MARKET MOVER - BNP PARIBAS - Investment Services India

Key Data Preview
12.5
10.0
7.5
5.0
2.5
0.0
Chart 5: Eurozone M3 & Lending (% y/y)
Private Sector
Bank Lending
M3
-2.5
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
% y/y Aug (f) Jul Jun May
M3 0.4 0.2 0.2 0.0
M3 (3-mth Avg.) 0.2 0.1 0.0 -0.1
Private Sector Loans 1.2 0.9 0.5 0.2
Key Point:
Rates of growth in M3 and bank lending remain low
but have started to pick up.
BNP Paribas Forecast: Signs of Life
Eurozone: Monetary Developments (August)
Release Date: Monday 27 September
At 0.2% in July, the y/y rate of change in M3 was roughly
half a percentage point above its cycle low in February. We
forecast a further acceleration in August and given that the
base effects over the remainder of the year are favourable,
the y/y acceleration has further to go.
The differential between narrow and broad money growth
remains unusually wide but the gap is closing. The y/y rate
of increase in M1, having been in double digits for almost a
year from mid-2009, slowed to around 8% y/y in July.
The y/y rate of change in M3 minus M2 has been negative
since early 2009, with the relative steepness of yield curves
having encouraged purchases of longer-term assets which
are not captured in M3. This effect has started to diminish
as yield curves have flattened.
As with M3, the y/y rate of increase in bank lending to the
private sector remains very low but has picked up in recent
months. August’s 0.9% y/y growth rate was the highest in
over a year. A further acceleration is forecast in August.
Loan growth to households is the main reason for the pick
up. It has been improving since October last year, with the
y/y rate of change in July, of 2.8%, up by three percentage
points from its cycle low in September 2009. Bank lending
growth to non-financial corporates continues to lag.
Chart 6: French Sales of Manuf. Goods (3m avg)
12.5
10.0 Retail Sales of Manuf. Goods (including cars, Volume % y/y)
7.5
5.0
2.5
0.0
-2.5
-5.0
03 04 05 06 07 08 09 10
Source: Reuters EcoWin Pro
New Car Registrations (% y/y, RHS)
Volume index Aug (f) Jul Jun Aug 09
SA-WDA
% m/m -0.5 1.6 -1.4 -0.9
% y/y 1.4 1.0 -1.9 -0.7
Key Point:
July should be much stronger than August. But the
underlying trend is subdued.
50
40
30
20
10
0
-10
-20
-30
BNP Paribas Forecast: Volatile
France: Hh Consumption of Manuf. Goods (Jul.-Aug.)
Release Date: Tuesday 28 September
The raw data are more difficult to collect in August, so
INSEE publishes the July and August retail sales figures
together in September.
Car sales, which are included in the retail sales data, are
the main source of short-term volatility. Car registrations
declined in both July and August, more in the former
month. The progressive ending of the sales incentive
caused a sharp decline through H1 2010; it seems we are
now close to the low point, although the y/y rate will
continue to plunge because of the base effect. Sales of
other manufactured goods were reportedly quite dynamic
during the seasonal sales in July. Tourism activity was also
relatively strong in July after a poor performance in June.
As a result, we estimate retail sales jumped in July, fully
correcting the June decline. However, sales probably
declined again in August. Such a pattern would still open
the door for a solid gain in Q3. Retail sales in July and
August are among the first hard data for that quarter,
allowing us to have a clearer view of how much growth will
decelerate H2 2010 after a respectable 0.6% q/q GDP
increase in Q2.
Market Economics 23 September 2010
Market Mover
56
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