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Slump in sentiment not yet weighing heavily on spending The moderate decline in retail sales volumes in February was probably due to the unseasonably severe winter weather rather than the recent slump in sentiment, with the latest flash estimate implying …
25th April 2025
This page has been updated with additional analysis since first publication. March may be as bright as it gets as confidence slides March’s rise in retail sales volumes meant sales rebounded by an impressive 1.6% q/q in Q1, rounding off a …
You can’t buy what you can’t afford The fall in existing home sales in March serves as a good reminder that more home listings alone are not enough to revive the market. Affordability also has to meaningfully improve which, based on our view that …
24th April 2025
Boeing demand boosts orders The jump in durable goods orders in March was driven entirely by a large rise in orders received by Boeing. Excluding transport, core goods orders flatlined. With the post-strike boost from the restart in production at Boeing …
Sharp rise in sales shows market still has momentum Lower mortgage rates drove a sharp rise in new home sales in March, showing that the market still has solid momentum despite inventory creeping up in the resale segment. However, with mortgage rates …
23rd April 2025
This page has been updated with additional analysis since first publication. Tariffs dampening activity but not yet inflation The marked fall in the composite PMI in April raises the chances that the uncertainty stemming from the US tariffs chaos will be …
This page has been updated with additional analysis since first publication. Fiscal position worse than OBR predicted even before US tariffs bite March’s public finances figures showed that public borrowing was overshooting the OBR’s forecast even before …
PMI data bolster the case for a shallow easing cycle Early signs suggest that the economy is holding up well despite heightened uncertainty. With firms also reporting stronger inflationary pressures, we’re sticking to our view that the RBA won’t cut rates …
Strong labour market lessens the need for aggressive cuts With the labour market broadly on solid ground, we expect the RBA to deliver only a shallow easing cycle. The 32,00 rise in employment in March was a touch softer than the 40,000 increase that we …
17th April 2025
Exports will rebound across Q2 While export values fell in March, we expect them to rebound over the coming months as US consumers rush to place orders before the suspension of reciprocal tariffs ends in July. The annual increase in export values slowed …
RBNZ won’t fret the modest uptick in inflation Although headline inflation in Q1 was stronger than it had anticipated, we suspect the RBNZ will take comfort from the fact that measures of core inflation continued to fall towards the mid-point of its 1-3% …
Bank holds but further cuts likely amid dovish communications The Bank of Canada’s decision to keep interest rates unchanged at 2.75% today was not a huge surprise given recent above-target gains in core prices, concerns about future price increases and …
16th April 2025
Tariff hit yet to come The fall in industrial production in March was not as bad as it looks given that it was driven solely by a large weather-related drop in utilities output. Manufacturing enjoyed a strong first quarter with output rising by 5.1% …
Consumption growth rebounds following weather-related weakness A presumably temporary pre-tariff surge in motor vehicle sales drove the strong 1.4% m/m increase in retail sales in March. But there was also a big 3.3% m/m rebound in building materials …
This page has been updated with additional analysis since first publication. Dip in inflation won’t last, but weak economy will quash inflation eventually The dip in CPI inflation from 2.8% in February to 2.6% in March (CE forecast 2.6%, consensus 2.7%) …
Gasoline-driven fall in headline inflation The downward surprise to CPI inflation in March, along with the first target-consistent gains in CPI-trim and CPI-median in eight months, at the margin raise the odds of a rate cut by the Bank of Canada tomorrow. …
15th April 2025
This page has been updated with additional analysis since first publication. Jobs growth weakens with more to come While the jobs market weakened further, there were few signs this is feeding through to slower wage growth. But if the more uncertain …
Stagflation on consumers’ minds The further fall in the University of Michigan Consumer Sentiment Index in April along with the rise in both one- and five-year inflation expectations, suggests that the tariff-related fears which had soured sentiment over …
11th April 2025
One step forward after two steps back and with a mountain ahead Following the favourable CPI and PPI data, we estimate that the core PCE deflator rose by a below-target 0.05% m/m in March. Even taking into account a likely upward revision to the rise in …
This page has been updated with additional analysis since first publication. Surprisingly strong growth to prove short-lived, as rises in tariffs and taxes bite The surprisingly strong 0.5% m/m rise in GDP in February (consensus +0.1%, CE 0.0%) and the …
Core PCE prices on track for below-target 0.11% gain The unexpectedly small 0.06% m/m rise in the core CPI in March was partly due to steep falls in hotel prices and airline fares, which reflect both weakening domestic demand and the recent drop in …
10th April 2025
RBNZ will cut further than most anticipate The RBNZ cut rates by 25bp at its meeting today, while signalling that further easing would be forthcoming in the months ahead. We think the Bank will ultimately loosen policy settings to a greater degree than …
9th April 2025
This page has been updated with additional analysis since first publication. Housing market loses steam in Q1 The 0.5% m/m fall in Halifax house prices in March provides further evidence that the boost from buyers rushing to complete home purchases before …
7th April 2025
Underlying wage growth remains strong We suspect that the sharp slowdown in regular earnings growth in February is just a sampling anomaly rather than a sign of genuine weakness. With this year’s spring wage negotiations resulting in a larger pay hike …
Payrolls brings better news The bumper 228,000 rise in non-farm payrolls in March offers some welcome good news amid the escalating global trade war, showing that the labour market remains healthy despite the drag from DOGE-led federal job cuts. We expect …
4th April 2025
Tariffs not entirely to blame for employment fall While US tariffs will be the obvious culprit for the fall in employment in March, two-thirds of the decline was concentrated in the services sector, suggesting that other factors were at play. Nonetheless, …
Gold playing a key role in the slight narrowing of the trade deficit The narrowing of the trade deficit in February was driven by stronger exports, mainly of non-monetary gold, while imports remained at record levels, as businesses continued to rush …
3rd April 2025
Tariffs knock trade balance back into deficit The large fall in exports in February was to be expected given the (albeit temporary) imposition of tariffs on goods imports into the US that month. While Canada may have gotten off relatively lightly on …
Fall suggests manufacturing renaissance remains elusive The slight dip in the ISM manufacturing index in March suggests that, rather than triggering a reshoring factory renaissance, the uncertainty surrounding President Trump’s tariff threats are …
1st April 2025
This page has been updated with additional analysis since first publication. House prices continue to lose momentum The stagnation in Nationwide house prices in March suggests any boost from buyers rushing to complete home purchases ahead of the rise in …
RBA’s easing cycle will be shallow While the RBA is becoming increasingly confident that inflation will sustainably return to target, we still expect its easing cycle to be shallow. The Bank’s decision to leave the cash rate unchanged at 4.10% was …
Consumer spending remains muted With consumers seemingly keeping spending on a tight leash, there is a risk that the RBA will loosen policy a bit more than we currently expect this cycle. The 0.2% m/m rise in retail sales values in February was a touch …
Tankan suggests economy is firing on all cylinders While business conditions were unchanged in the latest Tankan survey, the survey suggests that an increasingly overheating economy is creating strong price pressures. The Tankan’s headline measure of …
This page has been updated with additional analysis since first publication. Tentative signs households may be starting to spend a bit more freely February’s money and lending figures provide some green shoots of households starting to save less and spend …
31st March 2025
Solid rise in GDP not a sign of things to come The stronger-than-expected 0.4% m/m rise in GDP in January, along with an upward revision to the December outturn, shows the economy still had solid momentum at the start of this year. The weak February …
28th March 2025
Inflation too hot and spending too cold The third consecutive above-target gain in core PCE prices in February, of 0.37% m/m, reinforces our view that the Fed is unlikely to cut interest rates this year. Admittedly, officials are likely to be concerned by …
This page has been updated with additional analysis since first publication. Bumper rise in retail sales suggests households may be spending more freely Today’s deluge of data confirmed that the economy was weak even before the full effects of higher …
Trump imposes 25% tariff on auto imports Following media reports at the start of this week that product-specific tariffs would be deferred, President Donald Trump has changed tack once again and announced that all finished motor vehicle imports will be …
26th March 2025
For updated and more detailed analysis see here . Markets may be concerned about unfinished fiscal business Despite saying the “world is changing”, the Chancellor, Rachel Reeves, today just tinkered with fiscal policy. This left the impression that bigger …
Tariff effects help lift core orders Stronger orders for primary metals and fabricated metal products in February suggest that tariff effects helped to drive up core durable goods orders last month, while transportation orders also did better than we …
This page has been updated with additional analysis since first publication. Temporary dip in inflation may not help the BoE or Chancellor much The dip in CPI inflation from 3.0% in January to 2.8% in February (CE & consensus 2.9%, BoE 2.8%) is a bit of a …
Weakness in Australia’s underlying inflation points to May rate cut The weakness in underlying inflation means that the RBA will probably cut rates again 25bp in May and creates some downside risks to our forecast that the Bank will only cut rates to …
Small rebound in sales shows new home market still in good health After a large partly weather-driven fall in January, last month’s small rebound in new home sales was a little underwhelming but still illustrates that the market for new homes is in decent …
25th March 2025
House price inflation rises to five-month high The solid 0.5% m/m rise in house prices in January and accompanying pick-up in house price inflation to 4.7%, from 4.6%, confirms that the market has stopped cooling for now. While we still expect house price …
This page has been updated with additional analysis since first publication. Stubbornly high UK price pressures will add to BoE’s worries With the downside risks on activity shrinking and high price pressures being sustained, the Bank of England is …
24th March 2025
Consumption outlook deteriorating The sharp drop in retail sales volumes in January is not a major concern, coming off a massive GST holiday-driven surge the month before. The worry is that it could signal what's to come, with the preliminary estimate …
21st March 2025
This page has been updated with additional analysis since first publication. Gloomy news ahead of next week’s spring fiscal event Although it will have no impact on the fiscal update next week, the significant overshoot in borrowing in February highlights …
Strength in inflation suggests BoJ will hike rates again soon The strength in underlying inflation in February suggests that the Bank of Japan could hike rates at its next meeting in May but we still expect that uncertainty over the impact of US tariffs …
20th March 2025
Unexpected rise not a sign of strength to come The small rise in existing home sales in February is unlikely to mark the start of a period of strength for buying activity given that purchase mortgage applications, which lead transactions by a month or …
For an updated and more detailed version of this analysis, click here . Committee less committed to collection of rate cuts The Bank of England was always going to continue its cut-hold-cut-hold pattern by leaving interest rates at 4.50% today but, in the …
