Increased uncertainty weighs on commercial construction The headline CIPS construction PMI edged up to 46.6 in April, from 46.4 in March. That left the balance below 50 and consistent with a contracting construction sector. A small rise in the housing and …
7th May 2025
The future of Europe …
Chinese policymakers will probably find ways to keep the published unemployment rate close to their “around 5.5%” target for this year. But this may mask broader weakness in the labour market as a downturn in exports reduces new hiring, increases …
Inflation lower than expected, but the core rate to remain high for rest of year Sweden’s CPIF inflation was unchanged in April which will give the Riksbank little cause for concern going into its policy decision tomorrow. We expect it to keep the policy …
Our CE China Labour Market Indicator (CLMI) brings together a range of timely indicators to provide a comprehensive view of the cyclical health of China's labour market. Our index extends further back in time than the official unemployment rate, is less …
Chinese policymakers have announced a raft of new monetary easing measures. These will help to shore up growth at the margin. But any boost to credit demand will be modest and today’s moves are no substitute for an expansion in fiscal support. China’s …
This page has been updated with additional analysis since first publication. Ample spare capacity in the labour market will support disinflation Although New Zealand’s unemployment rate held steady in Q1, the details of today’s jobs report were far from …
Early signs are that Vietnam is doing well as US buyers look to find alternative suppliers outside China. Asia publishes export data much faster than other regions, providing some of the most timely evidence of how trade is being affected by Trump’s …
6th May 2025
Pharmaceuticals imports push trade deficit to new record high The widening in the trade deficit to a new record high in March was driven entirely by imports of pharmaceutical products as firms looked to front-run tariffs. This was broadly in-line with the …
Tariffs bite, but strong demand elsewhere softens the blow The surprise improvement in Canada’s goods trade balance in March, despite the imposition of US tariffs, was thanks to a surge in exports to other countries. Nonetheless, as the survey indicators …
Given the shift in OPEC+ policy over the weekend, the global oil market will, all else equal, be better supplied over the coming years than previously looked likely. Accordingly, having consistently flagged the downside risks to oil prices over the past …
Merz significantly weakened by first round election failure The failure of CDU leader Friedrich Merz to be elected Chancellor in the first round of voting will probably not prevent him and the Grand Coalition from taking power in the coming days or weeks. …
We see a few reasons to be sceptical about the chances of a broad-based upwards revaluation of Asian currencies, despite recent moves. At the time of writing the breakneck rally in Asian currencies vs. the US dollar seemed to have come to a screaming …
In current circumstances it would take a large strengthening of the yen to push inflation below the Bank of Japan’s 2% target. And with profit margins close to record highs, the hit from a stronger yen to corporate profitability probably won’t result in a …
Service sector shrugs off tariff uncertainty The rebound in the ISM services index to 51.6 in April, from 50.8, is another illustration that most firms are able to shrug off the tariff chaos. Admittedly, at 51.3, our weighted composite of the …
5th May 2025
Simion’s lead leaves Romania on the verge of a big political shift Far-right candidate George Simion emerged as the clear frontrunner in the first round of Romania’s rescheduled presidential election and is now the favourite to win the second round on 18 …
We pay little attention to the official Indonesia GDP figures, which once again showed growth was unchanged at around 5% last quarter. While the official figures are likely to show growth remaining stable over the coming quarters, we expect activity to …
Labor expands majority in election blowout The Australian Labor party, led by Prime Minister Anthony Albanese, is cruising towards victory in yesterday’s federal election. Given that our forecasts assumed policy continuity, we are inclined to leave them …
4th May 2025
If you’re looking for evidence of the negative hit from Donald Trump’s tariffs, you’ll struggle to find it in the hard data. Group Chief Economist Neil Shearing is on The Weekly Briefing from Capital Economics minutes after the release of the US …
2nd May 2025
The dollar is ending the week on the backfoot, despite the ongoing normalisation and returning risk appetite across financial markets, as well as a generally decent set of US economic data. Somewhat surprisingly, the greenback remains well below its pre-2 …
The manufacturing PMIs show that US trade policy weighed on sentiment across the emerging world, although the falls in the surveys arguably weren’t as bad as might have been feared. In India’s case, there may also be some tentative signs of a pickup in …
The stronger-than-expected April US Employment Report published today leaves us comfortable with our central scenario that the trade war won’t be enough to tip the US economy into recession. So, we think the Fed will keep its focus on inflation and stand …
SA 2025 Budget: fiscal slippage is coming South Africa’s 2025 Budget will be tabled for a third time later this month and, to be approved, we think the ANC and DA will need to agree on some spending cuts, although it probably won’t be enough to avoid some …
Hold in Chile, BanRep turns dovish Andean central banks sent very different signals this week. In Chile, the central bank left its policy rate unchanged at 5.00% as expected. And policymakers still sounded somewhat concerned about inflation, highlighting …
The 0.3% annualised contraction in first-quarter GDP generated a lot of headlines this week. In contrast, final sales to private domestic purchasers rose by a solid 3.0%, implying there was plenty of strength in the underlying economy. Nevertheless, the …
Additional fiscal easing may be needed before long Our China Activity Proxy published earlier this week showed that China’s economy slowed in Q1, growing by just 3.9% y/y. That’s despite the fact that the trade war with the US was only just getting …
Overview – President Trump’s inflationary trade and immigration policies leave no clear path to the lower borrowing costs that the housing market desperately needs. A tariff-driven resurgence in inflation will likely keep the Fed from cutting this year, …
Magic Carney The Liberals won 169 seats in the election this week, just missing out on the 172 required for a majority. Nonetheless, that was still a momentous result for the Liberals considering they were, at one point earlier this year, projected to …
The larger-than-expected fall in the Nationwide measure of house prices in April has raised concerns about how quickly the housing market is losing momentum. After price gains of 1.1% m/m and 0.7% m/m in November and December last year, prices are down …
This webpage has been updated with additional analysis since first publication. Labour market remains resilient even after tariff announcements The healthy 177,000 rise in non-farm payrolls in April and unchanged unemployment rate will reassure the Fed …
Riyadh ups the ante ahead of OPEC+ meeting Developments in the oil market once again took centre stage this week, with Brent crude prices set for their second consecutive weekly fall. The biggest news event of the week came courtesy of reports that Saudi …
We think there are two key takeaways from the flurry of activity figures released this week. First, the euro-zone economy held up better than we expected in Q1. GDP expanded by 0.4% q/q. That was partly due to a very strong outturn in Ireland, where data …
A 25 basis point (bps) rate cut in May is a done deal Markets have got ahead of themselves in expecting four 25bps rate cuts in 2025 But the risks are tilting towards rates being cut further than markets expect, perhaps to 3.00% The Bank of England will …
A cut more likely than a hold Malaysia is one of the few countries in the region not to have cut interest rates this cycle. Concerns about the inflation outlook and healthy economic growth have meant the central bank has been in no hurry to loosen. …
Russia’s economy may be starting to break ... The latest economic data released out of Russia have given clear signals that growth has slowed sharply, with GDP having potentially contracted outright in q/q terms in Q1. We had expected a slowdown to …
Exporters relatively well-placed to benefit US Treasury Scott Bessent said this week that “India would be one of the first trade deals we [the US] would sign”, brightening the prospects of India avoiding large tariffs once the 90-day reprieve comes to an …
Paul Samuelson famously quipped in 1966 that the stock market had predicted nine of the last five recessions in the US. We suspect it just sent another false signal about an economic downturn. We can quibble over whether we just had a bear market. On a …
Easter-driven rise in services inflation won’t concern ECB April’s rise in services inflation is unlikely to worry the ECB too much as it was probably driven mainly by Easter timing effects. We think services inflation will start falling again in the …
Tariff front-running drives a strong start to the year Hong Kong’s GDP growth saw a strong pick-up in Q1, expanding by 3.1% y/y in Q1, up from 2.5% y/y in Q4 of last year (the Bloomberg median was +2.1% and our forecast was +3.4%). In q/q terms the …
PMIs not as good as they look The manufacturing PMIs across Central and Eastern Europe (CEE) held up relatively well in the face of higher US tariffs, but forward looking components of the surveys suggest conditions may deteriorate ahead. Meanwhile, price …
RBA still on track to deliver shallow easing cycle This week we learnt that Australia’s trimmed mean inflation fell from 3.2% in Q4 to 2.9% in Q1, returning it to the RBA’s 2-3% target band for the first time in over three years. While that outturn was …
The April PMIs for Asia fell sharply, providing the first sign that Trump tariffs are weighing on sentiment in the region. With concerns about growth mounting and inflation worries continuing to ease, we think most central banks in the region will …
Few signs of sharp slowdown in activity With trade tensions clouding prospects for Japan’s economy, the Bank of Japan revised down its GDP growth forecasts sharply at its meeting on Thursday and sounded more dovish than it did in January. One channel …
Weak retail spending raises risk of looser monetary policy With consumers spending remaining sluggish, risks to our interest-rate forecasts are tilted to the downside. The 0.3% m/m rise in sales values in March was a bit softer than the 0.4% increase the …
It’s possible that the recent blackout on the Iberian peninsula goes down in history as a catalyst for widescale electricity grid upgrades which ultimately help to bolster the pace of the renewable rollout. But at least in developed economies, it’s …
1st May 2025
Headwinds are gathering for the Swedish economy, and we expect the Riksbank to strike a dovish tone in its statement next week. But it will probably stop short of cutting the policy rate as it waits for some of the economic uncertainty to fade. Meanwhile, …
Oil prices have now fallen by about 18% since ‘Liberation Day’, and one could make the case for them being in oversold territory – particularly if US tariffs are rowed back further, as we expect. But further signs that Saudi Arabia is willing to push oil …
Saudi pushing for a more aggressive OPEC oil hike It already looked like next week’s OPEC+ meeting could see another plan outlined to hike to oil output from the group in June. But if anything, supply could be raised further given signals from Saudi …
Manufacturing activity holding up The small fall in the ISM manufacturing index in April suggests that, while tariffs are weighing on the economy, they are not crushing it. And although the prices paid index is still some way below its pandemic peak, it …
The prospect of a flood of low-cost Chinese exports to African shores may help those economies suffering from high inflation but it risks undermining the growth of domestic industry. Governments in the likes of Nigeria, with a history of employing …
