set to remained unchanged until mid-May and then be lifted …
Household spending evaporating Consumer confidence sank to a record low in April. That lends further credence to the view that a consumption-led plunge in economic activity is underway this quarter. We are forecasting a 12% q/q contraction in GDP in Q2. …
Recovery remains tepid as weak exports hold back manufacturing The latest survey data shows that renewed weakness in the manufacturing sector was offset by a pick-up in construction and services, leaving the overall pace of recovery broadly unchanged in …
Corona containment harmed activity in March with much worse to come While both industrial output and retail sales held up a little better than we expected in March, they still fell sharply. And with efforts to contain the virus having been stepped up …
Builds in US commercial crude stocks to continue to slow US crude stocks rose again last week, but the pace of the builds is showing more signs of slowing. We expect stocks to continue to increase until the coronavirus-related quarantine measures are …
29th April 2020
Economy hit by unprecedented slump in services consumption Since the pandemic-related lockdowns only really began in earnest in the final two weeks of the quarter, the 4.8% annualised decline in GDP over the first quarter as-a-whole illustrates that …
Activity falling off a cliff The collapse in April’s Economic Sentiment Indicators to levels not recorded before in Central and Eastern Europe point to GDP falling by around 6.0% y/y at the start of Q2, more than twice as large as the worst-affected …
More evidence of sharp downturn but cushioned by bank lending The largest-ever slump in the EC Economic Sentiment Indicator in April comes as no surprise but, along with the 3.9% q/q fall in Belgian GDP in Q1, it underlines the depth of the euro-zone’s …
Underlying inflation to fall towards 0% soon Inflation was accelerating ahead of the virus outbreak but the surge in spare capacity should push underlying inflation below 1% over the coming quarters . The 0.3% q/q rise in consumer prices in Q1 was in line …
Commercial real estate returns dip in Q1, but likely to turn negative in Q2 Data for the first quarter show that all-property total returns saw their weakest quarterly performance since the tail-end of the GFC. Given that occupier market conditions have …
28th April 2020
Annual house price growth accelerates prior to COVID Low inventory and mortgage rates helped house price growth accelerate over the turn of the year. But the sharp drop in housing demand caused by the coronavirus means prices are set for a modest fall …
Low inflation opens door for a 50bp cut The decline in Brazilian inflation to 2.9% y/y in the first half of April suggests that Copom will be able to lower the Selic rate by an additional 50bp (to 3.25%) next week. The political crisis and in the recent …
Italy and Spain suffering most, but some encouraging signs The Bank Lending Survey highlights the fact that demand has fallen much further in Italy and Spain than elsewhere. But it also suggests that loan guarantees and the ECB’s cheap loans to banks are …
Unemployment rate will rise sharply The unemployment rate rose in March and it’s set to spike much higher over the coming months. The labour force fell -0.1% m/m, while employment dropped -0.16% m/m. In annual terms, both rose just 0.1%. (See Chart 1.) As …
India’s gold imports to test historic lows Imports of gold into China and India continued to contract at a double-digit pace in March. But the plunge in physical demand has had little impact on the gold price, as it has been outweighed by strong …
27th April 2020
Economy shrugs off coronavirus outbreak in Q1 The relatively strong batch of Russian activity data for March suggest that GDP growth probably picked up a touch to 2.5% y/y in Q1. However, this largely reflects the fact that Russia was much slower to …
Slump reflects cancellation of aircraft orders The 14.4% m/m slump in durable goods orders in March was principally due to a massive 295.7% m/m decline in commercial aircraft orders, with core orders down by only 0.2%m/m. The upshot is that business …
24th April 2020
