MARKET COMMENTARY

MARCH 2021

In the US, in March, it was reported that the IBD/TIPP Economic Optimism Index increased 3.5 points to 55.4 the highest since February 2020. Data showed that the ISM Manufacturing PMI rose to 64.7 in March from 60.8 in February. It was reported that the IHS Markit US Services PMI increased to 60 in March from 58.8 in February. Data showed that the University of Michigan's consumer sentiment for the US was increased to 84.9 in March from 76.8 in February, this was the largest expansion in consumer morale since May 2013.

In Europe, during its March meeting, the European Central Bank (ECB) left key interest rates at record-low levels and said it would implement emergency bond purchases at a momentous pace throughout the following quarter. The goal is to bring government bond yields down and to aid the Eurozone economic recovery. It was reported that the Capacity Utilization in the Euro Area rose to 77.6% in Q1 2021 from 76.3% in Q4 2020. Data showed that the IHS Markit Eurozone Manufacturing PMI rose to a record high of 62.5 in March of 2021 from February's 57.9. It was reported that the consumer confidence indicator in the Euro Area increased to -10.8 in March, the highest level since February 2020. The latest data showed the strongest expansion in the service sector since July 2014. Data showed that the IHS Markit Eurozone Services PMI rose to 48.8 in March from 45.7 in the previous month.

In Japan, in March, data showed that the Japanese Yen LIBOR Three Month Rate was at -0.09 percent. It was reported that the Bank Lending Rate in Japan remained unchanged at 1% in March. Data showed that the au Jibun Bank Japan Manufacturing PMI increased to 52.0 in March. It was reported that the Bank of Japan's index for big manufacturers' sentiment improved to 5 in Q1 2021, from -10.0 in the previous three-month period.

APRIL 2021

In the US, in April, it was reported that the University of Michigan's consumer sentiment index for the US increased to 86.5, from 84.9 in March. Data showed that the IHS Markit US Manufacturing PMI rose to 60.6 from 59.1 in March. During a sharp rise in output, firms quoted difficulty in sourcing raw materials and inputs. It was reported that the IHS Markit US Services PMI increased to an all-time high of 63.1, from 60.4 in the previous month. New businesses expanded the most, aided by an increase in new export orders. At its meeting on 27–28 April, the Federal Open Market Committee (FOMC) decided to hold the target range for the federal funds rate at its effective floor of 0.00%–0.25%. Furthermore, the Fed reiterated its dedication to supporting the economic recovery.

In Europe, it was reported that the ZEW Indicator of Economic Sentiment for the Euro Area decreased to 66.3, the lowest reading since January amid concerns over the relapse in the fight against COVID-19. Data showed that the IHS Markit Eurozone Manufacturing PMI increased to 63.3 from 62.5 in March. It was reported that the IHS Markit Eurozone Services PMI increased to 50.3, from 49.6 in the previous month. The latest data showed the first growth in activity since last August. It was reported that the consumer confidence indicator in the Euro Area (Consumer ESI) was -8.1, the peak since February 2020. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality.

In Japan, traders remained alert amid the COVID-19 resurgence. It was reported that the au Jibun Bank Japan Manufacturing PMI increased to 53.3 from the previous month reported as 52.7. This was the third straight month of development in industrial activity. It was reported that the au Jibun Bank Japan Services PMI was at 48.3, the data remained unchanged from March. Data showed that the au Jibun Bank Japan Composite PMI rose to 50.2 in April 2021 from 49.9 a month earlier. This was the first growth in the private sector since January 2020, as the economy recovered moderately from the effects of COVID-19.

MAY 2021

In the US, it was reported that the University of Michigan's consumer sentiment index decreased to 82.8 in May of 2021 from 88.3 in April. Rising inflation also meant that real income expectations were the weakest in five years. Meanwhile, the current economic conditions subindex fell to 90.8 from 97.2. Amid greater customer confidence and the reopening of non-essential businesses, data showed that the IHS Markit US Services PMI rose to 70.1 from 64.7. The latest data pointed to the sharpest rate of expansion since data collection for the series began in October 2009. It was reported that the IHS Markit US Manufacturing PMI increased to 61.5 from 60.5. New orders expanded while output growth accelerated despite the deterioration in vendor performance due to restrained operating activity.

In Europe, data showed that the ZEW Indicator of Economic Sentiment for the Euro Area increased to 84 in May of 2021 from the previous month's figure of 66.3. It was the highest data point since February of 2000. The ZEW Economic Sentiment Index measures consumer sentiment on a scale between -100 to +100 where 0 indicates neutrality. It was reported the IHS Markit Flash Eurozone Manufacturing PMI decreased to 62.8 from the previous month of 62.9. New order growth slowed but the pace of job creation remained solid. Data showed that the consumer confidence indicator in the Euro Area (Consumer ESI) rose to -5.1 from -8.1 in April, the highest level since October 2018. The Consumer ESI measures consumer confidence on a scale between -100 to +100 where 0 indicates neutrality. It was reported that the IHS Markit Eurozone Services PMI increased to 55.5 from 50.5 in the previous month. Business activity across the region’s service sector expanded in May at a rate not seen since June 2018. New orders for services increased for the first time since last July, growing at the fastest pace since January 2018.

In Japan, it was reported that the au Jibun Bank Japan Manufacturing PMI dropped to 52.5 from 53.6 in the prior month. The data reflected the latest wave of local COVID-19 cases and renewed regulations under state of emergency laws. Data showed that the au Jibun Bank Japan Services PMI decreased to 45.7 from 49.5 a month earlier. This was the 16th straight month of contraction in the service sector and the steepest pace since August 2020. The consumer confidence index in Japan decreased to 34.1 from 34.7. It was the weakest data point since February 2021, most main sub-indices worsened such as the overall livelihood, income growth, and employment perceptions.

JUNE 2020

In the US, at its 9–10 June meeting, the Federal Reserve left the target range for its federal funds' rate unchanged at 0-0.25 percent. Moreover, the Fed reaffirmed its commitment to using its full range of powers to support the economic recovery. The United State’s Consumer Confidence Index data reported an increase to 98.1 in June 2020 from the previous number of 85.9. Data showed that the IHS Markit US Manufacturing PMI rose to 49.8 in June of 2020 from previously reported 39.8 May 2020. The data pointed to only a minimal deterioration in US manufacturing conditions as goods producers and their customers began to reopen amid looser restrictions following the COVID-19 outbreak. The downward trend in production eased markedly as new orders stabilized amid reports of relative improvement in demand conditions. Companies reported a further drop in workforce numbers as evidence of spare capacity remained unchanged, but the rate of job losses also decreased.

In Europe, the Bank of England unanimously voted to retain the key bank rate at a historic low of 0.1% on 18th June. The Central Bank will proceed with the current programme of £200 billion of UK government bonds and sterling non-financial investment-grade corporate bond purchases. On 6th June, the ECB expanded its pandemic emergency purchase programme by €600 billion to a total of €1.35 trillion, more than an expected €500 billion increase, and extended it to at least June 2021. The interest rate on the ECB's Main Refinancing Operations, which banks can tap to obtain one-week credit from the central bank, was left at 0 percent while the rate on overnight liquidity was fixed at 0.25 percent. The bank's Deposit Facility Rate was left at -0.5 percent. Data showed that the economic sentiment indicator in the Euro Area rose by 8.2 points from the previous month to 75.7 in June 2020. It was reported that the IHS Markit Flash Eurozone Composite PMI increased to 47.5 in June from 31.9 in May. On 25th June, the European Central Bank (ECB) launched a new backstop facility to provide precautionary euro repo lines to central banks outside the euro area in response to the COVID-19 crisis. The Eurosystem repo facility for central banks (EUREP) will be available until June 2021 and will address possible euro liquidity needs in case of market dysfunction resulting from the COVID-19 shock that might adversely impact the smooth transmission of ECB monetary policy.

In Japan, data showed that the au Jibun Bank Japan Manufacturing PMI increased to 40.1 in June, amid the prolonged impact of the COVID-19 pandemic on activity. The latest data signaled a 14th consecutive month of contraction as new orders, output, employment, and purchasing activity continued to fall at sharp rates. On the price front, selling prices dropped as businesses strived to stimulate sales, while input costs rose following a decline in May. At its monetary policy meeting ending on 16th June, the Bank of Japan (BoJ) left its monetary policy unchanged, although revised upwards the number of business loans it could potentially back under a pre-existing scheme designed to support the economy. The BoJ also left the short-term policy rate on the current account balances of banks that it holds unchanged at minus 0.10%. It was reported that the Consumer Confidence Index in Japan increased to 28.4 in June 2020 from 24.0 in the previous month of May, as investors remain pessimistic amid the COVID-19 crisis.

JULY 2020

In the US, data showed that consumer sentiment dropped to 72.5 in July 2020. This was mainly due to the continued resurgence of COVID-19. It was reported that the current economic conditions index declined to 82.8 from 87.1. The US economy decreased by an annualized 32.9 percent in the second quarter of 2020. This is the biggest contraction ever, pushing the economy into a recession as the pandemic forced many businesses including restaurants, cafes, stores, and factories to close and people to stay at home, hurting consumer and business spending. Data showed that personal consumption, exports, private inventory investment, nonresidential fixed investment, residential fixed investment were decreasing. The recovery in H2 will depend on the capacity of the country to control the pandemic and avoid more waves of infections. Fed officials see the US economy decreasing 6.5 percent in 2020. In a nascent sign of recovery, the IHS Markit US Manufacturing PMI increased to 51.3 in July of 2020 from 49.8 in June. The data pointed to the first expansion in factory activity since February. Overall growth was driven by the first upturns in both output and new orders for five months. Firms noted that the rise in production was due to greater new business inflows. Data showed that workforce numbers in the manufacturing sector were broadly unchanged in July compared to June. On July 29th, 2020 The Federal Reserve left the target range for its federal fund's rate unchanged at 0-0.25 percent. Data showed that government spending in the United States increased to 3369.89 USD Billion in the second quarter of 2020 from 3347.86 USD Billion in the first quarter of 2020.

In Europe, it was reported that the economic sentiment indicator in the Euro Area rose by 6.5 points from the previous month to 82.3 in July 2020, moving further away from an 11-year low hit in April but remaining well below the February's pre-pandemic level. The IHS Markit Eurozone Composite PMI increased to a 25-month high of 54.8 in July 2020 from 48.5 in the previous month. Both manufacturing and services returned to growth as more businesses reopened following the COVID-19 lockdown. It was reported that new orders rose for the first time since February and to an extent not seen since October 2018, while employment declined for the fifth month in a row. On the price front, average prices charged for goods and services dropped at a slower pace. The European Central Bank left monetary policy unchanged during its July meeting.

In Japan, data showed that the au Jibun Bank Japan Manufacturing PMI increased to 45.2 in July 2020. The latest data signaled a 15th straight month of contraction in the sector, but the smallest since February, amid the prolonged impact of the COVID-19 pandemic on activity. Output continued to fall at much softer rates, while new orders fell to the smallest in five months, helped by gradually easing the downturn in export sales across the manufacturing sector. It was reported that employment declined for the fifth month running, as firms opted to delay replacing retired staff and those leaving for other personal reasons. On the price front, input cost inflation eased from June's five-month high, while output charges stabilized, following an extended period of price discontinuing. Business sentiment was the strongest since January. It was reported that the consumer confidence index in Japan increased to 29.5 in July 2020 from 28.4 in the previous month. During its July meeting the Bank of Japan kept its key short-term interest rate at -0.1% and maintained the target for the 10-year Japanese government bond yield at around 0%. Meantime, in a quarterly outlook report, the central bank said that Japan's economy is likely to improve gradually from the second half of this year.

AUGUST 2020

In the US, The Conference Board’s consumer confidence index decreased to 84.8 in August from 95.9 in July. Therefore, the index plunged further below the 100-threshold that separates pessimism from optimism. Data showed that the IHS Markit US Manufacturing PMI increased to 53.6 in August from 50.9 in July. The data pointed to the strongest increase in factory activity since January of 2019, driven by quicker expansions in output and new orders as the resumption of business operations and the reopening of the economy had helped to boost sales. For the first time since February, manufacturers registered a rise in the level of work-in-hand in August. It was reported that the US economy added 1.371 million jobs in August of 2020. That leaves payrolls 11.5 million below its pre-pandemic level as more than 22 million jobs were lost in March and April.

In Europe, the Bank of England voted unanimously to maintain the key bank rate at a record low of 0.1% and the size of its bond-buying program at £745 billion during its August meeting. Policymakers said Britain's economy will take longer to recover from COVID-19 than previously forecast and warned about the risks of cutting interest rates below zero. Data showed that the economic sentiment indicator in the Euro Area increased by 5.3 points from the previous month to 87.7 in August. Sentiment remains well below pre-pandemic levels. It was reported that the IHS Markit Eurozone Composite PMI decreased to 51.6 in August from 54.9 in July. The data pointed to the loss of growth momentum in the private sector, as some restrictions were reimposed following the resurgence of COVID-19 cases in some countries across the region. New orders rose for the second consecutive month, albeit at a softer pace mainly due to a drop in export sales. Looking by region, output growth in Germany remained solid, while France suffered a loss of momentum.

In Japan, data showed that the au Jibun Bank Japan Manufacturing PMI increased to 47.2 in August. The latest data pointed to the 16th straight month of contraction in the sector, as manufacturing remained under pressure amid the ongoing COVID-19 crisis. Production fell at the least since February while new orders declined at the weakest pace since January. It was reported that job shedding eased to its softest in three months. Looking ahead, business sentiment picked up to the highest since before the COVID-19 in January, due to hopes that demand will rebound once the pandemic has diminished. Data showed that the Consumer Confidence Index in Japan declined to 29.3 in August from 29.5 in the previous month. It was reported that the au Jibun Bank Japan Services PMI fell to 45.0 in August from a final 45.4 in July. The sector continued to be affected by the ongoing COVID-19.

SEPTEMBER 2020

In the US, the IHS Markit US Manufacturing PMI increased to 53.5 in September of 2020 from 53.1 in August. The data pointed to the strongest expansion in factory activity since January of 2019. New business increased at a solid pace that was broadly similar to August’s 19-month high. The US economy added 661 thousand positions in September of 2020, rising strongly from an updated 1.5 million in the earlier month. In September, non-farm payrolls were below the February level by 10.7 million, or 7.0 percent. Data showed that US Continuing Jobless Claims had decreased to 12,580 from the previous month of 13,544. The Conference Board Consumer Confidence Index had increased to 101.8 in September from the previous month recorded 86.3.

In Europe, the Bank of England voted unanimously to maintain the Bank Rate at a record low of 0.1% and the size of its bond-buying program at £745 billion during its September meeting. The economic sentiment indicator in the Euro Area rose by 3.6 points from the previous month to 91.1 in September 2020, moving further away from an 11-year low hit in April but remaining well below pre-pandemic levels. Data showed that the IHS Markit Eurozone Composite PMI decreased to 50.1 in September of 2020 from 51.9 in August. The latest data points to a near stalling of the Eurozone economy at the end of the third quarter as rising infection rates and ongoing social distancing measures curbed demand. It was reported that manufacturing output growth accelerated in September to the fastest since February 2018 but the service sector, having already almost stalled in August, recorded the largest contraction of output since May.

In Japan, data showed that the Au Jibun Bank Japan Manufacturing PMI was revised higher to 47.7 in September 2020. The latest data was the highest since February, mainly due to the rising demand from China and South East Asia. It was reported that the Consumer Confidence Index in Japan increased to 32.7 in September 2020, the highest since February, from 29.3 in the previous month. The Bank of Japan kept its key short-term interest rate at -0.1% and maintained the target for the 10-year Japanese government bond yield at around 0% during its September meeting. The decision came hours after the US Federal Reserve pledged to hold interest rates near zero until at least 2023. Japanese policymakers slightly upgraded their views on the economy, saying it remains in a severe state but has started to recover as business activity gradually resumes. Data showed that the Japan CPI Tokyo YoY had decreased to 0.2 on Sep 2020 from the previous month recorded 0.3.

OCTOBER 2020

In the US, data showed that the US Continuing Jobless Claims had decreased to 7,756 from the previous month’s 11,979. In October, it was reported that the Markit US Manufacturing PMI had increased to 53.4 from the previous month’s 53.2. The data pointed to the 4th consecutive month of growth in factory activity and the strongest since January 2019. Output growth was the sharpest since November of 2019, driven by stronger client demand and higher new order inflows. Business expectations remained positive, improving on September’s 4-month low, as firms foresee a rise in output over the coming year. Data showed that the Conference Board Consumer Confidence Index had decreased to 100.9 from the previous month’s reported 101.3. It was reported that the Markit US Services PMI Business Activity Index had increased to 56.0 from September’s record 54.6.

In Europe, in October, the economic sentiment indicator in the Euro Area was unchanged at 90.9, remaining well below pre-pandemic levels, as rising COVID-19 cases across the region forced many European governments to impose fresh restrictive measures. Data showed that the IHS Markit Eurozone Composite PMI slipped to 49.4 from 50.4 in September. The latest data pointed to a renewed contraction in business activity across the eurozone after three months of expansion. During its October meeting, the European Central Bank left monetary policy unchanged, as policymakers took a wait-and-see approach until a new round of economic projections is reported in December, which will allow a thorough reassessment of the economic outlook and the balance of risks. The main refinancing rate was held at 0 percent while the deposit rate remained at a record low -0.5 percent. The ECB will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of €1.35 trillion. Data showed that the Markit Eurozone Manufacturing PMI had increased to 54.8 from September’s reported -0.5.

In Japan, in October, the Consumer Confidence Index Japan increased to 33.6 from the previous month reported 32.7, the highest since February but below pre-pandemic levels. It was reported that the Japan CPI Tokyo YoY had decreased to -0.3 from the previous month recorded 0.2. In October 2020, data showed that the au Jibun Bank Japan Manufacturing PMI was revised higher to 48.7 compared to the final 47.7 in the previous month. This marked the lowest deterioration in the health of the manufacturing sector since January. Output was reported to have contracted at the slowest pace since November 2019, while new orders fell at the softest pace since July 2019. At the same time, export orders increased for the first time in close to two years as external markets gradually recovered.

NOVEMBER 2020

In the US, in November, it was reported that the IHS Markit US Manufacturing PMI increased to 56.7 from 53.4 for the month of October. The data pointed to the strongest expansion in factory activity since September of 2014, largely driven by a notable uptick in new business as demand conditions improved. The rate of input price inflation picked up to the fastest since October of 2018, as demand for inputs increased once again and amid a record-breaking deterioration in vendor performance. In November, data showed that the US economy added 245K jobs, easing from a downwardly revised 610K in the previous month. It is the smallest employment gain since the job market started to recover in May from a record 20.8 million loss in April. Data showed that nonfarm employment was below its February level by 9.8 million, or 6.5 percent. Employment declined in government and retail trade while gains occurred in transportation and warehousing, professional and business services, and health care. During its November 2020 meeting, the Fed left the target range for its federal fund's rate unchanged at 0-0.25%.

In Europe, on 5th November, the Bank of England left its Bank Rate at a record low of 0.1% and increased the size of its bond-buying program by a larger-than-expected £150 billion to £875 billion, as the country entered a new coronavirus lockdown. Policymakers noted that there has been a rapid rise in rates of Covid infection and the UK Government has responded by increasing the severity of Covid restrictions. It was reported that the economic sentiment indicator in the Euro Area decreased 3.5 points from the previous month to 87.6 in November 2020, remaining well below pre-pandemic levels. Several countries across the region were forced to re-impose partial lockdowns to curb the rapid spread of COVID-19. In November 2020, data showed that the IHS Markit Eurozone Composite PMI decreased to 45.1, from 50.0 in the previous month. The latest data pointed to the steepest month of contraction across the bloc's private sector since May, as countries introduced more aggressive measures to counter rising coronavirus cases. The deteriorating performance was broad-based, albeit with the service sector hardest hit from restrictions.

In Japan, in November, it was reported that the au Jibun Bank Japan Manufacturing PMI was revised higher to 49 compared to a final 48.7 in the previous month. The latest data signaled a deterioration in the health of the manufacturing sector for the 19th consecutive month, but the weakest contraction since August 2019, with output and new orders falling at softer rates. In addition, employment declined further, albeit at a slightly softer pace compared to October. Data showed that the consumer confidence index in Japan edged up to 33.7 in November 2020, the highest since February but below pre-pandemic levels.

DECEMBER 2020

In the US, data showed that the IHS Markit US Services PMI fell to 55.3 in December 2020, from the previous month's five-and-a-half-year high of 58.4. The data pointed to a sharp slowdown in services activity growth amid rising COVID-19 cases, with firms stating that restrictions and softer demand weighed on total activity. It was reported that the IHS Markit US Manufacturing PMI was little changed at 56.5 in December of 2020 from 56.7 in November. The data pointed to the second-fastest improvement in operating conditions since April of 2018, amid strong output and new orders growth. In December of 2020, data showed that the University of Michigan's consumer sentiment for the US increased to 80.7 from 76.9 in November. It was reported that the number of Americans filing for unemployment benefits decreased to 787 thousand in the week ended December 26th, moving further away from a three-month high of 892 thousand hits in the week ended December 12th. Still, claims remained well above the 200 thousand levels reported back in February and will likely remain elevated for some time as although vaccination has already started the pandemic is far from controlled. On a non-seasonally adjusted basis, the number of claims was down to 841 thousand, compared with 873 thousand in the previous week. Also, about 308 thousand people applied for help from the Pandemic Unemployment Assistance scheme, which covers workers that do not qualify for initial claims, compared with 397 thousand in the previous period.

In Europe, at its December monetary policy meeting, the European Central Bank expanded its Pandemic Emergency Purchase Programme (PEPP) by another €500 billion and extended it to at least the end of March 2022. The decision was made to support the Eurozone's struggling economy amid the COVID-19 crisis. The policymakers approved more long-term loans on cheap terms for another year until June 2022 and announced four additional pandemic emergency longer-term refinancing operations to be offered in 2021. The main refinancing rate was held at 0 percent while the deposit rate remained at a record low -0.5 percent. It was reported that the IHS Markit Eurozone Services PMI increased to 47.3 in December 2020 from 41.7 in the previous month. Output contracted for a fourth straight month, with fewer companies reporting output to have been hit by coronavirus lockdown restrictions compared to November. The rate of decline in new orders softened, while employment continued to contract. Data showed that the IHS Markit Euro Area Manufacturing PMI increased to 55.5 in December of 2020 from 53.8 in November. The data pointed to the strongest growth in factory activity in 31 months as output and new orders growth accelerated and exports of goods rose at the second-fastest rate in 34 months while employment continued to fall. Input costs rose at the fastest rate for just over two years, linked in many cases to increasingly widespread shortages for many key raw materials. It was reported that the Germany 10 Year Government Bond Yield decreased to an all-time low of -3.437%. European governments are struggling to contain a new highly contagious coronavirus strain, which forced people to dial back their movements once again as state authorities impose stricter lockdown restrictions. Germany is due to extend its nationwide lockdown until the end of January, with more than 10,000 infections reported on Sunday.

In Japan, it was reported that the au Jibun Bank Japan Manufacturing PMI increased to 49.7 in December 2020 from 49.0 a month earlier. The latest data signaled the smallest decline in factory activity since May 2019, as the economy emerged from the downturn caused by the COVID-19 pandemic. Data showed that the Bank of Japan's Tankan index for big manufacturers' sentiment rose to -10 in the fourth quarter of 2020 from -27 in the previous three-month period, as the economy emerges from the COVID-19 disruption. The Corporate Tax Rate in Japan stands at 30.62 percent. it was reported that the au Jibun Bank Japan Services PMI fell to a three-month low of 47.2 in December 2020 from 47.8 in the prior month. The latest data signaled a quicker deterioration in output across the service sector, as a fresh wave of coronavirus took a toll on economies globally, including in Japan. New business inflows contracted sharply, and at a similar pace to the previous survey, while export sales also reduced further. At the same time, employment shrank for the second straight month, although the rate of decline was marginal. Lastly, business sentiment softened to the weakest in four months. It was reported that Japanese Prime Minister Yoshihide Suga is considering a state of emergency for Tokyo and surrounding prefectures to curb a spike in local COVID-19 infections.

JANUARY 2021

In the US, during its first meeting of 2021, the Federal Reserve left the target range for its federal funds rate unchanged at 0-0.25%. Data showed that the IHS Markit US Manufacturing PMI was revised slightly higher to 59.2 in January of 2021 from 59.1, pointing to record factory growth, due to accelerated expansions in output and new orders. Meanwhile, cost pressures intensified amid raw material shortages. It was reported that the IHS Markit US Services PMI rose to a two-month high of 57.5 in January 2021 from 54.8 in the previous month. The rate of expansion was the second-sharpest since March 2015 and steep overall. That said, the pace of new business growth softened at the start of 2021 as restrictions placed on firms due to the ongoing COVID-19 pandemic dampened demand. The upturn was solid, however, with new business from abroad returning to growth. Data showed that the University of Michigan's consumer sentiment for the US was revised lower to 79 in January of 2021 from 80.7 in December. There was a decrease in the assessment of current economic conditions while the expectations component improved slightly.

In Europe, during its January 2021 meeting, The European Central Bank left monetary policy unchanged. Policymakers took a wait-and-see approach following last month's decision to expand and extend its pandemic emergency program. It was reported that business confidence in the Euro Area increased to -0.27 points in January from -0.41 points in December of 2020. Data showed that the IHS Markit Eurozone Manufacturing PMI was revised slightly higher to 54.8 in January of 2021 from 55.2 in December. Factory activity in the Euro Area expanded for a seventh successive month and again at a marked pace. Growth was recorded across all three broad market groups. It was reported that the consumer confidence indicator in the Euro Area was -15.5 in January of 2021, a 1.7 points decrease from December’s -13.8. Data showed that the IHS Markit Eurozone Services PMI fell to 45 in January 2021 from 46.4 in the previous month. The latest data pointed to a fifth successive month of contraction in the service sector at the second-fastest rate since May, amid tighter coronavirus disease restrictions. New business inflows fell for a sixth month running, also declining at a steeper rate than in December.

In Japan, data showed that the au Jibun Bank Japan Manufacturing PMI was revised higher to 49.8 in January 2021, up from 50 in December 2020. It was the highest PMI reading since May 2019, pointing to a stabilization in operating conditions, as some business anticipated a recovery in demand in 2021. It was reported that the au Jibun Bank Japan Services PMI declined to 45.7 in January 2020 from a final 47.2 in December. This marked the twelfth straight month of contraction in the sector and the steepest pace in five months, as the government declared a state of emergency in Tokyo due to rising local COVID-19 infections. Both activity and incoming new business declined the most since May. Data showed that the consumer confidence index in Japan decreased to 29.6 in January of 2021, the weakest since August, amid a resurgence of COVID-19. The Bank of Japan left its key short-term interest rate unchanged at -0.1% and maintained the target for the 10-year Japanese government bond yield at around 0% during its January meeting by a 7-1 vote.

FEBRUARY 2021

In the US, it was reported that the IHS Markit US Manufacturing PMI decreased to 58.6 from 59.2 in January. Although expansions in production and new orders softened, rates of growth were still steep overall, as manufacturers noted stronger client demand. Data showed that the IHS Markit US Services PMI rose to 59.8 in February from 58.3 in the previous month. The latest data pointed to the strongest expansion in the service sector since March 2015, as new business growth picked up to a three-month high despite a decline in new export orders. Meanwhile, employment rose only marginally, amid efforts to control outgoings. It was reported that the University of Michigan's consumer sentiment indicator for the US fell to 76.8 in February from 79 in January. Consumer sentiment edged downward in early February, with the entire loss concentrated in the Expectation Index and among households with incomes below $75,000. Households with incomes in the bottom third reported significant setbacks in their current finances, with fewer of these households mentioning recent income gains since 2014. Data showed that consumer confidence came in at 91.3 in February, up from January's 88.9. The index moved closer to the 100-threshold but still indicated pessimism among consumers.

In Europe, data showed that the IHS Markit Euro Area Manufacturing PMI jumped to 57.9 in February of 2021 from 54.8 in January. The data pointed to the strongest growth in factory activity in 3 years. It was reported that the IHS Markit Eurozone Services PMI increased to 45.7 in February 2021, down from 45.4 in the previous month. The latest data indicated a sixth consecutive monthly contraction of services sector activity, as virus-related restrictions continued to affect many businesses. Data showed that the consumer confidence indicator in the Euro Area rose by 0.7 points to -14.8 in February 2021, from the previous month's figure of -15.5. It was reported that the industry confidence indicator in the Euro Area increased by a third consecutive month to -3.3 in February 2021, rising above pre-pandemic levels.

In Japan, it was reported that the au Jibun Bank Japan Manufacturing PMI increased to 51.4 in February 2021 from 49.8 a month earlier, marking the first month of expansion in factory activity since April 2019 and the fastest since December 2018. Data showed that the au Jibun Bank Japan Services PMI increased to 46.3 in February 2021, from 46.1 in the previous month. The data showed that a quicker deterioration in business activity across the service sector, as businesses struggled to mitigate the impact from emergency measures taken to curb the spread of COVID-19 in Tokyo and nine other prefectures. It was reported that the consumer confidence index in Japan increased by 4.2 points from the previous month of 29.6 to 33.8 in February of 2021.

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