Business investment to plunge this quarter The slight rise in machinery orders in February suggests that business investment was weathering virus-related disruption well back then. But with measures to contain the virus severely harming domestic and …
8th April 2020
Inflation easing, more rate cuts on the way The larger than expected fall in Mexican inflation in March, to 3.3% y/y, should ease near-term concerns at the central bank about the impact of the weakness of the peso on prices. More importantly, with the …
7th April 2020
House prices hold firm before the lockdown The Halifax index recorded flat house prices in March, but that tells us little about the effect of the coronavirus. And with very few housing transactions likely to go through across April and May, the house …
Both exports and imports to dive further The small decline in the trade balance in February was the result of a sharp decline in exports being offset by a sharp decline in imports consistent with our view that domestic demand was set to struggle even …
Wage growth to turn negative before long Wage growth weakened a little in February and we think it won’t be long before it turns negative as the coronavirus outbreak generates large amounts of slack in the labour market. According to today’s preliminary …
More recent surveys paint a much bleaker picture The Bank of Canada’s business and consumer surveys do not yet reflect the sudden deterioration in economic activity. Timelier surveys show that business and consumer confidence has plummeted. While a net …
6th April 2020
Inflation set to rise gradually, but easing is on the cards The rise in Russian inflation to 2.5% y/y in March probably marks the start of a gradual pick-up over the next few months as the effects of the weaker ruble feed through to consumer prices. But …
Surveys hit record lows as economies shut down March’s batch of whole economy PMIs showed that efforts to contain the coronavirus outbreak have resulted in a sharp decline in activity in the region’s non-oil sectors. Containment measures have escalated …
More confirmation that social distancing is obliterating economic activity The incoming data continue to confirm that the UK is destined for the sharpest fall in economic output for over a century in Q2. And the collapse in consumer confidence to its …
Construction output grinding to a halt March’s Construction PMI fell to its lowest reading since 2009, with commercial construction seeing a particularly sharp fall. Housebuilding saw a more modest decline, but as revenues dry up over the next few months, …
Italian construction projects put on ice March’s construction PMIs add to the evidence that activity across the euro-zone has taken a big hit, while Italy’s stricter virus containment measures have had a catastrophic effect on output. The drop in the …
Far worse is yet to come The drop in the PMI readings for March suggests that the economy had already lost momentum even before the nationwide lockdown was imposed towards the end of the month. More timely indicators suggest that activity has now ground …
Unemployment set to surge above 10% The 701,000 plunge in non-farm payrolls in March, which is already close to the worst monthly declines during the Global Financial Crisis, suggests the coronavirus pandemic started to decimate the economy even sooner …
3rd April 2020
Downward revisions confirm lockdown has led to a huge loss of activity The downward revisions to March’s PMIs confirm that the measures taken to slow the spread of the coronavirus have pushed the economy into a recession of unprecedented scale and depth. …
Surveys confirm that Italian economy is grinding to a halt The PMIs show that activity in Italy and Spain plummeted even before the authorities in both countries shut down all non-essential businesses. Euro-zone GDP is almost certain to fall at a record …
Drop in inflation opens door for more rate cuts The drop in Turkish inflation in March, coupled with the sharp downturn in the economy, means that the central bank is likely to follow up last month’s emergency 100bp interest rate cut with further easing. …
Consumption will fall in Q1 and plunge in Q2 T he 0.5% rise in retail sales in February precedes the significant spread of the virus in Australia and we think consumption will fall sharply the coming months . The 0.5% m/m rise in retail sales values in …
Exports set to slump after unexpected increase A surge in aircraft exports caused the trade deficit to unexpectedly narrow in February. But with oil prices plunging in March and export volumes likely to fall by more than import volumes amid the slump in …
2nd April 2020
Inflation set to stay below zero throughout 2020 Having fallen further into negative territory in March, Swiss inflation is likely to remain below zero for the rest of 2020. This will strengthen policymakers’ resolve to prevent the franc from rising much …
House prices surge before the coronavirus strikes House price growth accelerated in March, but that reflected sales agreed from before the coronavirus lockdown. Looking ahead, we now expect house prices to fall by around 3% this year. And with the …
Worst is yet to come India’s manufacturing PMI dropped to a four-month low in March and the reading has yet to capture the impact of the nationwide lockdown which began at the end of the month. April’s reading, and possibly beyond, will be far worse. …
Manufacturing avoids big initial hit The marginal fall in the headline ISM manufacturing index to 49.1 in March, from 50.1, indicates that the initial hit to the factory sector from the coronavirus was more muted than feared. With many factories now …
1st April 2020
Home purchase demand to halve Distress in the MBS market meant mortgage rates were volatile over March, but they started and ended the month at a record low of 3.47%. While that has helped refinance demand, applications for home purchase have collapsed as …
Stronger-than-expected PMI is a misleading indicator South Africa’s PMI jumped in March, but only due to a statistical quirk in the compilation process. The underlying data suggest that the economy was, in fact, weakening even before the recent lockdown. …
The start of a grim run of economic data The eye-watering declines in the manufacturing PMIs for March from Switzerland and the Nordics simply confirm that economic activity has dropped off a cliff following the introduction of containment measures. …
The slump in output has only just begun The slump in March’s manufacturing PMIs across Central Europe to levels not seen since the financial crisis are a sign of things to come and the figures for April are likely to be a lot worse. Russia’s PMI held up …
Activity improves but recovery to be slow The Caixin manufacturing PMI strengthened last month from February’s abysmal levels and suggests that the contraction in activity has already bottomed out. But weak foreign demand and labour market strains will …
Korean export resilience won’t last Korean trade figures held up surprising well in March but given collapsing global demand this is unlikely to continue. We expect a sharp contraction in export values in the next few months. Korean trade data provide a …
House prices may decline before long We think the continued rebound in house prices will come to an end before long as the virus outbreak reduces the volume of home sales and weighs on household incomes. House prices across the eight capital cities rose …
Industry conditions set to deteriorate further The manufacturing PMIs for Asia suggest that industry has been hit hard by the coronavirus, and we suspect the readings will deteriorate much further in the next couple of months. PMIs for March were released …
Not quite the bloodbath expected, but worse to come While the Q1 Tankan survey held up slightly better than we were expecting, it still showed a marked deterioration in business conditions. And with sentiment set to deteriorate further as lockdowns across …
GDP to slump following January’s modest gain The modest 0.1% m/m rise in GDP in January confirms that the economy was struggling even before the coronavirus outbreak. We estimate that GDP will plunge by 35% annualised in the second quarter. It was a mixed …
31st March 2020
Euro-zone inflation will soon turn negative The inflation rate in the euro-zone took a leg down in March, largely due to the slump in oil prices. With the economy taking on the verge of an unprecedented nose-dive, we expect headline inflation to drop …
Economy stagnating even before the coronavirus The confirmation that the economy stagnated in Q4 shows that it was very weak even before the spread of the coronavirus in the UK. We expect a 15% q/q fall in GDP in Q2 and things could easily be worse. Q4’s …
Past the worst but weakness to drag on The latest survey data add to broader evidence that activity has started to rebound but suggest that weak foreign demand and labour market strains remain headwinds. The official manufacturing PMI increased from 35.7 …
Economy was holding up well before corona collapse Activity indicators show that the economy continued to expand in February. Unfortunately, domestic and external demand have since collapsed, so output is set to contract sharply this year. The …
Worst yet to come for confidence The relatively small fall in the European Commission’s Economic Sentiment Indicator (ESI) for the UK is mainly because the survey was done prior to the UK going into a full lockdown. A much sharper drop in confidence is …
30th March 2020
ESI understates the decline in GDP On the face of it, March’s Economic Sentiment Indicator (ESI) is not as downbeat as some of the other surveys. But we think that it understates the drop in activity, and worse is likely to come in April. While the fall …
Net lending expected to weaken The improvement in net lending figures in February is unlikely to be sustained. Given that transactions are likely to grind to a halt as containment measures restrict most trading and that we expect capital values to fall by …
Downturn has only just begun The widespread slump in March’s Economic Sentiment Indicators (ESIs) for Central and Eastern Europe suggest that regional GDP growth slowed from 3.2% y/y in Q4 to around 2% y/y in Q1. But, with the survey not adequately …
Final rise in lending before the coronavirus hits February saw strong rise in house purchase mortgage approvals, but the coronavirus will prevent any further gains over the coming months. Indeed, given the stringent social distancing measures now in …
Chunky month-on-month fall, but much worse is to come While the Swiss KOF Economic Barometer registered its biggest monthly decline in five years in March, the fact that many of the responses to the survey component of the indicator predated the …
Italian output dropping like a stone Italy’s virus containment measures have already caused a huge contraction in activity. We had assumed a peak-to-trough decline in GDP of about 15%, but it could easily fall much further. The business and consumer …
27th March 2020
Housebuilding slump deepens Housing starts fell sharply in the final quarter of 2019. With housebuilders now halting construction in response to the coronavirus, and the hit to buyer confidence to persist even after movement restrictions are lifted, we …
26th March 2020
Unemployment set to rise sharply in Q2 While the fall in the IAB Labour Market Barometer in March points to a modest increase in German unemployment in Q2, the fact that the survey largely pre-dates the ramp-up in containment measures means that further …
Swedish economy set to contract in Q1, and much worse is to come The broad-based drop in Sweden’s Economic Tendency Indicator in March is consistent with the economy contracting by about 0.5-1.0% in Q1. Unfortunately, much worse is set to come in Q2. The …
Business confidence collapses in France The largest-ever fall in French business confidence in March leaves the survey pointing to a severe slump in activity at the end of Q1. But the reality is almost certainly much worse than this. The plunge in …
No signs of a stockpiling boost or a big plunge…yet The 0.3% m/m fall in retail sales volumes in February (consensus +0.2%) suggests that even prior to the disruption from the coronavirus, consumers were already starting to rein in spending. Admittedly, …
The worst is yet to come The sharp contraction in Singapore’s economy in Q1 was deeper than expected, and with global growth collapsing, the worst is yet to come. Given today’s outturn, we are lowering our 2020 GDP growth forecast from -3.0% to -3.5%. …
Refinery throughput to collapse and lift crude stocks US crude stocks rose a touch last week. We expect bigger increases in the coming weeks given that refineries have announced plans to curb output in response to the virus-related slump in product demand …
25th March 2020
