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Earthquakes take their toll on activity Turkish industrial production and retail sales figures for February showed that the impact of the earthquakes on the economy was larger than we and most others had anticipated. But we think this will be short-lived …
12th April 2023
Construction activity holds up as housing enters the doldrums The March headline CIPS Construction PMI reversed some of its surprise jump in February, but it remained in expansionary territory. That was driven by the commercial sector, where strong …
6th April 2023
House price indices diverge The third consecutive monthly increase in house prices recorded by Halifax suggests that pricing is proving remarkably resilient to higher mortgage rates. But it is at odds with the consistent fall in the Nationwide house …
Industrial resilience won’t prevent recession The second consecutive big increase in German industrial production in February all but confirms that GDP returned to growth in Q1. The industrial resilience may continue in the coming months but we still …
Surveys point to expansion in Q1 March’s PMIs suggest that the economy expanded in Q1. They also point to further gains in employment and strong price pressures. With the turmoil in the banking sector having stabilised, this makes us more confident in our …
5th April 2023
Headline rate falling but strength of core inflation will keep ECB hawkish Policymakers at the ECB won’t read too much into the drop in headline inflation in March and will be more concerned that the core rate hit a new record high. So March’s consumer …
31st March 2023
Recession still to come this year as resilience recedes The final Q4 2022 GDP data suggested the economy was even more resilient in 2022 than we previously thought, as the government absorbed some of the hit to households from high inflation. But we …
Adjustment to higher mortgage rates continues House prices fell for a seventh consecutive month in February, taking the total fall from their peak in August to 4.6%. With house prices still significantly overvalued in today’s higher mortgage rate …
Headline inflation tumbling, core peaking The big falls in headline inflation in Germany and Spain should provide some relief for struggling households in the coming months. And core inflation in Germany may now have passed its peak. However, with …
30th March 2023
Business surveys point to small expansion in Q1 The small decline in the EC’s economic sentiment indicator in March leaves it still pointing to an increase in GDP in Q1. Meanwhile, firms’ selling price expectations suggest that core inflation might be …
Net lending turns negative as investors hold back Net lending to property turned negative in February, as investors held back in the face of falling capital values. But the decline was small and even though the recent banking crisis will lead to some …
29th March 2023
Higher interest rates continue to hurt housing more than consumer credit February’s money and credit data suggest that higher interest rates were a further drag on lending in February, particularly in the housing market. That’s before the effects of the …
Mortgage lending still depressed despite slight recovery Reflecting the partial unwinding of the spike in mortgage rates following the “mini” budget, mortgage approvals rose to their highest level for three months in February. However, with mortgage rates …
Resilience unlikely to last The fifth successive monthly increase in the Ifo Business Climate Index (BCI) in March suggests that Germany is still benefitting from falling energy prices and easing supply problems but has yet to feel the full effects of …
27th March 2023
Fading domestic price pressures could mean yesterday’s rate hike is the last The flash PMIs suggest the economy’s strong start to the year was sustained in March. But with the full drag from high interest rates yet to be felt, our hunch is still that …
24th March 2023
Strong PMIs point to further ECB hikes The strong batch of euro-zone flash PMIs for March suggests that the economy expanded in Q1 and that both employment conditions and price pressures remained very strong. That adds to the reasons to think that, as …
Too soon to conclude February’s rebound will be sustained The further rebound in retail sales volumes in February suggests the recent resilience in activity hasn’t yet faded. But we doubt this will last as the drag on activity from higher interest rates …
Reacceleration in inflation supports the case for another rate hike The reacceleration in CPI inflation in February may be enough to tilt the Bank of England towards raising interest rates from 4.00% to 4.25% tomorrow despite the recent turmoil in the …
22nd March 2023
Pre-election tax cuts in prospect, but risks to the fiscal outlook growing Despite February’s worse-than-expected public finances figures, we still think the Chancellor may have more headroom to cut taxes/raise spending later this year. But the big risk …
21st March 2023
Core inflation and wage growth strong The strength of wage growth and core inflation will reinforce ECB policymakers’ conviction that, provided the region’s banks don’t come under further sustained pressure, their tightening cycle is not over. It came as …
17th March 2023
Resilience in January unlikely to last The rise in industrial production in January was entirely due to strong growth in Germany and Ireland, with all other major euro-zone economies recording a fall in output. We expect industry to struggle this year as …
15th March 2023
Latest figures confirm plummeting demand during Q4 The detailed mortgage lending data for Q4 showed a slump in demand, as rising mortgage rates began to bite. The latest MLAR data confirmed the sharp turnaround in market conditions and suggest that, with …
14th March 2023
Wage growth eases despite labour market remaining tight The labour market remained tight in January. Even so, the Bank of England will breathe a sigh of relief as wage growth is easing. Together with the collapse of a couple of US banks having tightened …
Economy continues to boom in early 2023 The large increases in industrial production and retail sales in Turkey in January suggest that the economy got off to a strong start in early 2023. Activity will have been disrupted from the earthquakes last month, …
13th March 2023
Broad-based falls in inflation last month Russian inflation came in slightly softer than expected in February, at 11.0% y/y, and it will fall to the central bank’s 4% target in March as base effects pass through. We don’t think there’s been enough …
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
Euro-zone flirting with recession Revised figures show that the euro-zone economy flatlined in Q4 last year and that domestic demand dropped sharply. There have been some positive signs in the past couple of months, but policy tightening is likely to …
8th March 2023
Industrial rebound, but recession still coming The big rebound in German industrial output in January suggests that industry may continue to hold up well in the face of the energy crisis. However, with the renewed drop in retail sales pointing to …
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
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
Sales up in January but trend is still down January’s rise in euro-zone retail sales was not enough to offset December’s fall. And the low levels of household confidence suggest that consumption will decline in the coming months. The national-level data …
PMIs point to resilience, especially in services February’s final Composite PMIs suggests that economic activity in the euro-zone has been fairly resilient in February, with the indices for Spain and Italy, and for the services sector, particularly …
3rd March 2023
Strength of core inflation means ECB has a long way to go February’s increase in core inflation will reinforce ECB policymakers’ conviction that significant rate increases are needed. For some time we have been forecasting a 50bp hike at the meeting 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
Renewed rise in inflation will worry ECB The renewed rise in headline inflation in Germany, France and Spain in February suggests euro-zone inflation edged up this month, rather than falling as had been expected. With signs that underlying inflationary …
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 …
Industrial downturns in CEE bottoming out The manufacturing PM Is for February suggest that industrial sectors in Central and Eastern Europe are continuing to struggle, but there are tentative signs that the region may now be past the worst of its …
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 …
Recovery in business sentiment falters The stabilisation of the EC’s economic sentiment indicator in February contrasts with the significant increases in the PMIs and provides some support for our view that the economy will struggle this year. It also …
27th 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 …
24th February 2023
The surprise upward revision to euro-zone core inflation in January, to a new record high, will embolden the majority of ECB policymakers who want to press on with significant further rate hikes. The upward revision to January’s euro-zone headline …
23rd February 2023
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
Further improvement, but headwinds still strong The further rise in the Ifo in February confirms that the German economy may have been a bit more resilient than we had expected in Q1. But with the index still in recessionary territory and the drag from …
Sentiment continues to improve The ZEW indicators point to a further improvement in sentiment towards Germany and, along with other recent surveys, suggest that the economy is holding up better than we had anticipated. The rise in the ZEW economic …
21st February 2023
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 …
Economy growing, price pressures remain strong February’s chunky rise in the euro-zone Composite PMI suggests that the economy will grow in Q1. With the labour market still very tight and price pressures strong, the survey will reinforce ECB …
