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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 …
5th June 2024
One down, many more to come 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 that another rate cut in July is already nailed on. For now, our forecast is that …
Disinflationary trend gradually reasserting itself Economy and labour market losing momentum New projections should still show one or two rate cuts this year With no prospect of the Fed adjusting policy next week, the focus of the FOMC meeting will be 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 …
Mortgage applications fall to three-month low The decline in mortgage rates in May was not enough to stop home purchase mortgage applications from falling to a three-month low. The chances of a quick turnaround in June currently look slim, as the increase …
GDP growth will accelerate over the second half of the year While GDP growth slowed to a crawl in Q1, a rebound in real household incomes should contribute to a pick-up in activity over the second half of the year. The 0.1% q/q rise in Q1 GDP was a …
This page has been updated with additional analysis since first publication. Wage growth will climb above 2.5% this year Base pay rose the most since 1994 in April and we think it will accelerate a bit further as the strong pay hikes agreed in the spring …
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
Fall in ISM manufacturing index suggests economy losing momentum The drop in the ISM manufacturing index in May adds to the sense that the economy is losing momentum, while the drop back in the prices paid index should soothe concerns about a potential …
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 European Central Bank is likely to become the first major advanced economy central bank to cut rates since the end of the pandemic when it meets this Thursday – easing policy ahead of the Federal Reserve and the Bank of England. It’s a move that’s …
2nd June 2024
The weaker-than-expected first-quarter GDP data and downward revision to fourth-quarter growth caused markets to price in a higher chance that the Bank of Canada will cut interest rates next week. With consumption growth strong, however, we still think …
31st May 2024
Trump conviction won’t sway the election Trump campaign won’t be decided by courts We doubt that Donald Trump’s New York felony conviction on charges of falsifying business documents will have any significant impact on the presidential election …
With both Labour and the Conservatives this week ruling out increases in income tax, national insurance and VAT, it remains difficult to see how cuts to public services can be avoided after the election. (For all our election analyses, see here .) But …
Growth softer than expected, but strength under the surface The 1.7% annualised gain in GDP in the first quarter was weaker than the Bank of Canada’s forecast for an above-potential 2.8% increase. With consumption growth looking much stronger than …
Inflation data still too strong, but slump in real spending the bigger story As expected, the PCE deflator data suggest that, although not quite as bad as the first three months of the year, inflation was still running above target in April. At the same …
This page has been updated with additional analysis since first publication. Drag on activity from high interest rates continues to fade While April’s money and lending figures suggest the recent rebound in the housing market is cooling and households …
Persistently high mortgage rates cause prices to stagnate Despite a small increase in the Nationwide house price index in May, the big picture is that the slight rise in mortgage rates since the start of the year has caused house prices to stagnate. The …
Fertility rate may have fallen to fresh lows According to some estimates , Japan’s fertility rate fell from 1.26 in 2022 to 1.21 last year. Although higher than in some other Asian economies, for Japan this would still be a fresh record low. (See Chart …
Disinflation stalling The economic data released this week once again highlighted the dilemma the Reserve Bank of Australia finds itself in. On the one hand, the April Monthly CPI Indicator showed the second consecutive rise in both headline and trimmed …
This page has been updated with additional analysis since first publication. GDP should rebound this quarter On balance, the modest decline in industrial production and the rebound in retail sales in April point to a decent rebound in GDP this quarter. …
This page has been updated with additional analysis since first publication. Slowdown in underlying inflation has further to run May’s rebound in inflation in Tokyo largely reflects a jump in electricity inflation that has further to run, but underlying …
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
Labour market gradually cooling We forecast another 175,000 gain in non-farm payrolls in May, with the unemployment rate expected to be unchanged at 3.9%. Wage growth should be unchanged at a muted 3.9%. Healthcare job surge to continue The more modest …
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 …
The stickiness of inflation in April has led us to shift back our forecast for the timing of the first interest rate cut from 5.25% from June to August. Even so, our view that CPI inflation will fall from 2.3% in April to below 1.5% by the end of this …
29th May 2024
Following the previous large quarterly increase, improvement in all-property valuations stalled in the first quarter of the year despite a rise in the 10-year Treasury yield. There was little change at the sector level. Industrial continued to look …
Pieces almost in place for the Bank of Canada to cut But economic and labour market resilience means Bank can wait to be 100% sure Rates to be cut by 25 bp at each meeting from July, faster than markets pricing in The rapid easing in core inflation …
The tick up in mortgage rates since the start of the year has caused demand to soften. As a result, house prices are likely to tread water over the coming months. But our forecast that Bank Rate will be eventually be cut further than expected suggests …
Stalling disinflation means rates will remain higher for longer While inflation picked up further in April, we doubt that the Reserve Bank of Australia will respond with another interest rate hike. The 3.6% increase in the Monthly CPI Indicator was …
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
House prices March on The solid 0.3% m/m rise in house prices in March suggests that competition among buyers for the limited number of second-hand homes on the market remains strong. We expect that to continue for the rest of the year, consistent with …
Falling real consumption will help to reduce inflation The weakness in retail sales is consistent with our view that inflation will reach the top end of the RBA’s 2-3% target band in the second half of the year. The 0.1% m/m rise in retail sales values in …
The further fall in headline inflation in April, to a three-year low of 2.6%, means the 2% target could be achieved as soon as August. Whether the Bank of Canada cuts interest rates in a couple of weeks or waits until July, our key message is that the …
24th May 2024
Fed in wait-and-see mode Fed to proceed with caution The minutes of the Fed’s early May policy meeting were, not surprisingly given the backdrop of data releases ahead of that meeting, somewhat hawkish. The resilience of economic growth and employment, …
Retail sales point to soft consumption growth The broad-based nature of the weakness in retail sales in March show that high interest rates are weighing on demand and, at the margin at least, provide a bit more justification for the Bank to cut interest …
Durable goods orders slowly trending up Headline and core durable goods both did better than we expected in April, suggesting that the earlier decline in corporate borrowing costs may be feeding through. Nonetheless, with growth in underlying capital …
It’s tempting to think that every bit of economic data released between now and the general election on 4 th July will make a difference to who will be Prime Minister on 5 th July. Inevitably, data releases will be written up as “good” or “bad” for Sunak …
This interactive dashboard allows you to explore all of our forecasts and key data for European commercial property. If you have subscriber access to the data underlying this redesigned dashboard, you can download it via the menu options in the top right …
Outlook for retailers remains bright despite soggy start to Q2 The 2.3% m/m fall in retail sales volumes in April was much bigger than our forecast for a 0.5% m/m fall and the consensus forecast for a 0.4% m/m decline as the unusually wet weather …
Inflation rapidly losing momentum The economic data released over the last couple of weeks hardly suggest that the Bank of Japan should tighten monetary policy any further. After all, GDP plunged by 0.5% q/q in Q1 and the April inflation data released …
Households seem keen on saving more The minutes of the RBA’s May meeting confirmed that the Bank discussed a rate hike in response to the upside surprises in inflation and the labour market, but ultimately decided against it. One reason was that the …
This page has been updated with additional analysis since first publication. Underlying inflation will fall below 2% over coming months The sharp slowdown in underlying inflation in April had little to do with the slashing of high school fees in Tokyo …
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 …
