Electoral momentum

► Seasonally- and calendar-adjusted ser es can be mputed more we ght as lead ng nd cators. There the beg nn ng of a loss of momentum s almost ev dent, depend ng of course on the ncom ng March pr nt, wh ch we th nk w ll be weaker than February data.

► All sub tems are head ng south, and even cap tal goods – wh ch d splay the strongest performance - slowed down to 2.5 percent growth as opposed to the 4.5 percent of January. Work ng day-adjusted ndustr al product on conveys a s m lar message. ► In the run-up to elect ons, econom c cond t ons matter. In fact, momentum loss sn’t that ev dent although there are s gns of slow down. Th s s one factor that m ght expla n the dec s on to call for early elect ons.

► Head-on ndustr al product on posts 10 percent growth. As such the f rst two months have d splayed a calendaradjusted yearly 11 percent ncrease.

► G ven the close relat onsh p between ndustr al product on and GDP, the February pr nt re terates our expectat on of h gher than 7 percent growth n Q1. ►The d spers on ndex released by TDM dep cts a clear deter orat on. It s down from the 75 percent of December to 37.5 percent n February. Exactly half of the subsectors have posted growth n February compared to last December.

►PMI data also conf rm the downward trend. It s n pos t ve terr tory but one can expect a gradual fall unless there s an electoral cycle, albe t a short one, n the next months.

In fact, the dec s on to go to the polls 1.5 years earl er than scheduled expla ns t all. The ‘overheat ng debate’ s spur ous n our op n on. Absent short-term ncent ves and relat vely cheap cred t, the economy doesn’t and couldn’t ‘overheat’. It sn’t ‘overheat ng’ per se. It s exactly the contrary.