More confirmation of massive slump The Ifo has echoed the message from the PMIs published yesterday that Germany’s economy took a nose-dive in April, with the manufacturing sector following the services sector into a deep recession. The decline in the …
24th April 2020
Sharp drop in sales in March to be followed by a plunge in April The 5.1% m/m fall (consensus forecast -4.0%) in retail sales volumes in March was the largest on record and suggests that household consumption declined by at least 4% q/q in Q1. However, as …
Deflation to make unwelcome return Headline inflation was unchanged in March, but we suspect this may be the last positive reading for a while yet. Corona containment and the prior plunge in oil prices should translate into inflation turning deeply …
New home sales see largest month-on-month drop in six years The impact of the coronavirus on the housing market was made clear in March new home sales, which saw the largest month-on-month fall in over six years. Subdued mortgage applications point to a …
23rd April 2020
Lowest inflation on record, larger rate cuts in store The collapse in Mexican inflation to just 2.1% y/y in the first half of April will give Banxico more space to support the economy. It looks increasingly likely that the central bank will follow up this …
Modest decline, but more to come While the decline in workload reported was modest, there was a marked worsening in responses received towards the end of the survey period. Indeed, with profit margins set to fall and lending likely to be tight, the …
Survey points to unprecedented monthly contraction in GDP in April The eye-watering declines in April’s flash PMIs confirm the coronavirus lockdown has pushed the economy into a recession of unprecedented speed and depth. Particularly worrying was the …
Activity grinding to a halt April’s PMIs are shockingly bad and suggest that economic activity has all but ground to a halt. Some virus containment measures are now being lifted, but output will be very weak for many more months. Comparing the PMIs to GDP …
First signs of higher borrowing emerge, but much worse to come Despite the slight deterioration in March, the budget deficit was still only £48.7bn (2.1% of GDP) in 2019/20, but it will soon surge next year. The government measures to combat the economic …
Surveys probably understating the severity of the downturn The slump in the composite PMI to a record-low in April points to GDP falling by at least 7% in Q2, but we think the survey is understating the severity of the downturn. The flash estimate of the …
Economy slumps, worse to come Economic activity in Korea fell by the most since 2008 last quarter and unfortunately there is much worse to come. With the external environment weighing heavily on export demand, a much deeper contraction is likely this …
2020 contraction now firmly on the cards Global steel output declined in March in year-on-year terms. And all the signs suggest that worse is yet to come. As we had previously argued, the first global contraction in steel production for five years is now …
22nd April 2020
Mounting stocks come as little surprise US crude stocks jumped again last week, despite a small fall in production and a hefty drop in imports . Stocks are likely to continue to climb until the lockdowns are lifted, but the pace of increase may slow . The …
Fall in confidence understates crash in consumption The slump in the EC euro-zone consumer confidence index in April was another record decline. However, the index excludes data for Italy and almost certainly understates the true extent of the …
Inflation to drop below 1% in second quarter The 1.3%-point slump in inflation in March was mainly due to lower energy prices and, with gasoline inflation falling even further this month, we expect headline inflation to drop below zero in April. The drop …
More easing on the cards as inflation softens The larger-than-expected fall in South African inflation, to 4.1% y/y, in March will give the central bank more room for manoeuvre. Although yesterday’s announcement of a fiscal package by the government …
Economy heading for a collapse in output The collapse in the Polish activity data for March came on the back of two strong months and suggests that the economy probably avoided a contraction in Q1 and grew at around 2.0% y/y. But the slump in March is a …
CPI inflation starts to slide In March CPI inflation took the first leg of what we suspect will be a sustained journey down to around 0.5% by the summer, easing from 1.7% in February to 1.5% (consensus forecast 1.5%). The fall in CPI inflation in March …
Drop in existing home sales only the start of collapse in activity Existing home sales recorded their largest month-on-month decline in 4½-years in March, but given sales are recorded with a time lag that only represents the start of the fall in activity. …
21st April 2020
Sales edged up ahead of double-digit fall in March Retail sales edged up by 0.3% m/m in February, but we estimate that sales slumped by 10% m/m in March and expect an even larger decline in April. The 0.3% m/m rise was mainly due to a 1.1% increase in …
ZEW rebounds but weak recovery lies ahead The sharp rebounds in the ZEW Economic Sentiment Indicators for both Germany and the euro-zone in April suggest that investors are now expecting some recovery from the complete collapse in activity over recent …
Rate cut on the horizon despite rise in inflation The slight rise in Nigerian inflation in March, to 12.3% y/y, is unlikely to prevent policymakers from cutting their key rate in May to ease the country’s economic pain caused by the coronavirus. Figures …
Small crack may soon turn into chasm The small crack that appeared to be opening up in the labour market in March may soon turn into a chasm with the unemployment rate rising from 4% to almost 9%. February’s Labour Force Survey (LFS) data weren’t very …
Trade data beginning to reflect gloomy outlook Korean trade data for the first 20 days of April suggest that slumping external demand is now weighing heavily on Korean exports. The timely nature of the Korean trade data makes them a good bellwether for …
House prices set to fall House price inflation accelerated to a 22-month high in March but, given the disruption caused by the coronavirus outbreak, prices are set to fall in the coming months. The 0.6% m/m rise in the Teranet House Price Index was …
20th April 2020
Output growth slows, but not by enough Aluminium output growth slowed last month. But with demand for aluminium collapsing, nothing short of a huge contraction in output will do enough to prevent stocks from piling up. Such a fall in supply still seems a …
Trade flows are plummeting this quarter Exports fell sharply in March and are set to plummet this quarter as economic activity in most of Japan’s major trading partners has collapsed. The 11.7% annual fall in export values in March was more pronounced …
Inflation to fall back below RBNZ’s target before long The rise in headline inflation from 1.9% in Q3 to 2.5% in Q4 will be of cold comfort to the RBNZ given the virus outbreak may cause inflation to slow below 1% before long. Quarterly inflation of 0.8% …
China faces slow recovery from first contraction on record GDP contracted in Q1 for the first time since China began publishing quarterly data in 1992, though we suspect that the slump in output was even deeper than officials claim. The monthly data …
17th April 2020
Calm before the storm Manufacturing sales unexpectedly rose in February but, as many manufacturers stopped or reduced production last month, they are set to fall sharply in March and April. The 0.5% m/m rise in manufacturing sales was better than the …
16th April 2020
Coronavirus disruption leads to sharp fall in housing starts Both single and multifamily housing starts recorded large declines in March, as the coronavirus cut housing demand and disrupted the ability of homebuilders to work. Single-family starts will …
Mortgage lenders pull up the drawbridge Mortgage availability is set to collapse in Q2. Part of that will reflect limitations caused by physical distancing measures due to the coronavirus. Yet broader concerns about the economy, house prices and shrinking …
Unemployment rate may reach 12% before long The coronavirus didn’t have a noticeable impact on the March labour market data but upcoming releases will show a sharp deterioration. The unemployment rate will probably be in double-digits before long. The …
Crude stocks surge as refinery activity plummets to 12-year low US crude and product stocks soared again last week as the virus-related disruption continued to weigh on demand. We expect crude stocks to rise further in the coming weeks, but the recent …
15th April 2020
Sharpest fall since 1946; even worse to come in April The 5.4% m/m plunge in industrial production in March, which was the sharpest monthly fall since 1946, highlights that while coronavirus containment measures have primarily slammed the brakes on …
Collapse in discretionary spending partly offset by grocery store surge The 8.7% fall in retail sales last month suggests that first-quarter real consumption declined by up to 5% annualised. As the lockdowns were only introduced in the middle of last …
Core inflation set to fall even further below target While the decline in headline inflation in Sweden in March owed much to lower energy prices, persistently below-target core price pressures and the virus-related economic slump opens the door to further …
Inflation not a concern for policymakers Although not the preferred measure for policymakers, the drop in the headline WPI rate in March reinforces our view that inflation is no concern at this stage. Instead, the priority now is for the central …
Worse still to come for exports Shipments picked up last month as factories re-opened and domestic demand began to recover. But with economic activity in the rest of the world now collapsing, the worst is still to come for China’s export sector. The …
14th April 2020
Inflation no concern for policymakers Headline CPI inflation dropped to a four-month low in March and timely indicators suggest a further easing in price pressures so far in April. With inflation no concern, the priority for policymakers is to loosen …
13th April 2020
Signs of slowing lending growth, but bigger shifts still to come The amount of debt secured against real estate and held by commercial banks continued to grow in March. But the bigger picture is that the rate of growth of lending is showing signs of …
10th April 2020
Headline inflation to fall temporarily to zero The 0.4% m/m decline in consumer prices in March, which was principally due to a 10.5% m/m drop in gasoline prices, pushed the annual rate of headline CPI inflation down to 1.5%, from 2.3%. But that is just a …
Employment to plunge even further The labour market was weaker in March than even the 1.0 million plunge in employment suggests, with a further 1.3 million people counted as employed but not working any hours. We think that employment will fall by more …
9th April 2020
Large fall in inflation means Copom to ease further The larger-than-expected fall in Brazilian inflation, to 3.3% y/y last month, adds to reasons to think that Copom will cut the policy rate by another 50bp (to 3.25%) when it meets in early May. The …
Soft price pressures increase pressure for more rate cuts The slight fall in Egyptian inflation in March to 5.1% y/y leaves the headline rate well below the central bank’s target range which, coupled with the economic hit from the draconian measures to …
The 0.1% m/m fall in GDP in February will be the last figure that looks anything like “normal” for a while as the coronavirus lockdown will mean that in March and April GDP will fall at a speed and magnitude that the UK economy has never endured before. …
Surveyors report a collapse in activity Coronavirus measures have put the housing market on ice. With buyer enquiries and agreed sales in freefall, the market is on track to see a 70% fall in sales this quarter. Meanwhile the collapse in sentiment among …
Gasoline stocks likely to remain high The latest US weekly data clearly showed the negative impact on oil demand of measures to contain the coronavirus. Further stock builds are likely in the near term, despite falling domestic production . The EIA’s …
8th April 2020
Rising chance of further Norges Bank rate cuts While core inflation in Norway remained slightly above policymakers’ target in March, the precipitous plunge in economic activity raises the chance that Norway will join the sub-zero interest rate club. The …
Consumption plunging to new depths The collapse in the Economy Watcher’s Survey (EWS) in March to its lowest level ever supports our view that consumption will fall off a cliff in Q2. Almost all indicators plummeted, suggesting the brief thaw in economic …
