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Daily Macroeconomic Digest

lundi 18 janvier
China: strong growth in Q4-20; Italy: still negative inflation trend

Italy: CPI (Dec.): 0.2% m/m (prior: 0%)

  • Final data confirmed small rise in monthly prices; while food prices were lower, some rise were seen in energy, transport and also leisure sectors over the month.
  • Yearly trend in headline prices remained stable from the prior month at -0.3% y/y.


China: Q4-20 GDP at 6.5% y/y vs expected 6.2% (prior 4.9%). 2020 GDP 2.3% vs expected 2.1%. Upside risks in 2021.   

  • China’s Q4-20 GDP was significantly stronger than expected, resulting in 2.3% growth for the full year of 2020, above consensus. China will be the only major economy to experience expansion in 2020. This was led by the supply-side, with measures to effectively control of COVID-19 enabling its factories to capitalize on an uptick in demand for technology and PPE. The demand side also gained steam in Q4, with private investment and consumption contributing positively to growth.
  • Risks are tilted to the upside in 2021, as a firm economic recovery and a favourable base effect in Q1-21 will likely result in growth above our current consensus of 8.0% in 2021.


China: Mixed activity indicators for Dec, recovery remains on track

  • Industrial production (IP) rebounded to 7.3% y/y in Dec vs expected 6.0% (prior 7.0%). Production of computers, electronics, medical equipment and ferrous metals contributed the most to the sequential change in IP growth. On the contrary, machinery, chemicals and autos moderated further.  We expect that IP will not rebound strongly in 2021 but remain stable around 7.0%. Manufacturing will remain supported by external demand (20% GDP), led by sustained demand for electronics and medical equipment amid an unprecedented rollout of vaccination programs globally. 
  • Retail sales slowed to 4.6% y/y in Dec vs expected 5.5% (prior: 5.0%). The decline can be traced back to a seasonal base effect: online sales growth moderated to 7.3% y/y vs 13.9% in Nov, owing to better-than-expected demand during the Nov 11 commercial holiday. Automobile sales slowed to 6.4% y/y in Dec vs 11.8% in Nov. Lastly, a spate of cold weather may have also played a role in exerting downside pressure in Dec. We expect that retail sales will rebound to 10.0% on average in 2021, favoured by China’s domestic tilt, with a large favourable base effect also adding to the upside going forwards.
  • Fixed Asset Investments (FAI) ticked up higher, reaching 2.9% YTD y/y vs expected 3.2% (prior 2.6%). The increase was led by private FAI, which also translated into a pick-up in real estate investment to 7.0% YTD y/y vs 6.8% in Nov. Going forwards, we expect that FAI will reach 5.0% in 2021, as better corporate earnings are likely to boost private capital expenditures further, offsetting the decline in public sector investment.
vendredi 15 janvier
US: resilient industrial production but weakening consumer confidence and contracting retail sales

US: Empire manufacturing (Jan.): 3.5 vs 6 expected (prior: 4.9)

  • Sentiment has declined on both current and future situation.
  • In details, picture was more contrasted as prices and new orders were up on the short term, while shipments and employment were down.
  • On expectations, all sectors were down except new orders and shipments.
  • Confidence is on weakening trend, with large differences across sectors, reflecting uncertainties weighing on the economic outlook from a firm point of view.


US: Retail sales (Dec.): -0.7% m/m vs 0% expected (prior: -1.4% revised from -1.1%)

  • Core sales were sharply down by 1.9% m/m and prior month data were revised lower (-1.1% m/m vs -0.5% m/m initial estimate).
  • Sales were up for gasoline, clothes, building materials and autos, but sharply down for furniture, electronics and food.
  • Sales were also heavily down for department stores, eating and drinking sectors reflecting the impact of the restrictions, but online sales were also negative.
  • Data confirm deteriorating momentum in the economy in Q4, notably in the consumer, services and labor sectors.
  • These data, in addition to latest negative non-farm payrolls, should give some support to further help to households on the budgetary side, and postpone any rapid change in Fed's strategy.


US: Industrial production (Dec.): 1.6% m/m vs 0.5% expected (prior: 0.5% revised from 0.4%)

  • Production has rebounded mainly due to utility sector.
  • Production was down by 1.6% m/m on autos after 5% m/m the prior month; activity was sustained in utility, machinery, defense and construction sectors.
  • Production index finished the year close to its Jan.20 level, having recovered from the Q2 lows. The industrial sector was a support in Q4, moderating the slowdown in place in services and consumer sectors.


US: PPI (Dec.): 0.3% m/m vs 0.4% expected (prior: 0.1%)

  • Rebound in monthly prices was driven by energy prices, up by 5.5% m/m; prices in services were down by 0.1% m/m.
  • Yearly trend remained stable at 0.8% y/y.


US: Business inventories (Nov.): 0.5% m/m as expected (prior: 0.7%)

  • Sales were down by 0.1 % m/m.


US: Consumer confidence (Michigan) (Jan.): 79.2 vs 79.5 expected (prior: 80.7)

  • Sentiment has decreased more than expected globally; expectations were weaker than expected (index at 73.8 vs 74 expected, 74.6 prior month) and sentiment on current situation was more resilient (index at 87.7 vs 87 expected, 90 the prior month).
  • Preliminary index has pointed toward rising concerns on weakening financial situation and income, worries about future economic situation, uncertainties on future policy; sentiment on unemployment remained surprisingly positive in this context.
  • Willingness to spend has declined for major items such as autos and houses from the prior month.
  • Virus contagion, restrictions and changes in political power have increased concerns and uncertainties for consumers.


UK: Industrial production (Nov.): -0.1% m/m vs 0.5% expected (prior: 1.1% revised from 1.3%)

  • Manufacturing production was up by 0.7% m/m thanks to firmer activity in equipment and intermediate goods.
  • Production in mining, electricity and utility has sharply contracted over the month.
  • Large disparities across sectors should continue, while global lockdown should deteriorate activity in Dec.-Jan.
  • Separately, GDP proxy for Nov. was less negative than expected (-2.5% vs -4.6% q/q) thanks to the cushion of the industry and quite resilient consumption. Dec. and Jan. data should remain negative.


Sweden: CPI (Dec.): 0.7% m/m vs 0.6% expected (prior: 0%)

  • Prices of energy, transport and clothes have accelerated over the month; core inflation was up by 0.6% m/m after 0% m/m the prior month.
  • Headline trend has accelerated from 0.2% y/y the prior month to 0.5% y/y.


France: CPI (Dec.): 0.2% m/m as expected (prior: 0.2%)

  • Final data confirmed the monthly rise due to higher energy and transport prices while prices of food and clothes were down over the month; services were up by 0.5% m/m after several months of weak or negative changes.
  • Yearly trend remained weak at 0% y/y after 0.2% y/y the prior month.


Spain: CPI (Dec.): 0.2% m/m vs 0.1% expected (prior: 0.2%)

  • Prices of energy, transport, housing and leisure were up over the month, while prices of food and clothes declined over the period. Core inflation was flat over the month after 0.3% m/m the prior month.
  • Yearly trend has turned less negative, from -0.8% y/y the prior month to -0.6% y/y.


Poland: CPI (Dec.): 0.1% m/m (prior: 0.1%)

  • Prices of energy and transport have accelerated over the month, while those of clothes declined and were quite flat in other sectors.
  • Yearly trend has eased from 3% y/y the prior month to 2.4% y/y.


Brazil: Retail sales (Nov.): 0.6% m/m vs 0.9% expected (prior: 2.1%)

  • Broad sales remained sustained over the month thanks to autos and construction; excluding these two sectors, sales were down by 0.1% m/m, with only support in clothes, health and communication.
  • After strong rebound in past months, trend is weakening.
jeudi 14 janvier
US: strong rise in jobless claims

US: Initial jobless claims (Jan.9): 965k vs 789k expected (prior: 784k revised from 787k)

  • Continuing claims: 5271 k after 5072 k the prior week.
  • Jobless claims have sharply rebounded due to contagion and restrictions weighing on services as seen in the latest non-farm payrolls data.
  • Deteriorating labor should put pressure on Congress to increase direct support to workers, as it is expected to be presented tonight in Biden's communication.


UK: RICS house price balance (Dec.): 65% vs 61% expected (prior: 66%)

  • Sentiment in the housing sector has eased from the prior month; opinions on prices have sharply declined over the month and future demand and sales have decreased over the period.
  • The index has decreased but remained at a high level.


Sweden: Unemployment rate (Dec.): 4.6% (prior: 4.7%)

  • The unemployment ratio has eased further over the month; downward trend remained in place since the peak (5.5% reached in July 20.
mercredi 13 janvier
US Inflation (Dec): energy costs on the rise, while moderate core inflation

US: CPI (Dec.): 0.4% m/m as expected (prior: 0.2%)

  • The rebound in prices was mainly driven by energy prices, up by 4% m/m.
  • Besides energy, transport costs were on the rise and prices of apparels and computers; on the other side, prices of services and housing have shown modest change (0.1% m/m). Core inflation was up by 0.1% m/m as expected (0.2% m/m the prior month).
  • Headline inflation has slightly accelerated from 1.2% prior month to 1.4% y/y and core inflation stayed on a stable 1.6% y/y trend.
  • Progressive rebuilding inflation scenario is expected in 2021, with marked rebound to be seen in Q2-21 due to strong base effects.


Eurozone: Industrial production (Nov.): 2.5% m/m vs 0.2% expected (prior: 2.3% revised from 2.1%)

  • Production remained sustained thanks to capital goods (7% m/m) and intermediate goods (1.5% m/m). Activity in the consumer sector has decreased by more than 1% m/m.
  • Industrial activity was very strong in Ireland and modestly up in Germany over the month benefiting from export demand, but it has contracted in the other major countries over the month.
  • Industry has limited the downturn in global activity in Q4, but still active constraints on domestic demand may limit growth in January in manufacturing industry in parallel with services.


France: Business sentiment (Bank of France) (Dec.): 97 as expected (prior: 96 revised from 96)

  • Business sentiment has improved on production and orders despite rising uncertainties and constraints globally.
  • The first proxy for January has shown a reversal in sentiment for both manufacturing and service sectors.


Italy: Industrial production (Dec.): -1.4% m/m vs -0.4% expected (prior: 1.4% revised from 1.3%)

  • Activity has reversed and all sectors were negative except intermediate goods (up by 0.2% m/m).
  • Renewed constraints and lockdown should weigh down on activity in January too.


Turkey: Industrial production (Nov.): 1.3% m/m vs 0.8% expected (prior: 1.2% revised from 1.1%)

  • Activity remained sustained in all sectors, and particularly for capital goods over the month.
mardi 12 janvier
US: falling confidence among small-medium sized firms

US: NFIB Small Business optimism (Dec.): 95.9 vs 100.2 expected (prior: 101.4)

  • The index has sharply declined and was back to its March 2020 level.
  • All major components have declined over the month, due to rising contagion cases and renewed local lockdowns.
  • Views on future economy have dramatically declined, the index being lower than in March 2020; this may reflect uncertainties on economy, sales and COVID, but also fears related to potential new US policy after Biden's victory.


US: JOLTS Job Openings (Nov.): 6527 vs 6450 expected (prior: 6632 revised from 6652)

  • Job openings have slowed down over the month but remained strong before the turn on labor seen in past December.
  • Hirings and separations were stronger than in the prior month, pointing towards rising turnover.


UK: BRC retail sales (Dec.): 4.8% y/y (prior: 7.7%)

  • Spending remained sustained on food and online sales. Proxy of preliminary retail sales pointed towards quite resilient trend, probably due to Christmas sales.


Brazil: CPI (Dec.): 1.35% m/m vs 1.21% expected (prior: 0.89%)

  • Prices (IPCA index) have accelerated from previous month trend. All sectors have seen acceleration in prices; the strongest rises were in food, housing, transport and education over the month.
  • Yearly trend has also accelerated further from 4.31% y/y the prior month to 4.52% y/y.
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