The Covid-19 pandemic is having a profound impact on household expenditures. The volume has dropped and its composition has changed significantly. As restrictions are gradually lifted, services such as recreation, food services and accommodation, which have seen a big reduction in demand due to the restrictive measures, could thrive, to the detriment – at least relatively speaking – of spending on goods. For the strength of the early phases of the recovery, pent-up demand is an important factor. It plays a smaller role in the services sector, which could mean that countries with a larger services sector not only have suffered more from restrictive measures but could also face a bigger challenge during the recovery.
Most of our uncertainty indicators continue to decline on the back of vaccination campaigns that pick up speed and better economic data, although in several countries the number of new infections is again rising strongly. Starting top left and moving clockwise, the number of references in the media to uncertainty, after declining very strongly in recent months, has now more or less stabilized.
It is a true pleasure to read the April 2021 edition of the Beige Book, which the Federal Reserve Board (Fed) publishes eight times a year on current economic conditions in the US. Without exception, all twelve districts covered by Fed surveys reported an improvement in the business climate, with the wealthiest and most productive regions of the northeast, like Philadelphia, bordering on euphoria.
Italy’s cyclical improvement continues. This is reflected in our pulse, with several indicators rising above their long-term average. This is especially true for indices pertaining to industrial activity. The Purchasing Managers Index (PMI) for the manufacturing sector rose to its highest level in 21 years.
Faced with the resurgence of the pandemic, retail and leisure footfall declined in the developed economies, especially in Europe, during the week of 4-11 April. Moreover, the OECD Weekly Tracker of annual GDP growth continued to decline in Europe.
