Global Macro: US vaccine acceleration bodes well for the outlook –

After an initially slow start compared to smaller countries like the UK and especially Israel, the pace of vaccinations in the US has sped up significantly. It is now vaccinating around 2.5m citizens per day, on average – enough for around 0.8% of the population; this compares with a 0.5% daily vaccination pace at the beginning of March.

The current pace is actually higher than the peak seen in the UK, which has been a leader among advanced economies in its vaccination drive. The pace of vaccinations is also running ahead of our projections, and combined with the dramatic improvement in virus trends in the US – with hospitalisations now less than a quarter of the peak level in early January – it is enabling the economy to reopen more quickly than anticipated.

Indeed, as we reported last week, while the hospitality sector has already fully reopened in the US, some states are going further by removing capacity restrictions on restaurant dining. This bodes well for the recovery in the services sector, with risks to our average 7.1% annualised growth forecast for the first half of 2021 looking to be tilted to the upside.

Europe still slow at vaccinating, but pace is starting to pick up – Europe continues to significantly lag in its vaccination drive by comparison, with 9.3 doses now administered per 100 people in the EU, compared to 27.8 in the US and 34.6 in the UK.

The pace also remains much lower, with around 0.3% of the population being inoculated per day, compared with 0.8% in the US and 0.5% in the UK. With that said, the pace has continued to gradually accelerate, and looks set to speed up much further over the coming weeks, as vaccine supply shortages ease.

Supply of the Pfizer-BioNTech vaccine will double from current levels by the end of March, while the European Medicines Agency is about to approve a fourth vaccine from Johnson & Johnson later this week (which has the advantage of only needing one dose to be fully vaccinated).

Indeed, projections by the Dutch government – which is subject to the same supply constraints as all EU members – suggest that the pace of vaccination will pick up to around 0.6% of the population per day by April, to as high as 2% per day in May when mass vaccination centres are opened for younger age groups. This would be a similar pace to that seen in Israel earlier this year.

While it remains to be seen if the logistics can keep up with the looming deluge of vaccine supplies – and indeed whether suppliers are able to deliver on their commitments – this suggests the reopening of non-essential shops and the hospitality sector might come sooner than our current June/July assumption.