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Bank of Japan will hike rates at December meeting The Bank of Japan retained its hawkish outlook when it kept policy unchanged at today’s meeting and we still expect a rate hike to 0.5% at its next meeting in December. It came as no surprise that the Bank …
31st October 2024
This page has been updated with additional analysis since first publication. Australian consumer not out of the woods yet Although real retail sales saw a healthy pickup in Q3, there are reasons to suspect the data are overstating the momentum behind …
Consumption weakening yet again The September activity data were a mixed bag and consistent with our view that GDP growth slowed last quarter. Taking industrial production first, the 1.4% m/m rise was stronger than most had anticipated (Refinitiv …
Our more detailed and update analysis can be seen here . Despite large rise in taxes, Budget still boosts economy As the Budget loosens fiscal policy relative to previous plans, it is consistent with GDP growth perhaps being a bit stronger and interest …
30th October 2024
US economy continues to outperform Despite earlier fears that the US economy was headed for recession, growth continued to out-perform other DMs. Third-quarter GDP growth came in at a solid 2.8% annualised, down only trivially from the 3.0% pace in the …
RBA still on course to cut rates in Q1 2025 Today’s CPI release suggests that underlying inflation will be within striking distance of the RBA’s 2-3% target range by year-end. That should pave the way for the Bank to begin easing policy at its meeting …
Annual house price growth continues to cool A slightly healthier 0.3% rise in house prices in August does not change the fact that the market is rapidly cooling amid weak demand and growing supply. Therefore, we stand by our recent decision to trim our …
29th October 2024
Budget has yet to affect households’ financial decisions Although consumer confidence has fallen ahead of the Budget, there is little evidence in September’s money and lending figures that Budget worries are having a big influence on households’ financial …
LDP election loss heralds era of political instability Following its poor showing in yesterday’s Lower House elections, the LDP will need to form an untested coalition to remain in power which will undermine its ability to push through major pieces of …
27th October 2024
Stage set for a softer fourth quarter While the fall in durable goods orders in September was mostly due to the volatile transportation components, the decline in underlying capital goods shipments will still drag on business equipment investment. The …
25th October 2024
Pick-up in sales to be short-lived The increase in new home sales in September was probably supported by the fall in mortgage rates last month. Rates have rebounded since then, however, which lends support to our view that new home sales will not rise …
24th October 2024
This page has been updated with additional analysis since first publication. Budget concerns trigger slowdown in activity The fall in October’s composite flash PMI to an 11-month low suggests that real GDP growth, after what is shaping up to be a 0.2% q/q …
Flash PMI economic momentum is fizzling out The sharp fall in the composite PMI to a 2-year low supports our view that the strong rebound in activity that started in Q2 will be more muted across the second half of the year. Today’s flash estimate showed …
Stagnant existing home sales should rally soon The 1% m/m fall in seasonally adjusted existing home sales in September seems underwhelming given last month’s drop in mortgage rates, but the rise in mortgage applications in September points to a recovery …
23rd October 2024
50bp cut likely to be followed by another The weak economic backdrop means there is a strong case for the Bank of Canada to follow its larger 50bp cut today, which took the policy rate to 3.75%, with another 50bp move at the next meeting in December. Our …
This page has been updated with additional analysis since first publication. Borrowing disappoints but won’t prevent the Chancellor from raising investment While it is too late for September’s disappointing public finances figures to influence the amount …
22nd October 2024
Multi-family weakness offsets gain in single-family starts The small fall in housing starts in September was entirely due to the multi-family segment, whereas single-family starts rose to a five-month high. While starts will probably weaken this month due …
18th October 2024
This page has been updated with additional analysis since first publication. Households still increasing spending despite fears about tax rises September’s 0.3% m/m rise in retail sales volumes was stronger than expected (consensus forecast -0.3% m/m, CE …
Underlying inflation will remain around 2% for now While the resumption of electricity subsidies resulted in a plunge in headline inflation in September, inflation excluding fresh food and energy rose to a three-month high and should remain around 2% over …
Sales strong despite late-month hurricane disruption The strong 0.7% m/m rise in control group retail sales in September suggests that consumption growth strengthened to more than 3% annualised last quarter. That said, timelier data show a big drop in …
17th October 2024
This page has been updated with additional analysis since first publication. RBA to focus on inflation fight as labour market remains robust With the labour market running red hot, the Reserve Bank of Australia won’t cut rates before the first half of …
Manufacturers still struggling The 0.8% m/m decline in manufacturing sales volumes in August looks consistent with the flash estimate that GDP was unchanged that month, leaving the economy on track for a weaker third quarter. Although the S&P Global …
16th October 2024
This page has been updated with additional analysis since first publication. Not quite as good as it looks The surprisingly large drop in CPI inflation in September increases the chances that the Bank of England will speed up the pace of interest rate …
This page has been updated with additional analysis since first publication. Soft inflation data tee up another 50bp cut by the RBNZ The weaker-than-expected Q3 CPI data reinforce our conviction that the RBNZ will loosen policy more aggressively than most …
15th October 2024
Downside surprise makes a 50bp cut next week look likely The downside surprise to headline inflation in September and muted monthly gains in the CPI-trim and CPI-median core measures support our view that the Bank of Canada will choose a more aggressive …
This page has been updated with additional analysis since first publication. Further easing in wage growth supports case for more interest rate cuts The further fall in wage growth in August, together with signs that the labour market continued to loosen …
In light of both Hurricanes Helene and Milton we are flagging notes where we highlighted the physical climate risks facing the US. Ranking metros by physical climate risks to real estate Elevated insurance premiums continue to hit valuations Unpriced …
14th October 2024
PPI points to 0.24% m/m increase in core PCE Based on the combined CPI and PPI data, we now calculate that the Fed’s preferred core PCE deflator price measure increased by 0.24% m/m in September which, at 2.9% annualised, is a little hotter than we’ve …
11th October 2024
Stronger employment gain unlikely to be repeated The stronger rise in employment and fall in the unemployment rate in September were largely due to a seasonal quirk, as the weak summer jobs market meant that fewer young workers left positions than usual …
This page has been updated with additional analysis since first publication. Modest economic growth more likely than another recession this year The 0.2% m/m rise in GDP in August (consensus and Capital Economics 0.2%), which came on the back of the …
Core CPI consistent with another muted gain in core PCE Although core CPI prices increased by 0.3% m/m for a second consecutive month in September, our calculations suggest that core PCE prices increased by 0.20% m/m which, at an annualised pace, is only …
10th October 2024
Fed split on whether to kick off with 50bp or 25bp rate cut last month The minutes of the mid-September FOMC meeting reveal that support among Fed officials for kicking off the loosening cycle with a bigger 50bp rate cut was a little weaker than the lone …
9th October 2024
RBNZ hands down a dovish 50bp cut The RBNZ is likely to hand down a couple more 50bp rate cuts over the next few months . And we think it will end up cutting rates more aggressively than most are predicting. The RBNZ’s decision to cut its Official Cash …
Boost from net trade to be offset by weaker domestic demand Despite the trade deficit widening in August, developments earlier in the quarter means that net trade looks set to support GDP growth in the third quarter. With most of that positive …
8th October 2024
Rise in exports suggest stronger GDP growth The trade deficit narrowed to $70.4bn in August, from $78.9bn, as exports grew by 2% m/m and imports declined by 0.9% m/m. Exports, especially in real terms, were stronger than the advance goods data had implied …
RBA softens its tightening bias Although the RBA is becoming more attuned to downside risks to its outlook, we still think it will wait until early next year to cut rates. The minutes of the RBA’s September meeting confirmed that the RBA has in fact …
Regular earnings growth will remain close to 3% Base pay rose the most since 1992 in August and we think it will continue to surge in the coming months. According to today’s preliminary estimate, labour cash earnings rose by 3.0 y/y in August. That result …
This page has been updated with additional analysis since first publication. Confirmation house prices rebounded in Q3 The third consecutive monthly rise in the Halifax house price index in September provides further evidence that the falls in mortgage …
7th October 2024
Labour market strength rules out another 50bp rate cut Looking at the labour market strength evident in September’s Employment Report, the real debate at the Fed should be about whether to loosen monetary policy at all. Any hopes of a 50bp cut are long …
4th October 2024
Service sector on fire; but price pressures could be rebounding The surge in the ISM services index to a 17-month high of 54.9 in September, from 51.5, is a good reminder that the contrasting weakness in manufacturing is not a systemic threat to the …
3rd October 2024
Sharp fall in mortgage rates lifts applications The impact of lower mortgage rates was finally evident in mortgage applications in September, with applications for home purchase rebounding to a three-month high. With mortgage rates falling to little more …
2nd October 2024
This page has been updated with additional analysis since first publication. Consumer rebound not as strong as it seems The solid pickup in retail sales in August was driven in part by temporary factors, meaning that the underlying momentum behind …
1st October 2024
Tankan points to continued recovery This website has been updated with additional analysis since first publication. The slight rise in business conditions across all firm sizes in the latest Tankan suggests that the robust rebound in activity in Q2 will …
This page has been updated with additional analysis since first publication. Fading drag on credit from higher interest rates is supporting the economy August’s money and lending data provide further evidence that the gradual improvement in credit demand …
30th September 2024
This page has been updated with additional analysis since first publication. Softer rebound in activity, but another major downturn unlikely Q2 GDP growth of 0.5% q/q was a bit weaker than the previous estimate of 0.6% q/q, but the ONS also confirmed …
This page has been updated with additional analysis since first publication. House prices rise in Q3 and will rise further next year September’s 0.7% m/m rise in Nationwide house prices suggests that August’s 0.2% m/m fall was just a blip and that the …
Economic recovery lost some pace in Q3 While the plunge in industrial production in August creates some downside risks to our forecasts, the continued strength in consumer spending is encouraging. According to the preliminary estimate, industrial …
Core price pressures easing; Q3 consumption growth solid As we calculated based on the earlier price data releases, the core PCE deflator increased by a muted 0.13% m/m in August, with the headline deflator up by 0.09% m/m. Admittedly, although the …
27th September 2024
Stronger monthly GDP growth will be short lived Although the rise in GDP in July was stronger than expected, the preliminary estimate of unchanged GDP in August suggests that the momentum was short lived and puts third-quarter growth on track to surprise …
GDP revision shows stronger income growth; core orders rally At first glance the annual revision to the national accounts doesn’t appear to have had much of an impact – with second-quarter GDP growth left unchanged at 3.0% and core PCE inflation unchanged …
26th September 2024
