Weekly Economic Indicators Report by the Macroeconomic Policy Bureau as of August 13, 2021

Aug 13, 2021 | view 1,973

The Macroeconomic Policy Bureau (MPB) presents the weekly economic indicators report as of August 13, 2021:
1. The Industrial Confidence Index (TISI) for July 2021 decreased to 78.9 from 80.7 in the previous month.
2. Domestic cement sales in July 2021 contracted by -12.0% compared to the same period last year.
3. The liquidity asset level of commercial banks in June 2021 was 1.87 times the legally required liquidity assets.
4. Singapore's GDP in Q2 2021 grew by 14.7% year-on-year.
5. Malaysia's GDP in Q2 2021 grew by 16.1% year-on-year.
6. The Philippines' GDP in Q2 2021 grew by 11.8% year-on-year.
7. The UK's GDP in Q2 2021 grew by 22.2% year-on-year.

Thai Economic Indicators
The Industrial Confidence Index (TISI) for July 2021 decreased to 78.9 from 80.7 in the previous month.
This decline is attributed to the ongoing COVID-19 outbreak, which has spread widely across the country. Additionally, the government implemented lockdown measures in 29 provinces, resulting in reduced income for businesses, particularly SMEs, and the general public. The outbreak in several industrial factories has led to decreased production capacity and labor shortages. However, the export sector continues to expand due to improving economic conditions in trading partner countries, driven by increased vaccination rates, which have boosted foreign market demand. Furthermore, the depreciation of the Thai baht has supported the export sector.

Domestic cement sales in July 2021 contracted by -12.0% compared to the same period last year, and when seasonally adjusted, it shows a contraction of -10.2% compared to the previous month.
In July 2021, the impact of the enhanced COVID-19 control measures began to be felt, particularly in construction areas in Bangkok and its vicinity, leading to a slowdown in construction activities in these areas to control the outbreak in worker camps. This has had a cascading effect on cement usage, which saw a significant year-on-year decline in July 2021. The ongoing COVID-19 situation is expected to continue impacting construction, especially for large-scale projects.

Financial Sector Indicators
The liquidity asset level of commercial banks in June 2021 was 1.87 times the legally required liquidity assets.

The outstanding liquidity assets of the banking system in June 2021 amounted to 5.2 trillion baht, slightly down from the previous month. The Bank of Thailand has adjusted the liquidity asset maintenance requirement from the previous standard of at least 6% of deposits to at least 100% (or 1.0 times) of the estimated net cash outflow during a crisis (Liquidity Coverage Ratio: LCR) since January 2016.

International Economic Indicators
United States: The inflation rate in July 2021 remained stable at 5.4% year-on-year, the highest level in 13 years, partly due to a low base from the previous year and the reopening of economic activities. Supply chain disruptions have also contributed to rising prices, particularly for food, new vehicles, and housing. The number of initial jobless claims for the week of August 1-7, 2021, was 375,000, continuing a downward trend for the third consecutive week from the previous week's 387,000, reflecting a gradual recovery in the U.S. labor market. However, this remains above the pre-pandemic average of 230,000 weekly claims.

China: The inflation rate in July 2021 was 1.0% year-on-year, down from 1.1% in the previous month, marking the lowest level in three months, primarily due to falling food prices, especially pork. The value of exports in July 2021 grew by 19.3%, slowing from 32.2% in the previous month, amid weakening foreign demand due to new COVID-19 outbreaks in some countries, rising raw material prices, erratic weather, and transportation issues. The value of imports in July 2021 grew by 28.1% year-on-year, slowing from 36.7% in the previous month, due to weakened demand in some countries from the Delta variant outbreaks, rising commodity prices, and slowing production. The trade balance in July 2021 recorded a surplus of $56.6 billion, up from a surplus of $51.5 billion in the previous month.

European Union: Industrial production in June 2021 grew by 9.7% year-on-year, a decrease from 20.6% in May 2021, and lower than market expectations of 10.4% growth.
Singapore: GDP in Q2 2021 grew by 14.7% year-on-year, or a contraction of -1.8% compared to the previous quarter (seasonally adjusted).
India: Industrial production in June 2021 grew by 13.6% year-on-year, slowing from 28.6% in the previous month, marking the second consecutive month of slowdown after a significant growth of 134.6% in April 2021.
Indonesia: Retail sales in June 2021 grew by 2.5% year-on-year, down from 14.7% in the previous month, primarily due to sales in the food, beverage, and tobacco categories. The consumer confidence index stood at 80.2 points, down from 107.4 points in the previous month due to stricter outbreak control measures.
Malaysia: GDP in Q2 2021 grew by 16.1% year-on-year, or a contraction of -2.0% compared to the previous quarter (seasonally adjusted). Industrial production in June 2021 grew by 1.4% year-on-year, down from 26.0% in the previous month, primarily due to transportation equipment production. Retail sales in June 2021 contracted by -2.9% year-on-year, down from 17.3% in the previous month, mainly due to sales in fuel and automotive categories. The unemployment rate in June 2021 was 4.8% of the total labor force, up from 4.5% in the previous month.
Philippines: GDP in Q2 2021 grew by 11.8% year-on-year, or a contraction of -1.3% compared to the previous quarter (seasonally adjusted). The Central Bank of the Philippines announced to maintain the policy interest rate at 2.0% per annum.
South Korea: The unemployment rate in July 2021 was 3.3% of the total labor force, down from 3.7% in the previous month, marking the lowest unemployment rate since August 2020 amid recovery from the COVID-19 outbreak in some areas.
Taiwan: The value of exports in July 2021 grew by 59.7% year-on-year, slowing from 35.1% in the previous month, but in monetary terms, it amounted to $38 billion, the highest on record. The value of imports in July 2021 grew by 41.0% year-on-year, slowing from 42.3% in the previous month, but higher than market expectations. The trade balance in July 2021 recorded a surplus of $5.9 billion, up from $5.15 billion in the previous month.
United Kingdom: GDP in Q2 2021 grew by 22.2% year-on-year, driven by increased household consumption, fixed investment, and government spending. Industrial production in June 2021 decreased to 13.9% year-on-year, down from 28.2% in the previous month, remaining below the level in February 2020 by 2.3%.

Money Market and Exchange Rate Indicators
The SET index slightly increased from the previous week, in line with other regional stock markets that declined, such as Nikkei 225 (Japan), HIS (Hong Kong), and KLCI (Malaysia). On August 11, 2021, the index closed at 1,532.71 points with an average trading value between August 9-11, 2021, of 83,753.41 million baht per day. Foreign investors were net sellers, while domestic retail investors, domestic institutional investors, and securities company accounts were net buyers. During August 9-11, 2021, foreign investors sold securities net -5,362.85 million baht.

The overall yield on government bonds decreased by -1 to -8 bps. This week, investors participated in the auction of 4 and 11-year government bonds, with interest from investors at 3.19 and 2.68 times the auction amount. During August 9-11, 2021, foreign investor capital flowed into the bond market net 7,402.69 million baht, and from the beginning of the year until August 11, 2021, foreign investor capital flowed into the bond market net 84,349.32 million baht.

The Thai baht depreciated from the previous week, closing at 33.38 baht per US dollar on August 11, 2021, a depreciation of -0.92% from the previous week. This trend is consistent with the depreciation of the yen, euro, ringgit, Singapore dollar, and yuan against the US dollar, while the won appreciated against the US dollar compared to the previous week. The baht's depreciation was greater than that of other major currencies in the region, resulting in a -0.36% decline in the NEER index.