After a large fall in July, the EM manufacturing PMI only edged up slightly last month, suggesting that the sector fared worse in Q3 than in the first half of the year. The PMIs did at least provide encouraging signs that price pressures eased. The …
3rd September 2024
A disappointingly small rebound in the headline index of the US ISM manufacturing survey for August appears to have put some relative pressure on cyclical sectors of the S&P 500 today, which is down more than 1% the time of writing. The bigger picture, …
Manufacturing stuck in a rut The ISM manufacturing index was essentially unchanged in August, leaving it consistent with manufacturing output and GDP growth losing momentum in the third quarter, and a sharp drop in the new orders index reduces the …
Our migration dashboard highlights key trends in the US at both the state and metropolitan area level. If you have subscriber access to the data underlying this new dashboard, you can download it via the menu options in the top right of each chart or …
Bumper growth in Q2 tilts odds towards rate hike The much stronger-than-expected Brazilian GDP figure for Q2, of 1.4% q/q, means that the economy now appears to be on course to expand by 3% over the year as a whole. The flip side is that it will heighten …
Attention in Egypt is turning to the timing of the first interest rate cut. The lessons from the start of the last easing cycle in 2018 suggest that this is likely to begin in Q1, which is a little later than most expect. But the more important point is …
The intense focus on this week’s US August employment report is hardly surprising. The July report, showing a smaller-than-expected 114,000 increase in jobs and a bigger rise in the unemployment rate, intensified recession fears and fuelled the global …
Several advanced economies have raised tariffs on imports of green technologies and semiconductors from China to address their growing trade deficits in these goods and tackle a perceived strategic weakness. As long as the process is gradual, this …
Weaker-than-expected rebound strengthens case for rate cuts South Africa’s economy recorded weaker-than-expected growth of 0.4% q/q in Q2 which, coming alongside the easing of inflation pressures, further strengthens the case for an interest rate cut at …
Regular earnings growth will approach 3% While weaker growth in bonus payments weighed on overall wage growth, base pay rose by the most since 1992 in July and we think it will continue to surge in the coming months. The preliminary estimate released …
Slowly but surely, Egypt’s economy is recovering This PMI response has been updated with additional analysis of the UAE's survey published on 4th September. August’s batch of PMIs showed a more positive outturn for the Gulf’s private non-oil sectors, but …
Recent estimates add to the evidence that online retail shares are growing more slowly across Europe. There has also been little sign of convergence in online shares, supporting our long-held view that online competition will be less of a drag on southern …
This page has been updated with additional analysis. Headline inflation falls, risks skewed to the downside Switzerland’s headline inflation rate fell in August to one of its lowest levels in the last three years. This will be welcome news for the SNB, …
Disinflation process has some way to go The fall in Turkish inflation, to 52.0% y/y, in August is likely to be followed by continued disinflation over the coming months. But there are signs in the breakdown that underlying inflation pressures remain …
Inflation in Korea fell back sharply last month, supporting our view that the central bank will cut interest rates at its next meeting in October. Inflation data published today showed that the headline rate fell from 2.6% y/y in July to 2.0% in August. …
September is expected to mark the start of Fed easing, but how quickly will it unwind the tightening of recent years? What’s the outlook for ECB policy if services inflation remains sticky? And do hawkish signals from the Bank of England imply a more …
2nd September 2024
Chinese equities tumbled on Monday, and while we see scope for them to recover a bit in the coming months, we are quite pessimistic about their medium-to-long term prospects. Chinese stocks had a bad start to the month. US equities rose on Friday, which …
Explore our forecasts to end-2026 for GDP growth, inflation, policy rates and commodity prices. To explore our policy rate forecasts in more detail, please visit our Central Bank Hub dashboard. If you have subscriber access to the data underlying this …
PMI plunges but reasons to not be too downbeat The sharp fall in South Africa’s manufacturing PMI in August was disappointing but the survey has been extremely volatile recently and the big picture is that respondents remained optimistic about the …
Traffic-light coalition to stay on but state elections point to challenges ahead The big rise in populist parties in elections in two East German states at the weekend doesn’t threaten the survival of the governing coalition but it points to some …
PMIs increase, but still consistent with weak industrial activity The manufacturing PMIs increased across most of the region in August, although they generally remain at weak levels and suggest that industry has continued to struggle in Q3. In Poland and …
Rebalancing still a bumpy process The Turkish GDP figures for Q2, which showed a better-than-expected 0.1% q/q expansion in output, suggest that the rebalancing process still has some way to go. The data argue in favour of the central bank keeping …
Stretched affordability to sap momentum from house price rally With transaction volumes moderating and inventory rising, we expect the Australian housing market to cool in months ahead. In seasonally-adjusted terms, house prices across Australia’s eight …
This report was first published on 2nd September covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on 4th September. Growth has stabilised thanks to policy support The PMIs for …
August’s US employment report release on Friday will be the coming week’s must-watch market event. On the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing talks about what we’re expecting and how the …
31st August 2024
US and euro-zone inflation data released today did little to change our view that both the Fed and the ECB will cut interest rates by 25bp in September, as investors seem to expect. But we think both central banks will ultimately cut rates by a bit less …
30th August 2024
The dollar has rebounded a little this week ahead of next week’s crucial US non-farm payrolls report. The incoming data this week has generally supported our view that the US is on track for a soft landing, and if we are right in thinking that payrolls …
Harris supports dramatic increase in taxes After unveiling plans to boost spending and cut taxes for the middle-class in a big speech a couple of weeks ago, Vice President Kamala Harris has quietly acknowledged since then that she intends to pay for those …
Second-quarter GDP growth surprised to the upside of the Bank of Canada’s forecast, but the evidence that growth slowed sharply over the quarter suggests that third-quarter growth will be much weaker than the Bank is anticipating. That raises the chance …
Asia Chart Pack (August 2024) …
Canada joins tariff hiking club On Monday, Canada announced a 100% tariff on imports of Chinese electric vehicles and 25% tariffs on aluminium and steel. The tariffs themselves won’t have much of a macro impact – the affected goods make up less than 0.1% …
The Prime Minister’s statement this week that “there is a budget coming in October, and it’s going to be painful…those with the broader shoulders should bear the heavier burden” has prompted yet more speculation about how much tax revenues will rise and …
Canada’s tariffs on China’s electric vehicles Canada recently took a leaf out of the US trade policy playbook (see here ) by announcing a 100% tariff on Chinese-made electric vehicles (EVs). We think that the macroeconomic impact of the tariffs on China …
Chinese lending to Africa increases Data out this week showed that Chinese lending to Africa increased for the first time since 2016. With fiscal policy tight, African economies will welcome more financing. But the region would also benefit from efforts …
Lula taps Galípolo In a move that had been long signalled, Brazil’s President Lula announced this week that Gabriel Galípolo is his nominee to take over at the helm of the central bank when the term of current governor Roberto Campos Neto finishes at the …
Falling house prices and a soft labour market will continue to hold back consumer spending over the coming months. And with the PBOC concerned about a bond bubble, large-scale monetary easing appears unlikely. But a ramp up in fiscal spending and …
Belgium's political crisis and high budget deficit have largely gone unnoticed in past couple of months while all eyes have been on France. This Update answers some key questions about its political situation and prospects for fiscal policy heading into …
GDP figures for Q2 show a sharper-than-expected slowdown in India’s economy. Looking ahead, we expect economic activity to moderate a bit further over the coming quarters. But the big picture is that the economy remains on track to grow by a world-beating …
With no significant hard activity data out yet, it is too early to be confident about how the economy will perform in Q3, but the initial signs are not promising. To recap the survey data so far, the euro-zone Composite PMI fell from an average of 51.6 in …
Despite Q2 upside surprise, data raise chance of a 50bp cut next week Although second-quarter GDP growth surprised to the upside, the downgrade to GDP in June and preliminary estimate that GDP was unchanged again in July imply that third-quarter growth …
Price pressures well behaved despite strength of real economy The July income and spending report shows price pressures remaining muted despite the strength of real consumption. The latter suggests that third-quarter consumption growth will be 3.7%. Even …
Weaker-than-expected US data and a dovish shift from the FOMC have led to a sharp fall in interest rate expectations in the US, driving the dollar down as the market turmoil at the start of August has largely unwound. The yen has continued to rally, as …
Further signs of fiscal complacency in Poland The Polish government’s draft budget for 2025 announced this week suggests that fiscal policy will be more expansionary than we had previously expected next year. While that poses an upside risk to our …
Traditional gold drivers pick up the reins Much of the chatter in the gold market this year has been about the role of non-traditional drivers – particularly demand from China – in propelling the gold price higher. (Our latest Commodities Focus , …
Falling fertility bodes poorly for long-run outlook Data released this week showed that Korea's fertility rate (the average number of children a woman is expected to have over her lifetime) dropped further to 0.72 last year (see Chart 1), the lowest of …
This page has been updated with additional analysis since first publication. Services inflation remains sticky We doubt that August’s unexpected increase in services inflation will stop the ECB from cutting interest rates at its next meeting in September …
Net lending continues to recover gradually Net lending to commercial property was positive for the fourth consecutive month in July, albeit by a smaller £520mn. With development lending still negative, this was driven entirely by a rise in lending …
This page has been updated with additional analysis since first publication. Steady improvement in credit is supporting the economy July’s money and lending data provide further evidence that a steady improvement in the flow and demand of credit is …
MPC dissenters Varma and Goyal to step down As was widely expected, it was confirmed this week that the MPC’s three “external” members (who have careers outside the RBI and are selected by the government) will step down when their current terms expire on …
This page has been updated with additional analysis since first publication. Lower mortgage rates may soon help house prices regain momentum Despite the recent declines in mortgage rates, the small fall in the Nationwide house price index in August …
