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BOV Market Watch - Week ending 28th May 2021
28 May 2021

German GfK Consumer Sentiment to improve in June. The forward-looking German GfK consumer confidence index rose to -7.0 in June from revised -8.6 in May. Nonetheless, the reading was weaker than the economists' forecast of -5.2. The economic expectations indicator jumped to 41.1 points, from 34 points, the highest value in more than three years. The income expectations indicator rose 10.2 points to 19.5 points in May. After three increases in a row, the propensity to buy indicator dropped 7.3 points to 10.0.Germany is exiting from the Covid-19 third wave, and the incidences have been falling significantly for several weeks. Germany is also making great strides in vaccination. As a result, openings and a departure from strict lockdown are becoming possible.

French Manufacturing Confidence Strongest Since Late 2018. The French manufacturing sentiment index advanced to 107 in May from 104 in the previous month.  This was the highest score since August 2018, when the reading was 109. Manufacturers were more confident about their personal production prospects, as the general production expectations index rose sharply to 18 from 3, registering its highest point since the spring of 2018. The balance concerning activity over the last three months has been virtually stable at a high level, close to that of the beginning of 2018. The manufacturers' opinion on the level of order books further improved with the balance on overall order books rising to -10 from -15 in the previous month. The balance on foreign order books continued to increase in May. The corresponding gauge climbed to -18 from -22. The overall business confidence index that comprises the responses of business leaders in manufacturing, construction, services, retail trade and wholesale trade, improved in May. At 108, the index has returned above its long-term average of 100, for the first time since February 2020, and was even higher than before the Covid crisis.

U.S. Consumer Confidence holds steady in May. The Conference Board reported that its US consumer confidence index edged down to 117.2 in May after climbing to a revised 117.5 in April. This index had rebounded sharply in recent months. Reflecting consumers' improved appraisal of current conditions, the present situation index jumped to 144.3 in May from 131.9 in April. Consumers' assessment of the labour market also improved, as those saying jobs are "plentiful" spiked to 46.8 percent from 36.3 percent and those claiming jobs are "hard to get" dipped to 12.2 percent from 14.7 percent. Meanwhile, the Conference Board said the expectations index dropped to 99.1 in May from 107.9 in April, as consumers' optimism about the short-term outlook waned. The percentage of consumers expecting business conditions to improve over the next six months slipped to 30.3 percent from 33.1 percent, while the proportion expecting conditions to worsen rose to 14.8 percent from 12.1 percent. Consumers were also less upbeat about the job market, with those expecting more jobs in the months ahead slumping to 27.2 percent from 31.7 percent and those anticipating fewer jobs climbing to 17.3 percent from 14.4 percent. It is expected that overall, consumers remain optimistic, and confidence should remain resilient in the short term, as vaccination rates climb, COVID-19 cases decline further, and the economy fully reopens.

Australia Capital Expenditure increases by 6.3% on quarterly basis. The value of total new capital expenditure was up a seasonally adjusted 6.3 percent on quarterly basis, in the first three months of 2021.  This exceeded forecasts for an increase of 2.0 percent following the 3.0 percent increase in the three months prior. Capex for buildings and structures gained 3.8 percent   and capex for equipment, plants and machinery jumped 9.1 percent. On a yearly basis, overall capex was up 0.8 percent, buildings and structures sank 3.4 percent and equipment gained 5.6 percent.

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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).