Release date 5 November 2021
The service part of the world economy goes into high gear
Number of infections kept creeping up after autumn school holidays ended. In one week (between 29 October and 4 November), 19 thousand people were diagnosed with COVID-19 disease in Slovenia, what is 0.9% of total population. Of them, 63% were not vaccinated and 37% were vaccinated. A far more important number is the number of hospitalization and especially the number of patients on intensive care, which stood at 177 on 4 October. The current maximum capacity is between 160 and 180, but we do not expect a decision on imposing a heavy lockdown, despite rumours in some media. We do expect a more stringent inspection overview and extension of PCT criteria as well as some restrictiveness measures in some services sectors. In some services only PC criterion will apply. We believe the Ministry of Health wants to retain some flexibility also by sending the patients to other countries, as Germany. Due to rising COVID-19 infections, consumer sentiment declined in recent month, but we do believe that consumer spending will be more resilient.
More economic topics are below in the attachment.
The October value of the Global Composite Purchasing Managers Index (PMI), calculated by J.P. Morgan, increased slightly (from 53.3 to 54.5) as optimism in the service sectors of the global economy rose sharply (from 53.8 to 55.6), while the manufacturing PMI remained almost unchanged (it grew from 54.1 to 54.3). In the case of manufacturing PMI, the estimate of current production, as well as new orders, decreased slightly (meaning slightly lower growth than in previous months). The estimate of both input and output prices has increased, which means that companies are relatively successful in passing on final prices to further participants in the value chain. It is important to note here that the situation in the ASEAN countries improved significantly in October (the COVID-19 epidemic had a less negative effect on production), except for Myanmar, where the PMI was below 45. In Asian economies, sectors where activity was highest in October were machinery and equipment manufacturing sector, banks, industrial services, insurance and pharmaceuticals. The declines were present in the mining sector, paper industry, software, cars and automotive parts.
The level of euro-areamanufacturing PMI (especially the Netherlands, Ireland, Italy, Austria and Greece) remained high in October and optimism was similarly high in the US. In these economies, the number of employees in manufacturing increased, while it decreased in China and India. Index value of PMI in the euro area (58.3) fell only slightly from the September level (58.6), mainly due to decrease of sentiment in Germany, France and Austria, where it though remained quite high. In the Netherlands, Ireland and Italy, where the importance of the automotive industry is lower, PMI values have even reached higher values (above 60, which means strong growth in production and new orders). Among the major business challenges, European companies still cite the lack of available container capacity, the lack of raw materials and semi-finished products and other delays in transport.
EU Employment Dynamics: The Pandemic Years and Beyond; Jestl Stefan and Stehrer Robert; wiiw Research Report No. 457, November 2021; available at: https://wiiw.ac.at/eu-employment-dynamics-the-pandemic-years-and-beyond-p-5975.html; free download
Comment/Abstract: The economic shock induced by the pandemic has plunged European economies into a recession. Lockdowns and social distancing measures have affected economic life in a substantial way, with industries and population groups facing varying difficulties. This study explores potential future employment dynamics across European industries and employment groups for the period up to 2026 by drawing on past sectoral trends and the latest macroeconomic forecast results from the International Monetary Fund (IMF) and the European Commission. A scenario analysis is also carried out, taking into account the great uncertainty and risks that are related to the baseline forecasts.
Exports of goods, Slovenia, September 2021 (Statistical Office of RS); EUR 3.8 billion
Comment: We do expect slowdown of exports in September, mainly due to partial closure of some automotive assembly facilities in Slovenia; the trading part of exports will remain high, mainly due to higher growth in consumption of fuel in neighbouring countries.
“The key to making a good forecast is not in limiting yourself to quantitative information.” (Nate Silver)