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Slight uptick in February’s lending, but still below 2022 average Net commercial real estate lending ticked up in February following a slowdown the month prior. That said, monthly lending activity across all sectors remained below the average for 2022. …
13th March 2023
Payrolls strong but rest of report suggests 25/50bp Fed hike debate unresolved The above-consensus 311,000 increase in payroll employment last month confirms that the super-sized 504,000 gain in January wasn’t just a seasonal distortion, but the rest of …
10th March 2023
January’s strength won’t prevent contraction in GDP in Q1 The 0.3% m/m rise in real GDP in January (consensus +0.1% m/m, CE +0.4% m/m) will raise hopes that the economy will escape a recession in 2023 and will increase calls for the Chancellor to splash …
Lower inflation means Norges Bank can stick to 25bp hikes February’s decline in headline and core inflation takes some of the pressure off the Norges Bank and means that it is likely to hike by 25bp at the meeting in two weeks’ time. After surprising on …
Patches of positivity unlikely to last The slight recovery in the new buyer enquiries balance in February suggested that the reversal of the autumn spike in mortgage rates allowed a limited revival in demand. But with sales volumes falling and price …
9th March 2023
Strong start to 2023 unlikely to be sustained The widening in the international trade deficit to $68.3bn in January, from $67.2bn, included big rebounds in both imports and exports which, at face value, add to the signs that demand is strengthening at …
8th March 2023
The substantial recovery in Halifax house prices in February added weight to the view that we will see a stand off between buyers and sellers that causes transactions to slump, but minimal price falls. That would be a historical anomaly, which is why our …
7th March 2023
Worst hit to real wages since GFC could see spending fall in Q1 Wage growth fell sharply in January to its weakest in almost two years due largely to a slowdown in the growth of regular and overtime hours worked. Real wages posted the worst fall since the …
Construction activity rebounds The headline CIPS construction index rebounded back into expansionary territory in February and the forward-looking indicators also showed further improvement. Commercial developers may be taking advantage of lower input …
6th March 2023
Broader inflation outlook still intact The unemployment fell slightly in January but we’re still expecting it to rise through mid-year due to an economic downturn. Meanwhile, energy inflation fell by less than we expected in Tokyo as government subsidies …
3rd March 2023
Q4 GDP growth to remain at 0.2% The increase in capital spending reported in today’s “Financial Statements Statistics of Corporations” is broadly consistent with the preliminary Q4 GDP estimate. That means Q4 GDP growth is likely to remain at 0.2% q/q in …
2nd March 2023
Terrible 2022 helps boost outlook for 2023 The latest IPF Consensus Survey showed a modest upgrade to forecasts for total returns in 2023, driven by an uplift to the capital value view. That looks to reflect the larger-than-expected fall in capital values …
1st March 2023
Rise in mortgage rates cuts home demand Stronger-than-expected economic data led to a resurgence in mortgage rates in February, which put a stop to a tentative recovery in mortgage applications for home purchase. This points to sales staying close to …
Higher interest rates hurt housing, but other borrowing remains strong While January’s money and credit figures suggest that higher interest rates are continuing to act as a drag on the housing market, they appear to be having less influence in other …
Net lending holds up as even as investment collapses Net lending to property was once again positive in January, even as commercial property investment collapsed in the final quarter of last year. Investors may be preparing to re-enter the market and …
Q4 spike in mortgage rates continues to depress approvals The spike in mortgage rates in October and November last year ensured that mortgage approvals remained at a similar level to the depths of the 2007-09 financial crisis in January. That could mark …
House prices continue to slide The further fall in house prices in February will keep optimism based on reports that demand has recovered in check. Indeed, even if buyer volumes have recovered, the amount they can spend on a new home has been reduced by …
Stretched affordability will continue to push down prices Although the decline in house prices slowed markedly in February, we’re not convinced the worst is over. As such, we expect house prices to fall by another 6% before the year is up. The 0.2% m/m …
Slowdown in inflation won’t prevent RBA from lifting rates to 4.1% GDP growth softened last quarter and inflation slowed sharply in January. But with inflation still very high, that won’t prevent the RBA from hiking the cash rate to a peak of 4.1% in May …
House prices set for further falls in 2023 Despite a sixth consecutive month of falling house prices in December, affordability was still stretched even before the renewed rise in mortgage rates. As a result, it is likely that prices will continue to fall …
28th February 2023
Economy stagnates, supporting the Bank’s move to the sidelines The stagnation in fourth-quarter GDP, together with the downward revision to third-quarter GDP growth, leaves the economy in worse shape than the Bank of Canada expected. That is another …
Goods spending will fall for second consecutive quarter While retail sales bounced back in January, the rebound probably won’t be enough to prevent a contraction in sales volumes across the first quarter . The 1.9% m/m rise in retail sales in January was …
Industrial activity should rebound in February We suspect that the early start to the Lunar New Year was partly responsible for the sharp fall in industrial production in January and there should be a strong rebound in February. Meanwhile, retail sales …
Resilience of core orders unlikely to last The 0.7% m/m rebound in core durable goods orders in January rounds off a month of strong activity releases and suggests business investment will hold up a bit better in the first quarter than we had thought. …
27th February 2023
New home sales continue to outperform wider market Price reductions and generous incentives offered by homebuilders helped new home sales continue to outperform the wider market in January. But a renewed rise in mortgage rates will weigh on new home …
24th February 2023
Economy much weaker than thought in Q4 The downward revision to German Q4 GDP means the hit to activity at the end of last year was closer to our original expectation. It also suggests a technical recession in Germany during Q4 and Q1 is likely. Today’s …
Inflation will fall below 2% by mid-2023 Inflation hit a four-decade high in January and while we still expect inflation to fall below the Bank of Japan’s 2% target by mid-year thanks largely to the government’s energy subsidies, there are now upside …
Commercial crude oil stocks set to rise even further There was another strong rise in commercial crude stocks last week. With little prospect of any upturn in domestic demand anytime soon, commercial stocks should continue to rebound in the coming months. …
23rd February 2023
Investment prospects remain weak despite Q4 jump Private investment picked up firmly last quarter and although firms expect capital spending to remain relatively healthy, their projections are consistent with a slowdown in real terms this financial year. …
German inflation mystery continues The final release of German HICP for January confirmed that the headline rate fell but, disappointingly, still didn’t reveal what happened to the core rate. That said, there was some evidence that underlying price …
22nd February 2023
Wage growth will peak at just below 4% With the risk of a wage-price spiral contained, we expect the RBA to start cutting interest rates by year-end. The 0.8% q/q rise in hourly wages excluding bonuses was below the analyst consensus of 1% and our own …
Sales fall, but at much slower pace The marginal decline in existing home sales in January supports our view that housing market activity is reaching a trough. But growing economic headwinds and stretched affordability mean sales will recover only …
21st February 2023
Core prices rise at slowest pace in two years The much smaller rise in core prices in January suggests that headline inflation will fall faster than the Bank of Canada expects, reinforcing our view that the Bank is unlikely to resume raising interest …
PMIs suggest activity rebounded in February, but we doubt it will last The sharp rebound in the flash UK composite PMI in February suggests that the economy remained resilient to the dual drags from high inflation and high interest rates at the start of …
Tighter fiscal policy probably still on its way despite borrowing undershoot January’s public finances figures suggest the Chancellor will have scope for some giveaways in his Budget on 15 th March. But with the OBR poised to slash its medium-term GDP …
February readings reinforce dim economic outlook in Q1 February’s flash PMIs are broadly consistent with our downbeat narrative of the economy in 2023. The manufacturing PMI fell further due largely to a plunge in export orders, while a further rise in …
Yet another increase in core inflation The fall in the Riksbank’s target measure of inflation was largely due to a huge one-off drop in electricity prices but policymakers will focus more on the big increase in core inflation. This vindicates their recent …
20th February 2023
Too soon to conclude that retail is coming out of its funk The rebound in retail sales in January was better than expected, had echoes of the leap in US retail sales and suggests that the festive/new year period wasn’t a complete write-off. But while …
17th February 2023
Starts fall back in January despite warm weather Single-family housing starts dropped back in January and the permits data add weight to our view that more weakness is to come. We think that starts will edge lower in the coming months, before an increase …
16th February 2023
Exports downturn well under way The trade deficit was virtually unchanged in January, as volumes and prices of exports and imports fell across the board. With the global downturn weighing on external demand, further export volume contractions are in …
Labour market will continue to slacken The weakness in January’s labour market data shows that rapid rate hikes are starting to cool activity, but with inflation still far too high that won’t prevent the RBA from tightening policy for a while yet. The …
Commercial crude oil stocks looking healthy Commercial crude stocks rose to their highest since June 2021 last week due to lower refinery activity. With crude demand likely to remain sluggish over the coming months, and the US government set to sell …
15th February 2023
Further evidence of rebound The 1.0% m/m rebound in manufacturing output in January provides further evidence that the economy began the year on a strong footing. That said, while the survey evidence also appears to be turning a corner, for now it is …
Surge in sales erases Q1 recession fears The massive 3.0% m/m surge in retail sales in January may have been partly related to the unseasonably mild winter in the Northeast but, alongside the unexpected strength of payroll employment, it nevertheless …
Sales volumes fall again despite resurgent motor vehicle sector Another rise in motor vehicle manufacturing sales failed to offset weakness elsewhere in December, with overall sales volumes edging down. The rebound in the S&P Manufacturing PMI and …
Moderating services inflation makes Bank of England’s life easier The fall in CPI inflation from 10.5% in December to 10.1% in January (consensus and CE forecast: 10.2%, BoE forecast: 10.1%), the drop in the core rate from 6.3% to 5.8% and the easing in …
Pace of disinflation slowing The 0.5% m/m increase in consumer prices in January suggests that the downward trend in inflation is slowing. But we still expect the disinflationary process to re-accelerate soon, as easing shortages push core goods prices …
14th February 2023
Recession looming Confirmation that euro-zone GDP growth slowed to a crawl in Q4 does not alter our view that the region is now falling into recession. That said, we think the labour market will continue to hold up well. The second estimate of Q4 GDP …
Wage growth continues to accelerate despite cooling labour demand December’s labour market data showed that, despite an easing in labour demand, labour market conditions stayed tight and the market continued to support strong wage growth. The Bank of …
Still on track for a recession in the first half Japan’s economy returned to growth in Q4, avoiding a technical recession after the contraction in Q3. With business investment slowing even quicker than we anticipated and a lower savings rate leaving less …
