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This website has been updated with additional analysis since first publication. Underlying inflation may moderate faster than we expect The sharp slowdown in inflation excluding fresh food and energy in Tokyo this month reduces the likelihood that the …
26th July 2024
Stronger-than-expected growth unlikely to prevent September rate cut The sharper-than-expected pick-up in second-quarter GDP growth to 2.8% annualised should make the Fed a bit more comfortable about keeping policy unchanged next week, but the recent …
25th July 2024
New home sales remain weak New home sales were essentially unchanged in June after their 15% slump the month before, not helped by mortgage rates which remained stubbornly high at around 7%. So far in July, borrowing costs have declined and currently sit …
24th July 2024
Gradual loosening cycle continues and another cut in September looks likely Following its interest rate cut today, the Bank of Canada reiterated that further cuts are likely if inflation continues to ease in line with its expectations. Our forecast for …
GDP growth appears to be slowing at the start of Q3 July’s composite PMI suggests some of the recent rebound in activity this year may have been due to catch-up growth following the weakness of activity last year and GDP growth is easing towards a more …
Recovery will retain momentum across second half of 2024 The strong rebound in the composite PMI in July suggests that the recovery of Japan’s economy will continue across the second half of the year. According to the flash estimate released today, the …
Spike in rates takes sales to 13-year low The sharp rise in mortgage rates in April was the catalyst for existing home sales falling to a 13-year low in June. However, borrowing costs have since receded and timelier indicators of activity such as mortgage …
23rd July 2024
After his disastrous debate performance, President Joe Biden has dropped out of the race to be re-elected in this November’s election. His withdrawal letter acknowledges Vice President Kamala Harris as “an extraordinary partner in all this” and, in a …
21st July 2024
Cracks in consumption getting larger After a brief rebound in April, the renewed fall in retail sales volumes in May suggests that consumption growth is weakening again. We estimate that sales volumes fell by around 1% annualised in the second quarter, …
19th July 2024
This page has been updated with additional analysis since first publication. Limited wiggle room for the new Chancellor June’s disappointing public finances figures suggest that public borrowing is on track to come in a little higher than the OBR’s …
This website has been updated with additional analysis since first publication. Inflation will remain above target until early-2025 While the Bank of Japan will still see the July Tokyo CPI before its meeting later this month, the June nationwide figures …
This page has been updated with additional analysis since first publication. Encouraging, but interest rates may not be cut in August While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it …
18th July 2024
This page has been updated with additional analysis since first publication. A loosening labour market should forestall further rate hikes Although job growth remained healthy last month, it didn’t prevent the unemployment rate from rising anew. And we …
Drag from net trade will moderate Q2 GDP rebound While the widening of the trade deficit in June points to a sizeable drag from net exports on Q2 GDP growth, activity should still have rebounded last quarter. The 5.4% y/y rise in export values was weaker …
Manufacturing sector bucking negative tone of the surveys The rise in manufacturing output in June was better than we expected based on the small fall in hours worked, but it owed a lot to a rebound in motor vehicle production, which seems unlikely to be …
17th July 2024
Multi-family driven increase in housing starts The rise in housing starts and building permits in June is not as good as it seems at first glance, as it was driven by gains in the volatile multi-family sector, which we think will prove temporary. …
This page has been updated with additional analysis since first publication. We’re holding a 20-minute online briefing at 9.30am BST on Thursday 18 th July to discuss how today’s CPI and tomorrow’s labour market releases influence the chances of a rate …
This page has been updated with additional analysis since first publication. With inflation falling rapidly, the RBNZ’s August meeting is now “live” Today’s CPI release confirms that inflation is all but certain to return to the RBNZ’s 1-3% target by Q3. …
Odds still favour a July rate cut The Bank of Canada’s preferred CPI-trim and CPI-median measures of core prices rose at an above-target monthly pace for the second month running in June. Nonetheless, with the Bank’s Business Outlook Survey , released …
16th July 2024
Strong control group sales ease fears of consumer slump Although retail sales were unchanged in June, the strong 0.9% m/m rise in control group sales should ease concerns about the plight of the consumer in the wake of the renewed slump in sentiment. …
Stronger momentum in manufacturing The continued rise in manufacturing sales and new orders suggests that the sector gained some momentum in the second quarter. However, we expect that strength to fade this quarter. The 0.4% m/m rise in manufacturing …
15th July 2024
More evidence of consumers struggling The further decline in the University of Michigan consumer sentiment index in July adds to the evidence that consumers are increasingly struggling with high interest rates. Although the link between confidence and …
12th July 2024
PPI a lot better than it looks Ignore the fact that core PPI increased by a slightly bigger-than-expected 0.4% m/m in June and that May was revised to a 0.3% rise from unchanged. The PPI components that feed into the Fed’s preferred PCE deflator inflation …
CPI qualifies as ‘more good data’ The muted 0.1% m/m increase in core CPI in June strengthens the case for a September rate cut although, while a lot still depends on the PPI data due tomorrow, our initial estimate is that the core PCE deflator increased …
11th July 2024
This page has been updated with additional analysis since first publication. Economic recovery continues to strengthen The stronger-than-expected 0.4% m/m rise in GDP in May (consensus forecast 0.2%, CE forecast 0.3%) will be welcomed by the new …
RBNZ strikes some dovish notes Although it left the Official Cash Rate unchanged at 5.50%, the RBNZ sounded rather dovish in its commentary. The Committee’s messaging gives us greater confidence that the Bank will commence its easing cycle in November. …
10th July 2024
Powell leaves all options open Fed Chair Jerome Powell’s opening statement for his congressional testimony today offers few clues about the potential timing of interest rate cuts, with the key line that the Fed is still looking for “more good data” to …
9th July 2024
Regular earnings growth will approach 3% While base pay will probably be revised down somewhat in the final estimate, the preliminary estimate showed it rising the most in three decades and we expect it to accelerate a bit further over coming months. The …
8th July 2024
Cracks in the labour market increase the urgency for more cuts The modest decline in employment and rise in the unemployment rate to 6.4% in June raise the chance that the Bank of Canada will cut interest rates again this month, and makes us more …
5th July 2024
Payrolls beats, but rest of report adds to concerns Although the 206,000 gain in non-farm payrolls in June beat the consensus at 190,000, this was more broadly a disappointing report when we factor in the 111,000 downward revision to past months and the …
House prices slip back in Q2 As the first economic data release under a Labour government since 2010, the decline in Halifax house prices in June meant that Labour’s tenure got off to a slightly downbeat start. However, while we expect house prices to …
The big shift in the political landscape that appears to be delivering a Labour government with a large majority is unlikely to lead to anything like as big a shift in the economic landscape. But at the margin, Labour’s policies generate some upsides to …
4th July 2024
Minutes feel dated given subsequent signs of economic slowdown The minutes of the Fed’s mid-June policy meeting reveal that, not surprisingly given the split in the interest rate projections released at that time, officials were split on the outlook for …
3rd July 2024
Surveys consistent with softer growth and inflation The decline in the ISM services index to 48.8 in June, from 53.8, takes it to its lowest since the lockdowns in 2020. Alongside a decline in the ISM manufacturing index, these surveys suggest that GDP …
External trade continues to drag on GDP growth The trade deficit widened slightly to $75.1bn in May, from $74.5bn, as exports fell by 0.7% m/m, outpacing a 0.3% m/m decline in imports. Nevertheless, the decline in exports was more modest than the advance …
Exporters still struggling The fall in exports in May was largely due to lower commodity exports, which should have performed better in June thanks to the boost to oil exports from the completion of the Trans Mountain pipeline expansion. Cutting through …
Despite rising in June, mortgage applications consistent with weak home sales The decline in mortgage rates back below 7% helped mortgage applications for home purchase to rise by 5.1% m/m in June. That gain was tiny in the context of the ongoing …
This page has been updated with additional analysis since first publication. Uptick in retail sales not a gamechanger for the RBA The upside surprise in the May retail sales numbers primarily reflected consumers taking advantage of end-of-financial year …
Concerns about the economy will keep RBA from hiking The minutes of the RBA’s June meeting revealed that the Bank’s tightening bias remains intact. The Board noted that there were a number of factors that supported the case for a rate hike last month. …
2nd July 2024
More signs that the economy is struggling for momentum The ISM manufacturing index was little changed in June, leaving it consistent at face value with a small fall in GDP. While the ISM has not been a good leading indicator of GDP growth in recent years, …
1st July 2024
This page has been updated with additional analysis since first publication. Further evidence the drag on activity from higher interest rates is fading May’s money and lending data provided a bit further evidence that the drag from higher activity is …
House prices flat in Q2 Although house prices rose slightly in June, an earlier dip means they were flat on the quarter in Q2. With signs mortgage rates are causing demand to falter and that supply is improving, we think that house prices will flatline at …
This website has been updated with additional analysis since first publication. Tankan points to renewed strengthening in price pressures The Q2 Tankan survey suggests that economic activity will remain sluggish but the most striking development was the …
Inflation fading, consumers faltering The core PCE deflator increased by only 0.08% m/m in May and, even allowing for some modest upward revisions to the gains in earlier months, that was enough to pull the annual core inflation rate down to 2.57%, from …
28th June 2024
Heading for a slightly stronger second quarter The solid rise in GDP in April and preliminary estimate of a small increase in May leave the economy on track to perform better than the Bank of Canada expected this quarter, but not by enough to have any …
This page has been updated with additional analysis since first publication. Stronger economy good news for whoever is Prime Minister next Friday The upward revision to Q1 GDP growth from 0.6% q/q to 0.7% q/q (consensus forecast 0.6% q/q) suggests whoever …
Industrial output set to fall yet again The strong rebound in industrial production in May suggests that Japan’s economy turned a turner this quarter, but if output falls as much as firms are expecting this month, that strength won’t last. The 2.8% m/m …
This website has been updated with additional analysis since first publication. Rebound in underlying inflation allows BoJ to hike rates further The continued fall in the job-to-applicant ratio isn’t translating into a higher labour market and the bulk of …
Durable Goods & Advance Economic Indicators (May 2024) The small fall in core orders and larger fall in underlying capital goods shipments leaves prospects for second quarter business equipment investment weaker than we had expected. The 0.1% m/m rise in …
27th June 2024
This page has been updated with additional analysis since first publication. Riksbank pauses but will probably cut again in August The Riksbank’s decision to leave rates unchanged was as expected and does not suggest that policymakers are regretting their …
