Available data for Q1 suggest that the global economy had a better start to the year than previously feared. That seems to have reflected the post zero-COVID rebound in China and its effects, a boost to spending from a mild winter in the US and ongoing …
3rd May 2023
Berlin offices have been outperforming those in other German markets for some time. But Q1 data suggest that growth has begun to falter, and we think that the recent strength of the market won’t last. Berlin office rents have risen rapidly over …
Disinflation process continues, but smaller falls from here Inflation in Turkey fell a bit more than expected in April, to 43.7% y/y, driven largely by a sharp decline in energy inflation, but m/m price growth remained strong and the disinflation process …
Surprise hike, but no more tightening in 2023 Malaysia’s central bank (BNM) unexpectedly raised its main policy rate today by 25bps (to 3.0%), citing the resilient economy as grounds to “further normalise the degree of monetary accommodation”. However, …
PMI readings continue to be at odds with the hard activity data India’s manufacturing and services PMI readings rose in April but are at odds with the hard activity data that point to more subdued domestic and external demand. The composite PMI rose from …
Weakness in consumption growth While retail sales values rose at a decent pace in March, we estimate that sales volumes fell the most since 2021’s lockdowns last quarter and that weakness has further to run. That in turn should prevent the Reserve Bank of …
Weakness in consumption growth will deter RBA from further rate hikes While retail sales values rose at a decent pace in March, we estimate that sales volumes fell the most since 2021’s lockdowns last quarter and that weakness has further to run. The 0.4% …
Labour market continues to run red hot New Zealand’s labour market remained extremely tight last quarter, presenting upside risks to our forecast for a 25bp rate hike later this month. The 0.8% q/q rise in employment was stronger than most had …
Tight labour market raises the risk of outsized RBNZ hike The strength of New Zealand’s labour market last quarter poses upside risks to our view that the RBNZ will lift rates by 25bp later this month. The 0.8% q/q rise in employment in Q1 was stronger …
We think the euro-zone unemployment rate edged down last month (10.00 BST) The ISM Services Index was probably consistent with a stagnation in GDP in April (15.00 BST) We expect the Fed to deliver a final 25bp rate hike, to 5.00% - 5.25% (19.00 BST) Key …
2nd May 2023
The decline in job openings to a near two-year low of 9.6 million in March, from a peak of 12.1 million a year earlier, suggests that, even without a rise in the unemployment rate, labour market conditions are nevertheless easing and are consistent with a …
Note: We’re holding a special 20-minute online briefing all about EM debt risks this Thursday at 10:00 EDT/15:00 BST . Register now . Egypt’s balance of payments (BoP) position strengthened markedly late last year, but policymakers’ reluctance to live up …
Strong core inflation leaves ECB decision finely balanced The fact that core HICP inflation edged down in April will not resolve the debate between a 25bp and 50bp hike for the ECB this week – particularly as the core rate is still close to its all-time …
March’s money and credit data, as well as the Bank Lending Survey carried out in March and April, show no clear signs that the recent troubles in the US and Swiss banking sectors have had an impact on credit conditions in the euro-zone. Nevertheless, …
Pick-up in headline PMI hiding underlying weakness The rise in South Africa’s manufacturing PMI last month was due to a jump in inventories, while other indicators pointed to further weakness in the sector. The country’s severe energy crisis continued to …
This page has been updated with additional analysis and charts since first publication. Return of tourists propelling city’s rebound Hong Kong’s GDP growth turned positive in Q1 after four consecutive quarters of decline. The economy rebounded more …
Strong core inflation leaves ECB decision finely balanced The small decline in core HICP inflation in April leaves it close to its all-time high and will not resolve the debate between 25bp and 50bp for the ECB this week. The trivial increase in headline …
The 0.1% q/q expansion in Czech GDP in Q1 means that the economy avoided remaining in a technical recession by the skin of its teeth, but we think that growth will still disappoint consensus expectations this year. Meanwhile, the manufacturing PMIs for …
Neil Shearing Group Chief Economist The past couple of months has seen an upsurge in the number of analysts arguing that the renminbi will start to challenge the dollar’s position as the world’s reserve currency. But while the amount of world trade that …
House price falls pause in April The pause in house price falls in April suggested that the reversal of the autumn spike in mortgage rates has allowed prices to stabilise. But with affordability still very stretched by historical standards and the economy …
The Reserve Bank of Australia retained its tightening bias when it lifted the cash rate by 25bp at today’s meeting, but we suspect that it won’t raise interest rates any further over the coming months . The Bank’s decision to lift the cash rate from 3.60% …
Tightening cycle over but rates will only be lowered in Q2 2024 The Reserve Bank of Australia retained its tightening bias when it lifted the cash rate by 25bp at today’s meeting, but we suspect that it won’t raise interest rates any further over the …
Japan’s large corporate sector surpluses are a key source of deflationary pressure. Corporate savings surged in the 1990s, primarily because net interest payments slumped, and have since remained stubbornly high. Unfortunately, workers have benefited …
Manufacturing sector remains under pressure A simple average of manufacturing PMIs in Emerging Asia rose slightly in April but this was almost entirely driven by a large jump in Thailand’s headline index to a record high. Weak global demand and high …
House price rebound will prove fleeting The ongoing rebound in house prices is living on borrowed time. With affordability extremely stretched and the economy poised for a sharp downturn, we’re sticking to our forecast that house prices will fall another …
The collapse of First Republic Bank is no big surprise – it had been teetering on the edge since suffering $100bn in deposit withdrawals mostly in March – but it’s a timely reminder that banking turmoil will continue to flare up periodically. After …
1st May 2023
Manufacturing outlook weak, but hi-tech revival boosting construction The trivial rebound in the ISM manufacturing index to a still depressed 47.1 in April, from 46.3, contrasts with the more substantial recovery in the alternative S&P Global PMI but …
Another mixed set of data out of the US this week – GDP , consumption and the Employment Cost Index – generally pointed to stubbornly high price pressures and slowing growth. The dollar reversed its gains following today’s data, leaving it close to the …
28th April 2023
The MSCI USA Index has not made much further headway on net in April so far. But it has at least held on to its strong gains from earlier in 2023, returning about 8% YTD. Part of that strength presumably reflects the global economy proving more …
We expect the Fed to deliver a final 25bp hike… (Wed.) …while the ECB will probably raise the deposit rate by 50bp (Thu.) We think US non-farm payrolls rose by a softer 180,000 in April (Fri.) Key Market Themes With Yield Curve Control (YCC) set to stay …
Commodity prices generally fell earlier this week on the back of investors’ growing concerns about the outlook for commodities demand. Later in the week, the release of softer-than-expected US Q1 GDP data did nothing to soothe those fears. We expect …
Although underlying activity growth rebounded in the first quarter, while wage and price inflation remained too high, we expect the second quarter to bring a sharper slowdown across the board. GDP data show weaker start to year The first-quarter GDP …
The Bank of Canada’s Summary of Deliberations suggests it was closer to resuming interest rate hikes in April than we thought. Nonetheless, as the data releases this week showed a fall in the job vacancy rate and point to a contraction in March GDP, it …
The South African Reserve Bank’s Monetary Policy Review (MPR), published this week, made it clear that the central bank is increasingly incorporating fiscal risks into its interest rate projections and decision making process. The poor state of the public …
Panic stations in Argentina Developments in Argentina have taken a(nother) turn for the worse over the past couple of weeks. March’s grim inflation print (of 104% y/y) alongside rumours of an imminent devaluation and plans to renegotiate the country’s IMF …
Auto rebound to prove short lived Automotive production across Asia, which was badly hit during the pandemic by a shortage of semiconductor components, is now rebounding rapidly as this constraint unwinds. The surprise q/q expansion in Q1 Korean GDP …
Recession risk receding? Data released today showed that the euro-zone economy grew by 0.1% q/q in Q1. Excluding Ireland, where the data are notoriously volatile, GDP expanded by a slightly stronger 0.2%. But after contracting in Q4, the euro-zone did …
Property policy recalibration The Politburo held its monthly meeting today and, as is usual in April, its focus was the economy. The gist of its statement is one we’d agree with: economic growth in the immediate rebound from zero-COVID weakness “has been …
Decent first quarter likely to be followed by contraction The small rise in GDP in February points to healthy first-quarter growth but, with the preliminary estimate pointing to a contraction in March and activity set to suffer in April due to the federal …
The Bank of England’s Chief Economist, Huw Pill, has come under fire this week after saying that everyone in the UK “needs to accept that they’re worse off and stop trying to maintain their real spending power by bidding up prices whether through higher …
All-property yields have stabilised since the start of the year and alongside continued rental growth, that means total returns were more-or-less flat during Q1. (See Chart 1.) But, while the worst is over, the economy is still set for a mild recession, …
Today’s news on wages and inflation should have eradicated any remaining doubts that the Fed will hike interest rates by an additional 25bp next week. According to the Employment Cost Index (ECI), first-quarter private wages increased by 1.2% q/q, with …
Decent first quarter likely to be followed by contraction The small rise in GDP in February points to a healthy first-quarter growth rate but, with the preliminary estimate pointing to a contraction in March and activity set to suffer in April due to the …
Industry to continue facing headwinds Growth in India’s core infrastructure industries slowed in March, indicating that some of the resilience in the industrial sector at the start of the year may be fading. Domestic and external headwinds mean a …
Strength at start of 2023 unlikely to be sustained The 1.1% q/q rise in Mexican GDP in Q1 marked a pick-up from the end of last year, but a fresh slowdown is on the cards as a recession in the US and tight policy at home will take their toll. The outturn …
Inflation figures suggest 50bp ECB hike next week still likely National inflation figures released today suggest that euro-zone headline and core inflation edged up in April. That adds to the reasons for the ECB to opt for a 50bp hike at its meeting next …
The slowdown in European investment intensified in Q1 as transactions more than halved year-on-year. This was perhaps unsurprising given the ongoing price correction amid one of the sharpest tightenings of financial conditions on record. But, with …
Credit Suisse’s Q1 results, released this week, revealed the scale of the crisis that led to its demise. The two key pieces of data we learnt were that the bank saw deposit outflows of CHF67bn in the quarter and that, at its peak, it borrowed CHF168bn …
CEE edges closer towards monetary easing Central banks across Central and Eastern Europe (CEE) provided firmer signs this week that, with inflation now declining , monetary loosening may soon be on the cards. But there are still clearly big concerns that …
