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Container shipping costs have rebounded in the past month amid a pick-up in demand for goods from China and a possible front-loading of festive orders due to concerns about future shipping disruptions. And shipping costs could yet rise further. Our …
6th June 2024
Today’s interest rate cut from the Bank of Canada will be the first of many, and the dovish tone of the accompanying communications suggests another rate cut in July is nailed on. As Governor Tiff Macklem shrugged off any potential concerns about exchange …
5th June 2024
Our 2020 analysis of the impact of changed working patterns on office demand correctly estimated the share of fully remote work, but underpredicted the extent of hybrid work. Yet with office job growth set to stay strong for the rest of the decade, the …
Whoever wins the general election on 4 th July will have three main choices when it comes to spending and taxes. First, the new government could change the fiscal rules to give itself more fiscal space. Second, it could keep the current fiscal rules and …
The April JOLTS data provided further evidence of normalisation, with job openings falling further, layoffs still at historically low levels and the leading indicators all pointing to wage growth cooling. The job openings rate fell to 4.8% in April, from …
4th June 2024
The latest manufacturing PMIs suggest that the recovery in global industry has continued to gather momentum so far in Q2 and that price pressures have increased somewhat. But that probably won’t prevent central banks from loosening policy in the coming …
3rd June 2024
This year’s minimum wage increase will be a bit smaller than we had anticipated. And with the looser labour market putting downward pressure on wage growth among workers not covered by the minimum wage and awards, we expect wage growth to slow faster than …
While house price growth accelerated rather sharply in May, stretched affordability points to a renewed slowdown. Indeed, most leading indicators point to a renewed moderation in price growth. Allowing for seasonal swings, house price growth across the …
The stronger than expected Q1 GDP data in several major economies suggest that the global economy got off to a strong start in 2024. But we expect global growth to fall back to a slightly below-trend pace in the next few quarters, as China’s fiscal …
30th May 2024
We suspect that monthly core price growth will accelerate marginally from the very soft rates seen in the first four months of the year but, on the whole, core price pressures should remain muted. That sets the stage for both core and headline inflation …
While the timing of the sharp hit to UK commercial real estate values owes much to the ill-fated “mini-Budget” of September 2022, we think the UK’s role in leading the valuation downgrades also owes to its relatively insulated lending market in this …
28th May 2024
The latest flash PMIs suggest that GDP growth in advanced economies has continued to gain momentum in Q2. And central banks may take comfort in the fact that services price pressures seem to be easing. Our estimate of the flash DM composite output PMI …
23rd May 2024
We still think inflation will fall faster than the Bank of England is expecting, but in the light of April’s CPI release we now expect the downward trend to be slower and smaller. As a result, we have shifted back our forecast for the timing of the first …
Putting the politics aside, the high number of migrants coming to the UK for work is the main reason why the number of people willing and able to work isn’t shrinking. The provisional data show that net inward migration to the UK was 685,000 in the year …
The strength of healthcare employment and spending growth is because the sector is still recovering from the pandemic and also thanks to the jump in Affordable Care Act (ACA) enrolments. Employment and spending have almost caught up with their …
We’ll be discussing what the election means for the economy and financial markets in a 20-minute online briefing at 9.30am BST on Thursday 23rd May. (Register here .) The general election on Thursday 4 th July, which the Prime Minister announced today, …
22nd May 2024
Although it left rates unchanged at its meeting today, the RBNZ indicated that interest rates may have to stay higher for longer. However, we think the Bank is overstating the upside risks to the inflation outlook. Accordingly, we still think there’s a …
The latest apartment rent data are consistent with our view that rental growth will be sluggish this year. Although single-family rent growth has fared better, we suspect it will soon start to slow again. Zillow reports that apartment rents continued to …
21st May 2024
Having soared to a record high level under the Biden administration, we expect US shale oil output to peak this year before contracting in 2025, driven by a combination of further industry consolidation, productivity improvements running out of steam, and …
20th May 2024
The recent sharp drop in industrial REIT prices appears to have been tied to Prologis’ Q1 earnings call, which referred to especially weak leasing in Q1 and a cut to expected year-end net operating income. We aren’t too alarmed by either – slow Q1 …
17th May 2024
Financial conditions have loosened somewhat in advanced economies this year, suggesting that the peak drag from monetary tightening is behind us. However, outside Japan, they remain tight by past standards and are likely to contribute to below-trend …
16th May 2024
Housing market struggling to bloom The April housing market data show that the spring season is shaping up to be vastly different than last year, with sales dropping back despite higher listings and house prices unchanged. This has caused us to trim our …
15th May 2024
Treasurer Jim Chalmers has sought to present the 2024/25 Budget as one that strikes a balance between providing support to an ailing economy and keeping pressure off inflation. In our view, that’s disingenuous: the combination of increased government …
We expect the RBNZ to leave policy settings unchanged at its meeting next week. Although the domestic economic backdrop is clearly weak, lingering risks around inflation persistence means policy loosening is unlikely to come onto the agenda before Q4. …
14th May 2024
High net migration has led to a big jump in demand for rental properties that has pushed up the cost of rent compared to the average salary. But comparing rents to average pay is not as accurate a guide to tenant affordability as it used to be. Our …
13th May 2024
Although Japan’s equities and currency have generally moved in tandem in recent weeks, we think the historical inverse relationship between the two will reassert itself before long. We expect a stronger yen to become a headwind for Japan’s equities in the …
10th May 2024
The shares of the very biggest, ‘mega-cap’, firms have generally outperformed those of smaller ones by less in Europe than they have in the US on net so far this decade. We expect that to remain the case through the end of 2025, as bond yields drop back …
Although the recent weakness in exports from China suggest that a sharp rebound in global goods trade probably isn’t on the cards, we still expect global trade to rise this year after a very weak 2023. And while conflict in the Red Sea has caused some …
Lawmakers' current efforts to restrict institutional buying of single-family homes won't put downward pressure on house prices if enacted, as their market share is minimal. Investors ramped up buying of homes in 2021-22, a trend that has raised concerns …
9th May 2024
We’ll be discussing the outlook for Bank of England policy in a 20-minute online briefing at 3pm today. (Register here .) While leaving interest rates at 5.25% today as widely expected, the Bank of England gave the impression that it is close to cutting …
Increasing supply points to softer price growth While sales volumes were robust in April according to the RICS Residential Market Survey, stalling demand and increasing supply suggests that prices will continue to stagnate over the coming months. The …
All signs are that unit labour cost growth in New Zealand will plummet in the coming quarters. Coupled with subdued domestic demand, that should feed through to lower non-tradables inflation in short order. The upshot is that the RBNZ’s forthcoming easing …
The RBA’s decision to leave rates on hold at its meeting today suggests that there is a high bar for any further tightening of monetary policy. Indeed, the Board seems keen on minimising the collateral damage to the economy from its war on inflation. On …
7th May 2024
Banks easing credit conditions amid soft demand The second-quarter Senior Loan Officer Opinion Survey revealed that, a year after the regional banking crisis, only a modest net share of banks are still tightening lending standards. The Net percentage of …
6th May 2024
Inflation in Norway has been falling faster than Norges Bank expected for some time, but with the core rate still a long way above target, today’s communications show that policymakers are not counting their chickens. While they now seem to envisage …
3rd May 2024
The latest manufacturing PMIs suggest that global industry continued to recover at the start of Q2, but that this was entirely due to higher output in emerging markets, while activity remained much weaker in advanced economies. Meanwhile, the increase in …
2nd May 2024
Our forecast that the Bank of Canada will cut interest rates earlier and more aggressively than the Federal Reserve means that the loonie is likely to depreciate, but we doubt the move will be large enough to push up imported goods inflation …
Many central banks are concerned about the fact that services inflation has remained too high. But we think the risks in Switzerland are skewed to the downside and, in our view, outweigh the upside risks from goods prices. This leaves us comfortable with …
With downtowns generally suffering most from the growth in remote work, the hardest-hit cities such as San Francisco are now seeing this impact other revenue streams too, not least tourism. While there are promising signs that conversions from office to …
Euro-zone construction output picked up at the beginning of this year but we don’t think this was the beginning of a sustained rebound. Surveys suggest that output will decline in the next few months, and while rate cuts should support a recovery later in …
We envisage cyclical sectors generally continuing to outperform defensive ones in the S&P 500 through the end of 2025. That reflects our view about the economic outlook; our expectation that hype around artificial intelligence (AI) will grow; our forecast …
Rapid growth in unit labour costs poses an upside risk to core inflation in many advanced economies. However, firms’ pricing power is weakening and we think that it will continue to do so. As a result, higher labour costs will not be passed on in full and …
Fed biding its time Fed Chair Jerome Powell argued in his post-FOMC press conference that, despite the stickiness of inflation in recent months, additional interest rate hikes were still “unlikely”. Moreover, while he admitted that the strong start to the …
1st May 2024
Dollar’s strength not a threat to US economy The dollar’s rise is attracting a lot of attention, but is nowhere near big enough yet to have any significant impact on US inflation, although it does appear to be weighing on exports. In real trade-weighted …
The March JOLTS data showed clearer signs that labour market tightness is continuing to ease. Slower downward progress in wage growth could be concerning, but for now it still appears to be moving broadly in line with the forward-looking indicators, which …
House prices continue to temper their gains The housing rebound that began early last year continued to lose momentum in April. With affordability likely to remain stretched for the foreseeable future, house price growth will only ease further in the …
The anti-dumping duties that the EU is likely to impose on Chinese imports in the coming months will have little macroeconomic impact. But more goods will be targeted in the next couple of years with significant implications for some sectors and …
30th April 2024
Trump, the Fed, and the dollar Most of the major policy initiatives being suggested by Donald Trump’s campaign would be inflationary; whether it’s narrowing the trade deficit via tariffs or a dollar devaluation, curbing immigration or, now we learn, …
29th April 2024
The Ministry of Finance may have intervened earlier today by selling FX reserves to halt the sharp fall of the yen. However, the economic case for foreign exchange intervention is much weaker now than it was in 2022, when the MoF last sold dollars to …
While the headline of the Q1 NCREIF NPI data (-0.9% q/q total return) suggests we could be near the end of the price falls, we think this simply stored up bigger falls for the rest of the year. The growing share of underwater loans, as well as the far …
26th April 2024
