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War impact on activity small so far, but inflation risks intensify The surprisingly small fall in the composite activity PMI in March suggests that the war in Ukraine didn’t take that much steam out of the economy at the end of the first quarter. That …
24th March 2022
Slower growth, higher inflation March’s euro-zone PMI survey is consistent with our view that the economy will grow more slowly than most anticipate this year, while inflation will overshoot expectations. The small fall in the Composite PMI, from 55.5 in …
Outlook for consumption darkened by war in Ukraine The huge fall in consumer confidence in March suggests that consumption may have contracted as the war in Ukraine and higher energy prices reduced households’ willingness and ability to spend. In turn, …
23rd March 2022
High inflation means both the Chancellor and BoE have more work to do The further rise in CPI inflation from 5.5% in January to a new 30-year high of 6.2% in February adds to the pressure on the Chancellor to offset more of the cost of living crisis in …
Mixed bag for the Chancellor ahead of the Spring Statement Notwithstanding the deterioration in the public finances in February, large revisions to the back data mean that borrowing in 2021/22 is on track to undershoot the OBR’s October 2021 forecast by a …
22nd March 2022
Activity remains strong, but war in Ukraine casts a dark cloud Activity data for February show that Poland’s economy continued to expand strongly at the start of this year but the war in Ukraine is likely to drag on the recovery through a hit to exports, …
21st March 2022
Slower wage growth despite shortages The latest data show that euro-zone wage growth remained subdued at the end of last year, despite reports of widespread labour shortages. The tightening in the labour market that we expect is likely to put upward …
18th March 2022
Headline inflation to stay around 6% until Q4 With the war in Ukraine pushing up energy and food prices and potentially exacerbating supply problems, we think euro-zone inflation will remain around 6% until Q4 and average well above 2% next year. …
17th March 2022
Fears high inflation is fuelling wage growth The further fall in the unemployment rate to within a whisker of the pre-pandemic rate will only encourage the Bank of England to raise interest rates on Thursday, probably from 0.50% to 0.75%, despite the …
15th March 2022
Another blow to the notion of Swedish inflation exceptionalism The stronger-than-expected increase in Swedish inflation in February is surely the final nail in the coffin for the Riksbank’s thus-far dovish stance, and lends support to our view that the …
14th March 2022
As good as it gets for this year The cost of living crisis and the influence of the war in Ukraine probably means that the 0.8% m/m leap in GDP in January is as good as it gets for this year. Meanwhile, two-thirds of the huge 20% m/m fall in UK exports to …
11th March 2022
Inflation picks up further with sharp acceleration in sight Russian inflation rose to 9.2% y/y in February and, more importantly, the weekly CPI figures up to 4 th March (also just released) show that the collapse in the ruble led to a particularly sharp …
9th March 2022
Lending set to rebound after stamp duty related pause While mortgage lending was softer at the end of last year that largely reflected the jolt from the ending of stamp duty discounts. More recent data point to very strong market activity in early 2022 …
8th March 2022
House price inflation reaches 15-year high The gain in house prices reported by Halifax for February pushed the annual rate to 10.8%, its highest since June 2007. With new supply limited and mortgage rates still relatively low, we suspect that house price …
7th March 2022
PMI rises further as housing activity accelerates The construction PMI rose to its highest level in eleven months in February. Although encouraging, supply constraints remain a major impediment and input costs high, which we think will limit growth in the …
4th March 2022
Outlook for retail sales darkened by war in Ukraine The small rise in retail sales in January, after a steep fall in December, suggests that Omicron remained a drag on consumption. Although spending will have rebounded in February, higher energy prices …
Inflation to breach 6% in the coming months After February’s surprisingly strong inflation outturn and with energy prices surging, euro-zone inflation is very likely to rise above 6% in the coming months. It then looks set to remain well above the ECB’s …
2nd March 2022
Inflation rising, but ECB will pledge not to tighten prematurely The increase in inflation in Germany and much bigger jumps elsewhere mean that euro-zone inflation for February will come in well above expectations. However, the ECB has bigger concerns at …
1st March 2022
Weaker borrowing likely to persist The muted rise in consumer credit in January suggests that the Omicron wave was still prompting households to exercise caution at the start of this year. With interest rates rising and the cost of living crisis only set …
More evidence that home movers remain active A third consecutive monthly rise in mortgage approvals suggests that housing market activity will remain higher than usual in the coming months as households continue to adjust to remote working. The rise in …
Net lending starts year on softer note Net lending to property fell back in January, after reaching its highest level in 18 months in December. But overall net lending remained in positive territory, though we expect a number of challenges to limit any …
Industry faring well as price pressures ease Manufacturing PMIs in February generally pointed to strong manufacturing conditions in the region, but the escalation of conflict in Ukraine adds to the clear downside risks to industry over the coming months. …
Industrial steers better outlook for 2022 returns The latest IPF Consensus Survey suggests that commercial property will have a better year than initially thought. Our total returns forecast for 2022 is in line with that of consensus, but beyond this year …
25th February 2022
Sentiment high before escalation in Russia-Ukraine conflict February’s increase in the EC Economic Sentiment Indicator showed that confidence was high before the recent news about the conflict in Ukraine. It also showed that supply shortages remained …
Upside risks to inflation have risen Core inflation looks set to keep rising as the effects of global demand-supply imbalances persist. And the Ukraine crisis means that the risks to our above-consensus headline inflation forecasts lie to the upside. Data …
23rd February 2022
Economic conditions continue to improve The rise in the Ifo Business Climate Index (BCI) in February strengthens our view that conditions in the German economy continued to improve during Q1. While the latest escalation of Russia-Ukraine tensions will …
22nd February 2022
Borrowing in the black, but inflation still a burden Public sector net borrowing was in surplus in January as the figures were flattered by the usual bump from higher income tax receipts. Nonetheless, it was a smaller surplus than the Office for Budget …
Omicron just a blip, more signs of supply shortages easing February’s punchy flash PMIs provide even more evidence that the economy has rebounded swiftly after the hit from Omicron. And beneath the headline numbers, there are tentative but encouraging …
21st February 2022
Activity rebounding The surge in the euro-zone flash Composite PMI in February suggests that activity is recovering well and supports our view that GDP will rise by around 0.5% q/q in Q1. There are tentative signs that supply chain problems are fading – …
Economic activity continued to thrive in January Poland’s economic recovery continued to motor along at the start of this year as industrial production and retail sales growth picked up sharply in January. This came alongside further signs of an …
Strong rebound in GDP supports case for “higher for longer” interest rates The 4.7% expansion in Russian GDP in 2021 is consistent with a marked acceleration in growth in Q4. We expect the recovery to slow this year but the backdrop of a large and …
18th February 2022
Hand of the hawkish triumvirate strengthened The increase in Swedish CPIF excluding energy was significantly higher than expected and pushed the core rate above the Riksbank’s 2.0% target for the first time in nearly three years. While we expect headline …
Omicron recovery underway, but cost of living crisis beginning to bite A solid rebound in retail sales in January suggests the hit to activity from Omicron was smaller and shorter than previously thought. Even so, the cost of living crisis will restrain …
Rapid acceleration bolsters case for interest rate hike Israel’s economic recovery unexpectedly accelerated at the end of last year, with the 16.6% annualised rise in GDP in Q4 pushing it far above its pre-pandemic trend. Alongside the rise in inflation …
16th February 2022
Input shortages remain severe The rise in euro-zone industrial production in December took it above its pre-pandemic level and timelier evidence points to a small increase at the start of this year. But input shortages remain severe and the continued …
CPI inflation may rise to a peak of nearly 8.0% in April The rise in CPI inflation in January from 5.4% to a new 30-year high of 5.5%, the latest rise in oil prices and the new item weights mean that we now think CPI inflation will rise to a peak of 7.9% …
Recovery to resume and labour market to tighten further The small increase in euro-zone GDP in Q4 confirms that the region’s economy was struggling at the end of 2021. But with Omicron under control and restrictions being eased, we expect the recovery to …
15th February 2022
Strong end to Q4 but headwinds will put the brakes on recoveries Q4 GDP data for Central and Eastern Europe (CEE) were generally stronger-than-expected as policymakers responded to virus outbreaks with only light-touch restrictions and easing supply …
A recipe for further interest rate hikes Employment has recouped the falls after the furlough scheme, the unemployment rate has fallen to pre-COVID levels, job vacancies are at a record high and wage growth is rising. That’s a recipe for more interest …
Core inflation to stay well above 2% this year The upside surprise to Germany’s headline inflation rate in January was mostly due to higher energy prices rather than rising underlying inflation. Nonetheless, core inflation of 2.9% is well above the …
11th February 2022
Swiss inflation at a 13-year high but will head down from here Inflation was stronger than expected in Switzerland in January, although the upward surprise was not in the same league as that seen in the euro-zone and Swiss inflation is still consistent …
Shrugging off Omicron, but big squeeze in real incomes lies ahead When combined with the CPI inflation rate of 5.4%, the 0.2% m/m fall in GDP in December meant that the economy experienced a taste of stagflation at the end of last year. As it was driven …
Fall in CPI-ATE unlikely to deter the Norges Bank Given the backdrop of a tightening labour market, the fall in CPI-ATE is likely to be a one-off. We think that once the latest wave dissipates, the core inflation rate will pick up again and may rise above …
10th February 2022
Inflation continues to rise, another large rate hike incoming The latest data show that Russia’s economy grew strongly in December and that consumer price inflation rose to 8.7% y/y in January. The inflation reading was weaker than expected, but inflation …
9th February 2022
Slowdown unlikely to signal cooling market yet The smaller gain in house prices in January reported by Halifax is unlikely to mark the start of a sharp deceleration in house price growth. With the supply of homes for sale still very limited and mortgage …
7th February 2022
Disappointing end to a terrible year The small decline in production in December was not quite as bad as it looks because it was largely due to a fall in construction activity, but 2021 was still a terrible year for German manufacturers as supply chain …
PMI bounces back in January with commercial activity at the helm In contrast to the decline at the end of last year, the construction PMI rose to its highest level in six months in January. There were also encouraging signs that supply and cost issues …
4th February 2022
A disappointing end to 2021 The fall in euro-zone retail sales volumes in December means that sales growth slowed significantly in Q4 as a whole. While we expect consumer spending to recover over the coming months when restrictions are fully lifted, …
Economic headwinds and shortages to weigh on activity in the near term The latest RICS survey indicated that activity in Q4 and the outlook for the short term were broadly unchanged. The survey also suggested that labour and material shortages will …
3rd February 2022
Omicron hit to services activity The final Composite PMIs for January confirm that the euro-zone economy started 2022 on a weak note but the improving health situation suggests that growth will pick back up over the rest of the quarter. The PMIs also …
