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| HKECIC Weekly Market News |
| 8 March 2021 |
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| Market Snapshots |
| Asia and Australasia |
Hong Kong: PMI swings back to expansion territory in February
The IHS Markit Hong Kong Purchasing Manager’s Index (PMI) stood at 50.2 in February, up from 47.8 in January. The PMI posted back above the 50.0 no-change mark for the first time in three months. The improvement in business conditions reflected a waning negative impact of the COVID-19 pandemic as the latest wave of infections eased off. That said, restrictions to prevent the spread of the virus meant that business activity continued to fall in February. Output has decreased for the 35th successive months, but the latest fall was the softest since last November. In addition, efforts to secure inputs were again hampered by severe disruption to supply chains. Although the rate of lead time lengthening softened from January's survey record, delivery delays were still considerable and among the greatest in the series history.
Australia: Economy grew 3.1% in Q4 2020
Figures released by the Australian Bureau of Statistics (ABS) revealed that Australia's seasonally adjusted GDP rose 3.1% qtr/qtr in Q4 2020, extending a growth of 3.4% in Q3. Household spending increased 4.3% qtr/qtr as COVID-19 restrictions continued to ease, with Victoria (+10.4%) recording the strongest increase after strict lockdown restrictions were lifted. On the other hand, net external demand contributed negatively to the GDP as imports (+4.9%) rose faster than exports (+3.8%). While Australia’s economy has expanded in two straight quarters, economic activity remained 1.1% lower than recorded in Q4 2019. In annual terms, the Australian economy shrank by 1.1% in 2020. The Reserve Bank of Australia forecasts the Aussie economy will expand 3.5% over this year and next, continuing to be led by household spending. |
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| Europe |
Eurozone: January retail sales post sharpest decline in almost a year
According to the estimates from Eurostat, the seasonally adjusted volume of retail trade in the Eurozone fell by 5.9% mth/mth in January. This switches from a 1.8% rise in December 2020 and posts the sharpest decline since last April, as larger Eurozone economies extended social distancing restriction to combat the spread of the COVID-19 pandemic. Remarkably, sales of non-food products (except automotive fuel) were down sharply from December (-12.0% in January vs +1.0% in December). The news came at a time when Luis de Guindos, Vice-President of the European Central Bank, said Eurozone’s economic growth in the first half of this year would be relatively weaker than expected. |
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| North America |
US: Beige report shows recovery continues at a modest pace
The latest Beige Book published by the US Federal Reserve Board revealed that economic activity expanded modestly from January to mid-February for most districts, with most businesses remaining optimistic regarding the next 6-12 months as COVID-19 vaccines become more widely distributed. Despite challenges from supply chain disruptions, overall manufacturing activity for most districts increased moderately from the previous report. Meanwhile, the Fed said that there were reports of labor shortages among some businesses due to the pandemic and related issues. On a separate note, the Institute for Supply Management (ISM) Manufacturing PMI jumped from 58.7 in January to a three-year high of 60.8 in February. New orders, production, employment and new export orders increased at faster pace. |
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US-based card and gift retailer Paper Source Inc. has filed for Chapter 11 bankruptcy protection for potential sale of the business. Chief Financial Officer Ronald Kruczynski said in a court filing that the company has sustained deep damage to their finances and operations as a result of the ongoing COVID-19 pandemic. The struggling retailer, employing about 1,700 people in the country, plans to close at least 11 stores of its 158 stores during the process. |
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Copyright © 2021 Hong Kong Export Credit Insurance Corporation |
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Disclaimer
The information contained in the ‘Weekly Market News’ (WMN) is compiled by the Hong Kong Export Credit Insurance Corporation ("HKECIC") for general information only. Whilst HKECIC endeavours to ensure the accuracy of this general information, no statement, representation, warranty or guarantee, express or implied, is given as to its accuracy or appropriateness for use in any particular circumstances.
HKECIC is not responsible for any loss or damage whatsoever arising out of or in connection with any information including data or programmes on the WMN. HKECIC reserves the right to omit, suspend or edit all information compiled by HKECIC on the WMN at any time in its absolute discretion without giving any reason or prior notice. Users are responsible for making their own assessment of all information contained in this WMN and are advised to verify such information and obtain independent advice before acting upon it.
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