Daily Insight
Group Economics Macro & Financial Markets Research
26 February 2016
Euro M1 points to turn in momentum Aline Schuiling Senior Economist Tel: +31 20 343 5606 aline.schuiling@nl.abnamro.com Maritza Cabezas Senior Economist Tel: +31 20 343 5618
Eurozone real M1 money growth slows down ….
… while bank lending to non-financial companies recovers from December blip
US business spending unexpectedly strong…
…suggesting that the sharp fall in manufacturing is now behind us…
…however, we don’t expect a rebound given the ongoing weakness in energy related activities
maritza.cabezas@nl.abnamro.com
Eurozone real M1 money growth slows down …. The eurozone broad monetary aggregate M3 grew by 5.0% (annual rate) in January, up from 4.7% in December. Meanwhile, the narrow M1 growth rate edged lower from 10.8% in December to 10.5% in January. Real M1 money growth (corrected for HICP inflation) tends to be a relatively good leading indicator for economic growth in the eurozone. It has slowed down since the middle of 2015, from an annual growth rate of close to 12%, to around 10.2% in January. This seems to be in line with the fact that the eurozone economy lost some momentum in the course of last year and also adds to the evidence that GDP growth probably slowed down somewhat further in the first months of this year.
Real M1 money growth and economic activity %yoy
level
65
13 11 9 7 5 3 1 -1 -3 -5
60 55 50 45 40 35 00
02
04
06
08
Real M1 money supply (lhs) Source: Thomson Reuters Datastream
Insights.abnamro.nl/en
10
12
14
16
Composite PMI (rhs)
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Daily Insight – Euro M1 points to turn in momentum - 26 February 2016
… while bank lending to companies recovers from its December blip The counterparts of M3 money growth show that bank lending to non-financial companies picked up somewhat in January. Annual growth, corrected for sales and securitization, rose from 0.1% in December to 0.6% in January, roughly undoing the blip in December 2015 and returning to the level of November. The monthly flow in loans to companies improved from EUR -19bn in December to EUR 23bn in January. All in all, lending to companies, which tends to follow changes in fixed investment with a delay, remains sluggish. Meanwhile, annual growth in loans to households stabilized at 1.4% in January, with the monthly flow rising from EUR 2bn to EUR6bn. US business spending strong… January’s US durable goods orders increased by 4.9%, after declining 4.6% in December. Part of the large gains are related to civilian aircraft and dense goods, which are particularly volatile. The more closely watched business spending rose solidly in January. Core capital goods, excluding defence and aircrafts rose by 3.9% after falling 3.7% the previous month. This was the strongest increase since June 2014. Meanwhile core capital good shipments used by the BEA to estimate investment in durable equipment in the National Accounts fell slightly by 0.4% in January down from 0.9% the previous month. …suggesting that the sharp fall in manufacturing in manufacturing is now behind us This data suggest that business investment could be improving in the first quarter. However, Markit’s US manufacturing PMI corresponding to February was still weak, leaving it at its lowest level since October 2012. The forward looking details of the report were generally weak, with the new orders index falling more than the headline. This suggests that a rebound of manufacturing activity is unlikely. Indeed uncertainty about global growth and energy are still weighing on the US manufacturing outlook.
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Daily Insight – Euro M1 points to turn in momentum - 26 February 2016
Day
Date
Time
Country
Monday Monday Monday Monday
22/02/2016 22/02/2016 22/02/2016 22/02/2016
10:00:00 10:00:00 10:00:00 15:45:00
EC EC EC US
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
23/02/2016 23/02/2016 23/02/2016 23/02/2016 23/02/2016 23/02/2016 23/02/2016 23/02/2016
08:00:00 08:45:00 10:00:00 13:00:00 14:00:00 15:00:00 16:00:00
Wednesday
24/02/2016
Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday Friday Friday Friday Friday
Key Economic Indicators and Events
Period
Latest outcome
Consensus
ABN AMRO
PMI manufacturing - index PMI services - index Composite PMI output Markit - Flash PMI
Feb P Feb P Feb P Feb P
51.0 53.0 52.7 51.0
52.0 53.4 53.3
51.8 53.0 52.9
DE FR DE TR HU US US US
GDP - % qoq, final estimate and details Business confidence manuf. - index Ifo - business climate - index Repo rate - % Base rate -% S&P/Case Shiller house price index Existing home sales - % mom Conference Board cons. confidence - index
4Q F Feb Feb Feb 23 Feb 23 Dec Jan Feb
0.3 100.0 105.7 7.5 1.35 0.8 0.4 92.2
0.3 106.9 7.5 1.35 0.9 -1.5 97.2
16:00:00
US
New homes sold - % mom
Jan
-9
-3
25/02/2016 25/02/2016 25/02/2016 25/02/2016 25/02/2016
10:00:00 10:30:00 11:00:00 14:30:00 15:00:00
EC GB EC US US
M3 growth - % yoy GDP - % qoq Core inflation - % yoy New durable goods orders - % mom FHFA house price index - % mom
Jan 4Q -2nd Jan F Jan P Dec
5.0 0.5 1.0 4.9 0.4
4.7 0.5 1.0 2.0 0.6
26/02/2016 26/02/2016 26/02/2016 26/02/2016 26/02/2016 26/02/2016 26/02/2016 26/02/2016
00:30:00 06:30:00 11:00:00 14:00:00 14:30:00 16:00:00 16:00:00 16:00:00
JP NL EC DE US US US US
CPI - % yoy Producer confidence manufacturing - index Economic sentiment monitor - index CPI - % yoy GDP - % qoq annualised Univ. of Michigan cons. confidence - index PCE deflator core - % mom PCE deflator core - % yoy
Jan Feb Feb Feb P 4Q S Feb F Jan Jan
0.0 3.2 105.0 0.5 0.7 90.7 0 1.4
-0.1 104.5 0.1 0.5 91.0 0 1.5
106.6 7.5 1.35
96.5
0.4 1.0 1.0
104.0 0.2 0.7 0 1.5
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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