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Macro Weekly

Macro week 14 by #1 Chief Economist Harald Magnus Andreassen, and Macro Analyst Tina Norden

Last week

The virus

  • During last week most countries reported fewer new corona cases. The Easter holiday may have reduced testing in many countries but growth was slowing the previous week, as ‘normal’ after some weeks with R’s >>1. Restrictions & lower mobility worked, once more. Sweden and France is still heading upwards, while most other European countries are reporting fewer cases. This week will reveal the ‘Easter impact’
  • In UK, the no. of new cases is still falling fast as a large part of the population now is immune, and the infection level is down 94% from the peak. In Israel, the no. of cases is falling by 50% per week, and the virus is now almost eradicated
  • Norway reported a decline in new cases the past 7 days, at least partly due to lower testing activity during the Easter holiday, and the positivity rate rose last week. However, the no of cases flattened before Easter and the no. of new hospitalisations has been heading down too, and the decline started before Easter
  • The pace of vaccinations in EU/Norway has gained speed recently, and will accelerate further the coming weeks as BioNTech/Pfizer ramps up its deliveries. The Astra/Zeneca vaccine has lost momentum in EU/Norway due to more serious/deadly blood clot cases reported by several countries
  • The main risk going forward: The vaccines are not able to cope will with new variants of the virus and that those previously infected with other strains of the virus will not be immune vs. new variants

The economy:

  • Global
    • The composite global PMI probably rose by 1.2 – 1.4 p in March, to approx. 54.5, best since 2017, signalling growth well above trend. The manufacturing PMI was better than we assumed. In the US, the manuf. ISM rose to the highest level since 1983, and the service sector ISM skyrocketed to the highest level ever amid the first, partial reopening of the US economy. National surveys in the EMU are signalling higher growth too. Both in the US and elsewhere, delivery times are rising faster than ever, and prices are following suit, broad based. There are still some coronavirus ‘issues’, and harsh winter weather in US created some extra challenges in February, but most likely the main reason for rising delivery times/rapid prices increases is the surprisingly strong demand for goods. Employment is growing again but companies complain about availability of labour, especially in the US (small businesses are reporting unprecedented  problems filling their many vacancies)
  • USA
    • More than 0.9 mill jobs were added in March, 50% more than expected (given upward revisions of Jan & Feb). Many schools & restaurants reopened, but all sectors reported higher employment. However, the employment rate is still 5.4% below the pre-pandemic level, equalling 9 mill. missing jobs. In leisure/hospitality, 18%/3 mill jobs are missing . Unemployment fell by 0.2% to 6.0%, as expected
    • Auto sales rose sharply in March, we assume supported by the 2nd stimulus cheques. Consumer confidence rose sharply as well, and house prices are soaring
  • EMU
    • Retail sales in several countries rose in February, but less than expected, at least in Germany. Inflation remains tame
  • Norway
    • Retail sales kept up better than we assumed in February, given partly closure of most shops in the Oslo area. Sales fell just 0.3% m/m, and sales are still 8% above the pre-pandemic level

 

This week:  

  • PMI
    • We expect a 1.3 - 1.4 p lift in the global composite PMI. The output component in the manufacturing index rose by 0.8p, and the service sector PMI rose by some 1.5 pp. The PMI rose sharply in Europe (both EMU & UK), while the Chinese composite PMI recovered, thanks to strong growth in the service sector
  • USA
    • The focus has turned sharply towards inflation, and for several months core inflation at early stages in the PPI has signalled increased price pressures. The recent PMI/ISMs have been ‘chocking’, with unusually wide spread reports of shortages and price increases, amid strong growth in final demand for goods. Now, the core finished goods PPI is expected up ‘just’ 0.2%. The risk is on the upside  
    • We doubt the minutes from the last FOMC meeting will reveal more on the different views of the committee, than the ‘dot-plot’ spread signalled. Some more members (but not the majority!) thought that the signal rate probably would be hiked earlier than 2024
  • EMU
    • Even here, businesses are signalling higher prices, and the annual growth in the PPI is expected up to 1.3% from 0.0%.
  • Norway
    • We expect CPI inflation to accelerate marginally in March, by 0.1 pp for the CPI-ATE, and by 0.2 pp for the headline CPI, to 2.8% and 3.5% resp. We expect a stronger NOK to dampen inflation, and that the domestic cost pressure will be moderate too. However, higher inflation abroad will have some impact on CPI prices in Norway as well
    • House prices are rising at a 13% pace since last May. The inventory of unsold homes have fallen sharply but supply may now be increasing somewhat
    • We expect a 1%+ drop in manufacturing production in February following the 2.5% lift in January

Macro week 14 report:  Macro Weekly SB1 Markets 21-14.pdf


Previous reports: 

Macro week 13 report: Macro Weekly SB1 Markets 21-13.pdf
Macro week 12 report: Macro Weekly SB1 Markets 21-12.pdf
Macro week 11 report: Macro Weekly SB1 Markets 21-11.pdf
Macro week 10 report: Macro Weekly SB1 Markets 21-10.pdf
Macro week 9 report: Macro Weekly SB1 Markets 21-09.pdf
Macro week 8 report: Macro Weekly SB1 Markets 21-08.pdf
Macro week 7 report: Macro Weekly SB1 Markets 21-07.pdf
Macro week 6 report: Macro Weekly SB1 Markets 21-06.pdf
Macro week 5 report: Macro Weekly SB1 Markets 21-05.pdf
Macro week 4 report: Macro Weekly SB1 Markets 21-04.pdf
Macro week 3 report: Macro Weekly SB1 Markets 21-03.pdf
Macro week 2 report: Macro Weekly SB1 Markets 21-02.pdf

 

2020 reports:
Macro week 52 report: Macro Weekly SB1 Markets 20 - 52.pdf
Macro week 51 report: Macro Weekly SB1 Markets 20 - 51.pdf
Macro week 50 report: Macro Weekly SB1 Markets 20 - 50.pdf
Macro week 49 report: Macro Weekly SB1 Markets 20 - 49.pdf
Macro week 48 report: Macro Weekly SB1 Markets 20 - 48.pdf
Macro week 47 report: Macro Weekly SB1 Markets 20 - 47.pdf
Macro week 46 report: Macro Weekly SB1 Markets 20 - 46.pdf
Macro week 45 report: Macro Weekly SB1 Markets 20 - 45.pdf
Macro week 44 report: Macro Weekly SB1 Markets 20 - 44.pdf
Macro week 43 report: Macro Weekly SB1 Markets 20 - 43.pdf
Macro week 42 report: Macro Weekly SB1 Markets 20 - 42.pdf
Macro week 41 report: Macro Weekly SB1 Markets 20 - 41.pdf
Macro week 40 report: Macro Weekly SB1 Markets 20 - 40.pdf
Macro week 39 report: Macro Weekly SB1 Markets 20 - 39.pdf
Macro week 38 report: Macro Weekly SB1 Markets 20 - 38.pdf
Macro week 37 report: Macro Weekly SB1 Markets 20 - 37.pdf
Macro Week 36 report: Macro Weekly SB1 Markets 20 - 36.pdf
Macro week 35 report: Macro Weekly SB1 Markets 20 - 35.pdf
Macro week 34 report: Macro Weekly SB1 Markets 20 - 34.pdf
Macro week 33 report: Macro Weekly SB1 Markets 20 - 33.pdf
Macro week 32 report: Macro Weekly SB1 Markets 20 - 32.pdf
Macro week 31 report: Macro Weekly SB1 Markets 20 - 31.pdf
Macro week 30 report: Macro Weekly SB1 Markets 20 - 30.pdf
Macro week 28 report: Macro Weekly SB1 Markets 20 - 28.pdf