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Inflation to stay above 2% until late 2022 November’s detailed inflation breakdown shows that the increase in price pressures is not just due to high energy costs and global demand-supply imbalances for durable goods. Services inflation has risen too. We …
17th December 2021
Another bleak midwinter The fall in the Ifo BCI for December underlines that German’s economy has been hit hard by the latest Covid wave even before the Omicron variant has taken hold. The only consolation is that manufacturers are holding up well. It now …
Black Friday boost, but Omicron threatens Christmas for retailers The strong growth in retail sales in November feels like a bit of a consolation prize for retailers who are now once again facing a difficult Christmas in light of the rapidly worsening …
Rebound in wage growth won’t trouble the ECB The rebound in euro-zone hourly wage growth in Q3 is a sign of base effects fading and there is no evidence that this is the beginning of a wage-price spiral that would concern the ECB. Indeed, wage growth is …
16th December 2021
Omicron already hitting services hard The fall in the composite PMI in December doesn’t come as much of a surprise given the surge in cases of the Omicron variant of COVID-19. But it was much bigger than expected, and shows that caution among businesses …
Ending Q4 on a weak note The renewed decline in the Composite PMI in December suggests that growth slowed to a crawl as tighter restrictions and growing consumer caution are taking their toll on economic activity, with the service sector bearing the …
Inflation close to being further above the target than ever before Inflation is close to being further above the target than at any point since the UK started targeting inflation in October 1992. This makes tomorrow’s interest rate decision look closer, …
15th December 2021
Industry has better start to Q4, but supply problems persist The rise in euro-zone industrial production in October means euro-zone industry started Q4 on a decent note. But supply-chain problems remain acute and, in any case, any improvement is likely to …
14th December 2021
More fodder for the Riksbank’s hawks The increase in Swedish CPIF inflation in November strengthens the hand of the hawks at the Riksbank and supports our view that policymakers will reduce the size of the balance sheet next year. But with energy effects …
Furlough fears fading, COVID-19 concerns climbing Even though the fallout after the furlough scheme was smaller and shorter than the Bank of England had feared, concerns over the deteriorating COVID-19 situation will probably prevent it from raising …
Strong start to Q4, but currency crisis to hit activity before long Turkey’s industrial production and retail sales data for October suggest that the economy made a strong start to Q4, but these predate the recent currency crisis and we think the economy …
13th December 2021
Energy effects to subside next year Headline inflation reached a 13-year high in November, mainly driven by energy inflation. But the core rate was more subdued and is likely to remain below the Norges Bank’s target throughout 2022. The rise in headline …
10th December 2021
Touch-and-go whether economy grows or contracts in December The news that the economy was hardly growing at all before Omicron means it is touch-and-go whether it will grow a bit in December or shrink a bit. Against that background, we doubt the Bank of …
Another 75bp hike on the cards next week The rise in Russian inflation to 8.4% y/y last month reinforces our view that the central bank will hike the one-week repo rate by 75bp (to 8.25%) when it meets in December – that’s a larger hike than the current …
8th December 2021
New Covid wave and supply shortages weighing on economy Data released today show that the euro-zone economy recovered to within 0.5% of its pre-pandemic level in Q3. But with Covid cases rising, governments tightening restrictions, and supply problems …
7th December 2021
Partial recovery in auto sector lifts output The rebound in auto output in October means that aggregate industrial production may increase in the fourth quarter. But with the services sector being hit hard by new Covid restrictions, it seems likely that …
PMI points to improvement, as constraints fade slightly The construction PMI rose for a second-consecutive month in October, to its highest level since July. However, we expect continued labour and supply shortages to hamper output in the near term. While …
6th December 2021
Consumption set for a weak Q4 Euro-zone retail sales have levelled off since June, but rising Covid cases and the return of restrictions are likely to weigh on sales and other components of consumption in the coming months. October’s 0.2% m/m increase in …
3rd December 2021
Covid situation casts doubt on further labour market gains While labour market conditions continued to improve in October, the recent deterioration of the Covid situation and increased uncertainty due to the Omicron variant are likely to mean the recovery …
2nd December 2021
Supply chain disruptions continue to dominate The manufacturing PMIs in November were surprisingly strong across the board, but with supply chains stretched and the emergence of the Omicron variant clouding the outlook, there are reasons to be sceptical …
1st December 2021
Swiss inflation at its peak Inflation surprised on the upside in Switzerland in November, but this was due to temporary factors and it is likely to fall back to below 1.0% over the coming months. The upshot is that there is next to no chance of the SNB …
Still no sign of house price growth cooling House prices recorded another above-consensus gain in November as strong buyer demand bid prices up further. There is little sign of that dynamic changing anytime soon, so we expect the consensus forecast for …
Inflation to remain above target for a long time November’s inflation data were yet another surprise on the upside. The Omicron variant has increased the level of uncertainty even further but for now we suspect that it will have a fairly small impact on …
30th November 2021
Inflation peaks at 6% and will decline regardless of Covid The increase in German inflation to 6% on the HICP measure was partly due to statistical quirks which should be reversed next month. But even the national CPI measure of inflation rose to 5.2%. …
29th November 2021
Industrial sentiment picks up, but virus outbreaks weigh on services The EC’s Economic Sentiment Indicators for November showed a broad-based rise in industrial sentiment, but services sentiment softened further. With restrictions on activity being …
Development activity rises sharply in October A drop in repayments and rise in development activity resulted in positive net lending in October for the first time since March. Despite this turnaround, credit conditions will remain tight and uncertainty …
Dip in mortgage approvals after stamp duty holiday ends Mortgage approvals remained robust in October after the end of the stamp duty holiday, only easing back into line with their pre-pandemic average. With demand strong, we suspect that mortgage …
Sentiment high before Omicron news Despite the slight deterioration on the month, November’s EC business and consumer survey showed that economic sentiment in the euro-zone was high before the recent news about the Omicron variant. It also confirmed that …
Omicron darkens the outlook for spending The rise in consumer credit in October adds to evidence that economic activity fared well at the start of Q4. But that no longer offers much comfort in light of the discovery of the new Omicron variant. While much …
More upgrades to the consensus view, but heavily driven by 2021 The resilience of the commercial property market has led to further upgrades to the IPF Consensus view for this year, albeit still below our forecast. Beyond this year, we are more downbeat …
26th November 2021
Slowdown about to get much worse The fall in the Ifo Business Climate Index (BCI) for November was in line with expectations and suggests that the German economy was struggling even before the recent tightening of Covid restrictions. Things will be much …
24th November 2021
Signs of higher cost inflation add to Bank’s inflation concerns The composite activity PMIs hardly changed in November as the economy held up fairly well despite continued supply disruptions and shortages. Meanwhile, signs that price pressures continued …
23rd November 2021
Recovery continues, but outlook darkening The unexpected rise in the euro-zone Composite PMI in November suggests that the region’s recovery has not lost further momentum. But with supply shortages still acute, Covid restrictions being tightened and price …
Economy starts Q4 on strong footing The latest data suggest that Poland’s economy started Q4 with solid momentum as industry and retail sales expanded strongly in October. We think that industry will continue to hold up well in the coming months, but …
Rebound in retail sales will give Bank of England confidence The rebound in retail sales in October adds to the evidence that activity held up well in October and will raise expectations that the Bank of England will hike interest rates from 0.10% to …
19th November 2021
Chancellor unlikely to get much more help from the economy, for now The winding down of the furlough scheme helped to bring down public sector net borrowing in October. But we doubt that the public finances will get much help from faster GDP growth in the …
Softer rise in GDP, growth likely to slow further in Q4 The softer-than-expected 4.3% y/y expansion in Russia’s GDP in Q3 suggests that the recovery lost momentum during the summer and, with the severe virus outbreak likely to take its toll on domestic …
17th November 2021
Inflation to stay above 2% until late 2022 October’s euro-zone inflation data confirm that core price pressures are weaker than in other advanced economies. That said, we think headline inflation will remain above 2% until late 2022. Data released today …
Growth slows sharply as the re-opening boost fades in Q3 Israel’s economy slowed much more sharply than expected in Q3 as a shift in consumption habits away from goods and a fading of the re-opening boost to services caused a marked slowdown in …
16th November 2021
Pace of recovery to slow The decent increase in euro-zone GDP in Q3 means that the recovery is now almost complete in most of the region. We had already expected growth to slow markedly in Q4 as the boost from reopening fades and supply chain disruption …
Recoveries fading as supply chain disruptions take their toll The Q3 GDP data for Central and Eastern Europe (CEE) generally undershot expectations and suggest that economies entered Q4 with a clear loss of momentum. With supply disruptions set to persist …
Market remains tight after the end of furlough This labour market release is the first of two before the Bank of England’s December policy meeting and it suggests that the labour market remained tight after the furlough scheme ended. If the story is …
Inflation loses its momentum in October The much-weaker-than-expected rise in consumer prices in Israel in October was due to a sharp fall in airfares, but the big picture is that underlying inflation pressures generally remain soft. We don’t think the …
15th November 2021
Something, at last, for the Riksbank to ponder CPIF inflation rose to a 15-year high in October, although the headline rate was just half that reached in the US, for example, and the core rate remained below 2%. Policymakers won’t be losing sleep just …
Manufacturing will face a tough Q4 The second successive monthly decline in industrial production, in September, means that production was unchanged in Q3 compared to Q2. As supply-chain difficulties are likely to persist for some time, the outlook for …
12th November 2021
Another strong rise in GDP, inflation pressures to persist The solid 2.1% q/q rise in Poland’s GDP in Q3 took the economy to almost 3% above its pre-pandemic level, marking one of the strongest recoveries across Europe. But capacity constraints are …
New-found momentum will soon fade The economy regained some momentum in September, but continued shortages and the drag on real incomes from higher utility prices probably mean it will soon fizzle out. That’s one reason why we doubt that the Bank of …
11th November 2021
Close to the peak The breakdown of October’s inflation data confirms that most of the increase, from 4.1% in September to 4.6% on the HICP measure, was due to higher energy prices. We suspect that inflation will edge up a bit further before year-end but …
10th November 2021
Subdued core inflation will not deter the Norges Bank The fact that the Norges Bank’s target measure of inflation fell to below 1% in October and is likely to remain at around this level until early 2023 will not stop policymakers from pressing on with …
Low inventory levels pushing up retail prices Retail sales have levelled off since June as consumer spending on other services has increased. The latest survey evidence suggests that low inventory levels might also be limiting sales and are set to push up …
5th November 2021
