Macro Weekly

Macro week 49 by #1 Chief Economist Harald Magnus Andreassen

Last week:

Last week, AstraZenica/Oxford joined the Pfizer and Moderna in reporting encouraging vaccine news – but details in the human trial may be somewhat dubious. AstraZ’s vaccine is cheap, can be produced in far larger volumes then the two first applicants’, and is easily distributed. More companies are expected to report results the coming weeks/months – and substantial quantities of vaccines will likely be distributed in Q1
Still almost only good corona news from Europe, as the number of cases in most countries is falling sharply. Belgium is down 85% in 4 weeks, France 80% in 3 weeks. Spain, Italy and UK on the way down too – rapidly! Germany, Denmark and Sweden are still borderline cases, albeit with ‘low’ levels of infection, and some in the South East is not yet brought under control. Norway clearly turned down last week, as we expected. In the US, testing has fallen 10% during Thanksgiving, but growth in new cases has very likely slowed. Time spent outside home is increasing sharply in Belgium, ahead of any formal lifting of restrictions. Europe in avg is marginally up, US is still trending down
The global PMI probably fell some 0.5 – 1 p in November, due to a steep decline in the European service sector – no doubt due to the challenges created by the corona virus and ‘lockdowns’ – but still neither the PMIs nor national surveys signal a deep double dip in Q4, perhaps less than a 1% setback. The US PMIs are at the best level in many years both in manufacturing and services, signalling further growth in Q4, in line with most nowcasters. The first Chinese PMIs surprised at the upside, once more. The global PMI signals trend at growth (final data out this week)
In the US, president Trump said he would leave the White House if he lost the electorate, but added that he won the election and that a lot of things would happen before Jan 20. The bookmakers still say just 83/17 in favour of Biden. President-elect Biden has nominated Janet Yellen, the former Fed Governor as the new Treasury secretary. Other steady (& boring?) hands are also nominated
The 2^nd US GDP revision confirmed a Q3 7.4% growth (33.1% annualised). Corporate profits rose to a record level, supported by huge public support programs, equalling 4% of GDP, or 40% of normal profits – mostly in order to keep employees at work. Personal consumption rose in Oct but is still 1.6% below the Feb level. Income fell – but remains 4% above the Fed level, as public transfers have increased much more than the marginal decline in market based incomes! The savings rate is at 16%! New homes sales were higher than expected, and existing home prices are surging, as reported by two indices last week. Durable orders are back to a pre corona level, even if aircraft orders are still close to zero. Other orders, including investment orders, are well above the early 2020 level!
GDP in Sweden rose more than first reported in Q3. The KI survey index rose further in November and signals growth in Q4 too. The Riksbank decided to lift the QE target to 14% of GDP from 10% (by end of 2021). The signal rate is unchanged at zero.
In Norway, NAV unemployment rose by 8.5’ in November, or 0.2 pp to 7.0% all included, included part time unempl, up from 3.5% before corona. (Full time open unemployment rose by 10’, or +0.4 pp to 4.0%, up from 2.2% before corona. More furloughed persons in travel, tourism & services explain most of the increase in Nov – for obvious reasons. No drama in other sectors, in contrast to the March/April panic. The LFS unemployment rate has stabilised at 5¼ %, while employment is increasing – and it is down ‘just’ some 1.5% y/y. Retail sales rose a tad more than expected, and is still 10% above the pre corona level. Hotel guest nights are down 40%, Norwegians down -29%, and Norwegian recreational traffic down 20%. ‘No’ foreigners. Housing starts are probably on the way up again, not surprising giving prices in the 2^nd hand market

This week: More PMIs/ISMs, auto sales, US payrolls & Beige book. Credit growth & savings in Norway

November PMIs/ISM

The global composite PMI very likely fell, due to a sharp setback in European services. The global manufacturing index probably rose, while the service index fell. The global composite index should report growth close to trend. Europe may have a moderate double dip, but not the rest of the world. In US, the ISM may decline, but it will remain at a robust level

Global auto sales

We expect mixed in sales in November, in sum we expect them up – but China and several other EM countries will not report data this week

USA

Nonfarm payrolls is expected up 0.5 mill, far above a normal growth pace but far too slow the close the 10 mill gap anytime soon. Unemployment is expected further down
Fed’s Beige Book should report continued growth but as for the employment data – not sufficient to bring the economy back on track

EMU

Retail sales

Norway

Credit growth is probably slowing, due to lower demand from the business sector, while households are still eager to borrow
The household savings rate will ‘collapse’ in Q3, as consumption rose buy almost 10%

Macro week 49 report: Macro Weekly SB1 Markets 20 - 49.pdf

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