Q4 growth looking ok, but economy losing momentum Real consumption is on course for solid growth of 3.5% annualised in the fourth quarter, but the income and spending data show that it stalled in November. The soft durable goods orders data for last month …
23rd December 2022
Economy starting to lose momentum The modest gain in GDP in October and upward revision to activity in previous months suggest the economy was coping well with higher interest rates at the start of the fourth quarter, but the preliminary estimate that …
Big falls in inflation now behind us The Brazilian mid-month inflation figure for December was unchanged from the November full-month figure of 5.9% y/y, which provides an early sign that the big falls in inflation have now happened and it will be a much …
Inflation will fall below 2% by mid-2023 Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023. The increase in inflation from 3.7% to 3.8% in …
Fall in inflation paves the way for end of tightening cycle The second consecutive fall in Mexico’s mid-month inflation, to 7.8% y/y in December, confirms that inflation is now on a downward trajectory. This will allow Banxico to draw its tightening cycle …
22nd December 2022
Global steel supply well and truly in the doldrums Global steel output is now firmly in contractionary territory by any measure. With several headwinds unlikely to relent soon, it is likely that output will weaken even further from here. Figures released …
Flat US production will keep stocks low This week’s report showed a sizeable drop in commercial crude stocks as net imports fell sharply. With US production unlikely to rise by much and plans for strategic reserves to be refilled next year, crude stocks …
21st December 2022
Spike in mortgage rates feeds through to sales Existing home sales experienced their largest drop in nine months in November, as October’s spike in mortgage rates fed through to sales. But mortgage rates have since dropped back and are likely to fall …
Upside surprise keeps the pressure on the Bank Overall inflation pressures were stronger than anticipated in November and the 3-month annualised measures of CPI-trim and CPI-median both increased. This supports our view that the Bank of Canada will err on …
Resilience to give way to mild recession November’s activity data for Poland were much better than expected and provide further evidence of the economy’s relative resilience to the drags from high inflation and interest rates. Even so, we still expect a …
Fiscal stimulus pushes borrowing to a record November high November’s public finances figures showed that government borrowing is rising fast. And with pressures from the weakening economy and most of the costs from the government’s energy price support …
Weak new home demand weighs on starts Single-family housing starts continued to fall in November as weak new home demand weighed on homebuilder confidence. We expect this to push starts down to a trough of 650,000 annualised in the coming months, before a …
20th December 2022
Sales volumes struggling for momentum Retail sales volumes are struggling for momentum and, with the services spending indicators also showing some weakness, household consumption may be heading for a second consecutive quarterly contraction. The 1.4% …
Aluminium production in decline, despite positive base effects A low base in 2021 is driving an increase in global aluminium output this year, but the bigger picture is that growth in supply is slowing as high power costs and soft demand take their …
Tight labour market suggests that wage growth will stay strong Euro-zone wage growth has accelerated this year and we expect it to stay strong. In turn, this will contribute to core inflation remaining above 2% in 2023. Data released this morning showed …
19th December 2022
Sentiment recovers further, but recession still coming The further increase in the Ifo Business Climate Index in December and the general improvement in the surveys over the past two months suggests the outlook for the German economy has improved. But …
PMIs suggest we’re in recession, but inflationary pressures continue to ease The flash PMIs for December are consistent with our view that the economy is probably in a recession, although a relatively shallow one at the moment. While the price indices …
16th December 2022
Improvement, but surveys still point to recession The flash PMIs for December provide more evidence that businesses in some parts of the euro-zone have become a bit less gloomy about their current situation. But they still point to a contraction in the …
No early festive cheer for retailers The 0.4% m/m fall in retail sales volumes in November was well below both our and the consensus estimates for 0.5% m/m and 0.3% m/m gains, and resumes the downward trend seen across most of the year. While we think …
Annual falls in industrial output to continue while services recover December’s flash PMIs point to further annual contractions in industrial output but suggest services spending rebounded towards year-end. According to today’s flash estimate, the …
Consumer resilience starting to fade The 0.6% m/m falls in retail sales and manufacturing output in November suggest that the economy has lost some serious momentum, with the resilience of consumers to much higher interest rates starting to crumble. …
15th December 2022
Unabating price pressures to put policymakers in a bind November inflation data out of Nigeria came in stronger than expected, with the headline rate picking up to 21.5% y/y and price pressures increasing in m/m terms as well. Together with our …
The downturn has deepened and reopening won’t reverse it overnight The disruption from virus outbreaks intensified in November, with retail sales, investment spending and industrial output all contracting by the most month-on-month since the Shanghai …
Labour market strength won’t last much longer With employment jumping in November, the labour market is still tightening, The upshot is that the RBA will hike rates more sharply than most anticipate over the coming months. The 64,000 rise in employment in …
Export downturn will start before long While the trade deficit narrowed sharply in November, most of that reflects falling import prices. Export volumes seem to hold up well but with the global downturn weighing on external demand next year, export growth …
Growth burst will turn into slump next year The huge jump in Q3 GDP will prompt the Reserve Bank of New Zealand to press ahead with another 75bp hike in February, adding to our conviction that a recession lies ahead . The 2.0% q/q jump in production GDP …
14th December 2022
Bumper rise in crude stocks, little in the details to explain it While this week’s report revealed a whopping increase in commercial stocks, prices were up a little following the release. Instead, most attention is on the latest oil demand forecasts …
Sales volumes continue to struggle The strong rise in manufacturing sales in October was largely due to a jump in refined petroleum prices. Manufacturing sales volumes were unchanged and the business surveys point to outright falls ahead. The 2.8% m/m …
Economy lost momentum at the start of Q4 October’s hard activity data out of South Africa showed the economy’s strong performance in Q3 did not last into Q4. Industrial sectors, in particular, faltered. As headwinds mount, we expect a sharp slowdown. …
October’s fall in output sets the tone for a bleak Q4 Industrial production in the euro-zone declined by 2.0% m/m in October with all the largest economies showing a reduction in output. While output held up better than we had expected in Q3, this is …
Softer inflation will allow SARB to slow tightening Inflation in South Africa eased a bit more than expected, to 7.4% y/y, in November and there were encouraging signs that core price pressures are fading. The figures will provide room for the Reserve …
The Bank of England can breathe a sigh of relief knowing that CPI inflation has peaked. But with activity holding up and wage growth still strengthening, the 2.0% inflation target is still a long way from being hit. As such, the Bank will still probably …
Core inflation likely to come down more slowly than Riksbank hopes The increase in Sweden’s measure of core inflation to 8.0% was a touch below expectations but it still marks a new 31-year high. With CPIF inflation having risen to well above the …
Wholesale inflation drops to 21-month low The fall in Indian wholesale price inflation to a 21-month low in November chimes with the sharper-than-expected drop in headline consumer price inflation released earlier this week. We maintain our view that the …
Strong investment intentions won’t survive coming recession Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen. Meanwhile, machinery orders were …
Stick a fork in it, inflation is done The Fed will still hike its policy rate by 50bp tomorrow and the new projections could show the peak in rates above 5%, but the 0.2% m/m increase in core consumer prices in November provides strong support to our …
13th December 2022
Q3 likely to mark a peak for lending volumes The detailed mortgage lending data for Q3 show that demand was resilient to rising mortgage rates at first. Loan-to-income ratios crept up despite rising financing costs. But with interest rates on new …
Recession still likely, despite improvement in sentiment The further recovery in the ZEW in December confirms that sentiment in Germany has improved a bit, but it remains at a very low level and we still think Germany is now already in a recession. The …
Accelerating wage growth won’t make the Bank of England’s task easier Coming on the back of yesterday’s larger-than-expected rise in GDP in October, today’s news that the labour market is loosening only gradually and wage growth continues to accelerate …
Economy shows some resilience The large increases in both industrial production and retail sales in Turkey in October provide clear signs that activity is holding up well despite the various domestic and external headwinds. But we doubt this resilience …
Lending showed little sign of slowing in November CRE lending grew solidly again in November, at a rate close to the six-month average, with other commercial sectors picking up the slack from slower growth in multifamily lending. Although lending growth …
12th December 2022
Sharp drop in headline inflation may hasten end of tightening The sharper-than-expected drop in headline CPI inflation in November (to 5.9% y/y) pulls it below the ceiling of the Reserve Bank’s 2-6% target range for the first time in almost a year. We …
Industry to struggle as US enters recession Mexico’s industrial sector posted a solid 0.4% m/m rise in output in October but the big picture is that industry has stagnated since the middle of this year. And while more timely survey indicators have held up …
Little appetite for borrowing Credit growth has now reversed all of its modest acceleration over the past year, a clear sign that monetary easing has failed to gain traction due to virus disruption and waning confidence among households and firms. …
October’s rebound won’t prevent contraction in GDP in Q4 The 0.5% m/m rise in GDP in October was mostly due to the rebound after September’s extra bank holiday. Even so, the surprisingly strong rise could tilt the Bank of England towards another bumper …
Inflation pressures remain soft Russian inflation fell further last month, to 12.0% y/y, and the breakdown provided further signs that demand remains very weak. But this won’t offset the central bank’s concerns about pro-inflation risks and policymakers …
9th December 2022
Inflation eases further, but Copom’s eyes are on fiscal risks The further fall in Brazilian inflation, to 5.9% y/y, last month will help to ease the squeeze on household incomes. But with the prices of many core goods and services still rising rapidly …
Fall in inflation won’t stop 25bp Norges Bank hike The declines in headline and core inflation in November won’t stop the Norges Bank from raising interest rates by 25bp next week. But they support our view that the tightening cycle is very nearly over. …
Inflation likely to remain subdued even amid reopening Consumer price inflation dropped to its lowest in eight months in November and producer price inflation stayed at a 23-month low. The shift away from zero-COVID could put some upward pressure on …
Inflation drops back, but stronger core rate to prompt a bit more tightening Mexico’s headline inflation rate continued to drop back to 7.8% y/y in November but this was driven by weaker non-core inflation; core inflation actually strengthened further. We …
8th December 2022