The Employment Service of Slovenia published the latest unofficial data on the number of unemployed on Wednesday (14 April). Their number fell further, below 81,000. Given the circumstances (Easter lockdown between 1st and 11th April), this is a minor positive surprise.

Gross disposable income of households increased in Q4 2020 by one tenth (+3.8% or EUR +1.1 bn in 2020/2019). In times of crisis, household income falls but large public transfers (through job protection schemes and direct transfers) helped to limit the reduction in labour income in depressed sectors.

February full-month data on electricity consumption sounds intriguing (-8.1% drop at large energy users, after -6.5% in January) as industrial production in manufacturing was up by 1.8% y-o-y in January (February release should not be very different due to rising optimism). The rather large difference can probably be attributed mostly to growth in less-energy intensive production, in the high-value added segments (electrical, pharmaceutical, automotive).

Consensus Outlook for Slovenia’s GDP fell a bit in last month what was expected due to positive surprise in lower-than-expected reduction in GDP for 2020 (-5.5 %). Consensus GDP growth stands currently at 4.4 % for 2021 and at 4.3 % for 2022. But this does not tell the whole story as changes in subcomponents of the GDP (of expenditure method) were different.

There is a lack of forward-looking indicators in the past 2 weeks. Coincident indicators show that GDP was probably 2 % lower y-o-y in January, approximately on the same level in February and will probably grow in March as given current circumstances a hard lock-down for the 2nd half of March 2021 is unimaginable.

First release of Slovenia’s GDP at -5.5% (real) for the 2020 was above our expectations (we were on the optimistic side of the camp) which stood at -6%. Nominal GDP decreased just by 4.3%. Contribution of the household spending (55% of GDP) proved to be the main contributor to the reduction, falling by 9.8%. Real exports fell (-8.7%) less than imports (-10.2%) implying positive contribution of net exports to GDP (by 0.4 perc. points).

The situation on the job market continues to improve in February and follows seasonal pattern. The number of registered unemployed fell again below 90 thousand in mid-February. December numbers on new jobs added were positive as they increased by 0.2% vs. November, confirming that manufacturing and construction added most of the jobs.

Just as the public was frightened by new mutated variants of the COVID-19 virus, the numbers of infected, hospitalized, and dead people in Slovenia continued to decline on an unprecedented pace, similar to that in May 2020. The orange zone on the government traffic sign implies that all primary schools are opening on 15th February, the same goes for the last year class at secondary schools, including some lectures on universities. In addition, all retail outlets are able to operate freely. A very important restriction lifted is free movement across municipality borders and gatherings of up to 10 people.

The latest European sector PMI data showed rising output in nine out of 20 monitored sectors in January, the same total as in November and December. Of these, all were located in manufacturing except Banks, which was ranked fifth overall. There were signs of a widespread slowdown in manufacturing output growth by sector, while in services a number of sectors registered faster declines in January. The seven segments registered weaker rates of expansion than in December: Machinery & Equipment, Chemicals, Metals & Mining, Automobiles & Auto Parts, Construction Materials, Forestry & Paper Products and Technology Equipment.

In January 2021, the sentiment indicator increased by 2. 2 p. p. compared to December 2020. The monthly increase was influenced by all confidence indicators, except one (retail trade). The manufacturing confidence indicator was 4 percentage points higher than in December 2020.

The government extended the official pandemic for 2 more months, effective from January 17th, 2021. We believe the extension of support measures to be a positive sign. The scheme for covering fixed costs has been extended till the end of March (1st quarter 2021) and it is very likely (not official yet) that the scheme for supporting the job market (temporary lay-offs) will be extended until April 2021.

November data on exports (1 week ahead of Eurostat release) from Slovenian Statistical Office shows that trends have improved in final months, what was expected based on improving sentiment in manufacturing as well as anecdotal data from main companies. Y-o-y change (Nov. 20/Nov. 19) was positive (+0.9%; +EUR 30 m), for both group of markets (exports to EU: +EUR 20 m and exports to non-EU: +EUR 10 m). One must be careful by interpreting the headline figure for 11 months (-2.7% y-o-y) as the change severely underestimates the reduction of exports which is due to one-off increase in distribution of drugs of one bigger pharmaceutical group with operations in Slovenia and the region.