House price pressures cool Annual house price growth on the Halifax index cooled in February, suggesting that the market has lost steam. Looking ahead, with the coronavirus likely to affect sentiment as well as economic activity in the coming months, the …
6th March 2020
Worst is yet to come for retail sector Retail sales fell for the second consecutive month in January. And given that this happened before the coronavirus started to spread in Australia in earnest, the outlook for consumption remains weak. The 0.3% m/m …
Wage growth to remain soft as labour market loosens The sharp rise in wage growth in January was down to yet another sampling distortion. A more accurate measure showed that wage growth softened and we expect labour earnings to continue to disappoint this …
Narrower deficit increases chance of longer easing cycle Weak domestic demand in South Africa has narrowed the country’s current account deficit, which should provide some support to the rand and allow the SARB more space to loosen policy. We expect that …
5th March 2020
Worst is yet to come for trade The small decline in the trade surplus in January masks larger weakness in both export and import values. And we think the coronavirus outbreak means that exports have further to fall in the coming months . The trade surplus …
Crude stocks are gradually rising US crude stocks continued to edge higher this week as a rise in domestic crude output and lower refinery activity offset a fall in net imports . Product demand remains healthy for now, but if COVID-19 takes greater hold …
4th March 2020
Lower rates unlikely to boost applications for home purchase Concerns over the coronavirus have driven the 10-year Treasury yield to record lows, which helped push mortgage rates to a seven-year low last week. That gave a substantial boost to refinancing …
Headwinds growing Brazil’s relatively strong 0.5% q/q GDP growth rate recorded in Q4 masked a sharp loss of momentum late in the quarter. Taken together with growing headwinds from the effects of the coronavirus more recently, we think the central bank …
Coronavirus hit to consumption will weigh on growth The increase in euro-zone retail sales data in January suggests that household consumption picked up at the beginning of the year, but we suspect that spending will drop in Q2 as the Covid-19 virus …
Q1 was shaping up nicely until coronavirus got involved The small rise in the all-sector PMI in February suggests that Q1 was shaping up to be a good quarter for the economy. But we suspect the survey will take a turn for the worse in March as the …
Coronavirus to exacerbate downward pressure on Swiss inflation The return of deflation to Switzerland in February will only strengthen the policymakers’ resolve to prevent the franc from rising much further. Following yesterday’s emergency rate cut by the …
GDP growth will weaken further in 2020 GDP growth remained subdued at the end of last year, and given the fallout from the coronavirus outbreak we expect the economy to deteriorate further in 2020. The 0.5% quarterly rise in GDP was a touch faster …
Coronavirus to dampen inflation pressures further February’s fall in inflation reflected the decline in energy prices as a result of the coronavirus outbreak. But if the virus starts to sap domestic demand, then core inflation may decline slightly in the …
3rd March 2020
Sharp rise in construction output The IHS Markit/CIPS Construction PMI pointed to the strongest rise in construction since December 2018. This was driven by improvements in both commercial property and housing. But with the economic outlook weak and …
Coronavirus impact weighs on non-oil activity in the Gulf February’s whole economy PMIs suggests that activity in non-oil sectors in the Gulf has weakened amid the coronavirus outbreak. Efforts to contain the virus have escalated since the survey took …
Inflation rises again, but rate cuts still in play (for now) The further increase in Turkish inflation in February probably won’t be enough to deter the central bank from easing monetary policy a little more in the next couple of months. But policymakers …
Disruption to manufacturing supply chains likely to worsen The modest fall in the ISM manufacturing index to 50.1 in February, from 50.9, leaves the index still above the levels seen over the second half of last year. Nevertheless, the survey clearly …
2nd March 2020
Net lending remains unspectacular As expected, net property lending at the start of this year was relatively weak. The notable slowdown in lending to standing investment weighed on overall net lending to commercial property. We think a fall in capital …
Post-election lending surge in January House purchase mortgage approvals surged in January, and leading indicators point to further gains in the coming months. But with house prices high, economic growth set to stay weak and uncertainty to return later …
Broad-based improvement in February, but the story has moved on The increases in the manufacturing PMIs in February in Switzerland and the Nordics suggest that conditions in the industrial sector were improving before the surge in coronavirus cases in …
Turkey’s recovery gathering pace, divergence across Central Europe The rise in Turkey’s manufacturing PMI to a two-year high in February provides further evidence that the economic recovery continued at a rapid pace at the start of 2020. Elsewhere, there …
Economy faltering in early 2020 While weak PMIs elsewhere in the EM world were partially due to spill over effects from the coronavirus, the sharp fall in the South African survey largely reflects domestic weaknesses. We suspect that the economy …
Local manufacturing relatively unscathed from coronavirus outbreak The drop in the manufacturing PMI in February was expected given its previous surge to an eight-year high in January. But the reading is still consistent with decent growth in …
PMIs likely understate weakness of industry PMI readings for Asia are likely to have understated the disruption to industry from factory shutdowns in China, and the recent rise in coronavirus cases outside of China means that worse may be yet to come. …
An unprecedented slump in activity The latest PMI readings were in line with our downbeat expectations but will come as a shock to most analysts, who had anticipated a much smaller hit to business activity from the coronavirus outbreak. Particularly …
Korean trade data may get worse before they get better Growth in Korean trade in February masks underlying weakness. Trade with China shrank sharply due to disruption from the coronavirus, and there were few signs of strength elsewhere. Korean trade data …
House prices may rise by 10% this year The rally in house prices continued in February and all the leading indicators suggest that prices will keep rising at a rapid pace. However, affordability is deteriorating rapidly and we expect price growth to slow …
Total returns outlook strengthens in the near term February’s IPF Consensus Forecasts were revised higher, given the increased certainty surrounding Brexit. As such, the consensus expects stronger returns for this year, but this was offset by slightly …
28th February 2020
Strong December buys the Bank some time GDP growth of 0.3% annualised in the fourth quarter was in line with the Bank of Canada’s forecast, but the 0.3% m/m gain in December provides a stronger hand-over to the first quarter than the Bank seems to have …
Broad data revisions suggest economy weak for longer India’s economy slowed again in the fourth quarter of last year, confounding hopes for a small turnaround. But the bigger story in today’s data release is the substantial revision to the GDP data for …
Swedish economy will struggle to regain momentum The Swedish economy ended last year on the back foot, and a combination of the rising threat from the coronavirus, weak growth in the neighbouring euro-zone, and persistently below-target inflation lend …
House prices gather momentum House prices gathered momentum in February, and leading indicators point to further near-term gains. But this latest boost reflects sentiment, while the fundamentals argue against a sustained acceleration. We expect house …
Loose policy supports rapid growth, but imbalances building Turkey’s economy grew by a rapid 1.9% q/q in Q4 of last year and loose policy will keep it motoring along over the coming quarters. But there are increasing signs that strong growth is fuelling a …
Rebound in industrial production unlikely to last The coronavirus is likely to knock off course the slight recovery observed in the manufacturing and retail sectors last month. As such, we expect the unemployment rate to rise further over the coming …
Business equipment investment rebounding Durable goods orders were held down last month by a plunge in volatile defence orders, but the surge in underlying capital goods orders and shipments suggests business equipment investment growth is beginning to …
27th February 2020
Little sign of coronavirus impact, but euro-zone still on course for weak Q1 The rise in the euro-zone Economic Sentiment Indicator (ESI) for February adds to the evidence that the coronavirus has had little impact on the economy so far. But the survey …
Weakness in industry is spreading February’s batch of Economic Sentiment Indicators (ESIs) for Central and Eastern Europe provided yet more evidence that weakness in industry is spreading to domestically-focused sectors. There are no clear signs of a hit …
Confidence continues to grow but coronavirus may stop the party The European Commission’s Economic Sentiment Indicator (ESI) for the UK concurs with the message from the flash PMIs last week that the UK’s economic recovery continued in February. But …
Drag from private investment will fade by the middle of this year We estimate that investment fell sharply, by 1.5% q/q in Q4. But firms’ expectations of a pick-up in nominal capital expenditure in the next financial year suggest the drag from private …
Coronavirus to weigh on US crude exports US crude stocks rose last week. That said, exports could drop soon if coronavirus-related port disruption spreads across Asia, which would put upward pressure on stocks . The EIA’s weekly US Petroleum Report, …
26th February 2020
New home sales start the year at a 12½-year high Warm weather and a healthy inventory helped new homes make a strong start to the year. A drop in home purchase mortgage applications during February means some of that surge will be reversed over the next …
China production strength is old news China continued to prop up global steel production growth in January, though output growth in the US and Japan also improved. However, January’s data fail to fully reflect the impact of measures to contain the …
25th February 2020
House price growth ends 2019 on a strong note Low mortgage rates and tight inventory have supported house prices in recent months, with Case-Shiller reporting a jump in annual growth to 3.8% in December, a 10-month high. But looking ahead stretched home …
Falling business investment will continue to weigh on economy After flat-lining in Q4 last year, we suspect that the German economy will not grow in the first half of this year either, even if the effects of the coronavirus are contained. With no change …
Inflation picks up, easing cycle will end sooner than most expect Stronger headline inflation in early February was mostly due to food prices; core inflation remained stable. Even so, we think that the persistence of above-target inflation will limit …
24th February 2020
Small rise leaves Ifo at low level The small increase in the Ifo Business Climate Index in February will be a relief for those braced for a big hit from the coronavirus. However, the index is still below its level in December and remains consistent with …
Economy picks up, but remains weak Growth in Nigeria ticked up a notch in Q4, but there is still no sign of a broad-based economic recovery. We expect that the authorities will continue to enact unconventional stimulus policies later this year. National …
PMIs fall into recessionary territory The big fall in the Markit composite PMI, to the lowest level since the series began in late-2009, was driven by a plunge in the services index and will inevitably raise fears about the underlying health of the …
21st February 2020
Existing home inventory sees further declines Given the plunge in the pending home sales index in December, the 1.3% m/m drop in existing home sales in January was smaller than we had expected. But that implies sales will see a more substantial fall in …
