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Sharp drop in residential turned total lending negative in June Net lending to commercial real estate (CRE) in June was negative for the first time in over two years, but this was driven by a large drop in residential lending as elevated mortgage rates …
17th July 2023
Jump in confidence unlikely to last long The sharp rise in the University of Michigan consumer sentiment index to 72.6 in early July, from 64.4, leaves it close to a two-year high. That said, it remains fairly weak by historic standards, and the chances …
14th July 2023
Easing supply shortages still supporting activity The 2.2% m/m jump in manufacturing sales volumes in May was better than we expected given the weakness of the survey evidence and shows that easing supply shortages are still supporting the sector. While …
Inflation falling, but still too high for the Riksbank The fall in CPIF inflation, the Riksbank’s target variable, in June was smaller than policymakers expected, which will encourage them to raise the policy rate from 3.75% to 4.00% at the next meeting …
Hike to 5.0% likely to be the last The Bank of Canada’s 25bp hike today, taking the policy rate to 5.0%, is likely to be the last in this cycle. With the labour market loosening, core inflation declining and the survey indicators implying that inflation …
12th July 2023
This page has been updated with additional analysis since first publication. Core inflation has much further to fall The muted 0.2% m/m rise in core consumer prices in June won’t stop the Fed from hiking rates again later this month, but it supports our …
RBNZ leaves rates unchanged The RBNZ’s decision to leave its official cash rate on hold at 5.50% was widely expected. In fact, all 25 analysts polled by Reuters, including ourselves, had anticipated the pause. The minutes of the July meeting reinforce our …
This article has been updated with additional analysis and charts since it was first published. Business investment probably still grew in Q2 The fall in “core” machinery orders in May points to a significant fall in spending on machinery and transport …
This page has been updated with additional analysis since first publication. Note: We’ll be discussing the UK inflation, growth and policy outlooks after the June CPI release on Wednesday 19th July. Register here to join that 20-minute online briefing. …
11th July 2023
This page has been updated with additional analysis since first publication. Easing wage growth despite jump in employment The surge in employment in June was not quite as strong as it looks, with hours worked essentially unchanged last month, but still …
7th July 2023
This page has been updated with additional analysis since first publication. Easing employment growth offset by stubborn wage growth The 209,000 rise in non-farm payrolls in June was the weakest gain since December 2020 and suggests labour market …
A fragile plateau The decline in the Halifax house price index in June was surprisingly modest given the scale of the increase in mortgage rates in the same month. But the current level of house prices looks unsustainably high given where mortgage rates …
Strong wage growth in May won’t last Regular wage growth hit a near three-decade high in May and bonus payments surged, resulting in a jump in labour cash earnings. But we wouldn’t read too much into the result, since it appears to be mostly driven by a …
Services activity rebounds; job openings still trending lower The rebound in the ISM services index to a four-month high of 53.9 in June, from 50.3, leaves a weighted average of the services and manufacturing indices at a level that, historically, has …
6th July 2023
Slump in exports a downside risk to GDP growth The slump in export volumes presents downside risks to the preliminary estimate that GDP rose strongly in May, and suggests that the earlier boost from easing supply shortages is now largely behind us. With …
Export weakness to hit Q2 GDP; ADP should be treated with caution The May trade data suggest that falling exports will be a big drag on second-quarter GDP growth, and we suspect the reported surge in ADP employment last month is too good to be true. The …
Demand rebounds marginally from historic lows A slight decline in mortgage rates allowed mortgage applications for home purchase to recover from the previous month’s lows in June. That said, applications remain below the average seen so far this year, …
Net exports will cushion GDP growth in Q2 The rise in the trade surplus, to $11.8bn in May from $10.5bn in April, was stronger than most had anticipated (Refinitiv Consensus: $10.5bn, CE:$10.9bn). Exports of goods and services rose by a solid 4.4% in …
Fed largely united in favour of temporary pause The minutes of the Fed’s mid-June FOMC meeting suggest that participants were largely of the same mind as far as the decision to temporarily pause the hiking cycle was concerned. Just as “almost all” …
5th July 2023
Tightening cycle not over yet The RBA’s decision to keep rates unchanged today suggests that interest rates may not rise all the way to 4.85% as we currently expect, but further tightening still seems likely. Today’s decision was a very close call: 15 …
4th July 2023
This page has been updated with additional analysis since first publication. Still consistent with recession and disinflation The further fall in the ISM manufacturing index to 46.0 in June, from 46.9, is difficult to square with claims from some …
3rd July 2023
This page has been updated with additional analysis and charts since it was first published Economy probably won’t do as well as Q2 Tankan suggests Today’s Tankan survey showed a turnaround for the flagging manufacturing sector, while the services sector …
This page has been updated with additional analysis since first publication. Weak April offset by strong May The stagnation in GDP in April was weaker than expected but, with the preliminary estimate pointing to a sharp rise in GDP in May, quarterly …
30th June 2023
Consumption stagnates as core inflation eases The May income & spending data appear to confirm that real consumption growth slowed sharply in the second quarter, while also providing encouraging signs that core inflation is gradually easing. Although data …
National index resilient, but regional data confirm affordability matters The pause in the fall in house prices extended into June according to Nationwide, but we think it is just a matter of time before the spike in mortgage rates in recent weeks causes …
This page has been updated with additional analysis since first publication. Recession still to come this year as resilience fades The final Q1 2023 GDP data confirms that the economy steered clear of a recession at the start of 2023. But with around 60% …
This article has been updated with additional analysis and charts since it was first published Downhill from now for underlying inflation The end-month data rush mostly affirms our view of the economy. The first fall in underlying inflation in Tokyo in …
This page has been updated with additional analysis since first publication. Higher interest rates continue to take a toll on bank lending Higher interest rates continued to weigh on bank lending in May, particularly in the housing market. This effect …
29th June 2023
The Calm Before the Storm The tick up in mortgage approvals in May sustained the partial recovery from the slump at the beginning of the year. (See Chart 1.) But the increase reflects earlier declines in mortgage rates and will be cut short by their more …
Inflation back under 2% The further fall in Spanish HICP inflation will provide some respite for households who have suffered a sharp hit to real household income over the last year. But it will have little sway over ECB decision-making as …
NYC employment finally returns to its pre-pandemic peak Total employment growth was resilient across metros in May, recording 0.6% 3m/3m on average. That growth was led again by Boston, Las Vegas and Charlotte, with San Antonio also seeing a rise of over …
28th June 2023
Slowdown in inflation not fast enough to prevent further rate hikes The sharp fall in inflation in May raises the risk that Reserve Bank of Australia will not raise any further at the upcoming meeting in July, but we still think that mounting upside risks …
New home sales soar New home sales increased for the third consecutive month in May, rising by a punchy 12.2% m/m to reach 763,000 annualised, the highest level since February 2022. This leaves them firmly above pre-pandemic levels and around 20% above …
27th June 2023
House prices remain resilient House prices rose in April by the fastest pace in close to a year, reflecting constraints to supply as high mortgage rates have discouraged existing homeowners from moving. Although prices have shown resilience in recent …
Some improvement, but core inflation pressures still a bit too strong for comfort This page has been updated with additional analysis since first publication . While the steep declines in both headline and core inflation in May were partly due to …
Equipment investment still set for further declines The 1.7% m/m rise in durable goods orders in May was stronger than we had expected, even accounting for a big rise in the volatile commercial aircraft component. But the wider evidence still suggests …
This page has been updated with additional analysis since first publication. Services price inflation still sticky June’s flash activity PMIs won’t do much to ease the Bank of England’s inflation fears, which suggests that yesterday’s interest rate rise …
23rd June 2023
This page has been updated with additional analysis since first publication. Sales boosted by hot weather, but drag from soaring mortgage rates yet to bite The further rebound in retail sales volumes in May suggests the recent resilience in economic …
This page has been updated to include additional analysis and charts. PMIs suggest economic downturn might have started in June The fall in manufacturing PMI readings in June’s flash estimates suggest the recession we’re expecting in the second half might …
This page has been updated to include additional analysis, charts and a table. Inflation should fall below 3% by year-end Nationwide inflation played out largely in line with the timelier Tokyo CPI data in May. Headline inflation fell largely due to a …
Inflation to dip below 3% by year-end Headline inflation fell nationwide largely in line with the timelier Tokyo CPI data, while once again, underlying inflation rose despite that. As falling import price inflation brings down inflation in consumer prices …
Sales remain weak As expected, existing home sales remained relatively unchanged in May, rising by +0.2% m/m to 4,300,000 annualised. Despite this marginal rise, a decline in mortgage applications for home purchase in May suggest we have further falls to …
22nd June 2023
50bps and at least another 25bps hike to come The Bank of England’s decision to raise rates by 50bps, from 4.50% to a near 15-year high of 5.00%, is unlikely to be the last hike given the UK’s higher and longer lasting inflation problem. We think the …
This page has been updated with additional analysis since first publication. Broad-based resilience in spending The stronger-than-expected rise in retail sales in April suggests that household spending was resilient going into the second quarter. Both the …
21st June 2023
Ugly inflation print tips balance to 50bp hike tomorrow In response to May’s inflation data , released earlier today, we now expect the MPC to raise interest rates by 50bps to 5.00% at tomorrow’s meeting. A lot of attention has focussed on the fact that …
This page has been updated with additional analysis since first publication. Public finances limits the Chancellor’s room for manoeuvre Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision …
This page has been updated with additional analysis since first publication. Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST. …
Strongest monthly rise in single-family starts for nearly three years Single-family starts saw the largest monthly increase in nearly three years in May, suggesting homebuilders have been responding to the recent rises in new home sales. We still expect a …
20th June 2023
RBA will keep hiking to 4.85% The minutes of the RBA’s June meeting largely reaffirmed the Bank’s pivot to a more hawkish stance. To be sure, the Board did discuss the option of leaving rates unchanged, given the ongoing fall in households’ real …
Rebound in confidence likely to be short lived The end of the debt ceiling stand-off probably drove some of the rebound in the University of Michigan’s consumer sentiment index to 63.9 in early June, from 59.2. Despite that, confidence remains …
16th June 2023
