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Labour market conditions loosening The labour market is weaker than the 24,900 rise in employment might suggest, with the unemployment rate rising again and hours worked slumping by 0.7% m/m last month. The fall in hours worked means that the preliminary …
1st December 2023
The prospect of earlier interest rate cuts in the US and the euro-zone has led to a sharp fall in US and euro-zone government bond yields this week. 10-year US Treasury and German Bund yields have fallen by 15 and 22 basis points (bps), to 4.32% and 2.43% …
Rising prices continue to confound forecasters The further small increase in the Nationwide house price index in November was unexpected and came on the heels of an even larger rise in October. It means house prices are on track to fall by just 2% y/y in …
Consumption falling but labour market tightening The October activity data were a mixed bag. While industrial production rose by 1% m/m, firms’ forecasts for the next couple of months were weak and point to a stagnation in output across Q4 following …
House prices falling again in Sydney and Melbourne Data released by CoreLogic today showed that house prices rose by 0.6% m/m in seasonally-adjusted terms in November, the smallest rise since April. And CoreLogic’s daily data show that house price …
This page has been updated with additional analysis since first publication. Labour market not out of the woods yet The renewed tightening of the labour market in October probably reflects the lagged effects from the surge in output across the first half …
30th November 2023
House prices may soon start to fall again House price growth kept slowing in November and, with affordability the most stretched since the early 1990s, that slowdown has further to run. In seasonally-adjusted terms, house prices across Australia’s eight …
GDP contracted in the third quarter and there are downside risks to the outlook. As house prices are falling again, household debt is elevated and high interest rates are still feeding through, the key risk is that the mild recession we forecast could …
While we expect the return of striking workers to help non-farm payrolls rise by a stronger 200,000 in November, underlying labour demand probably eased. October’s employment report showed signs of a further loosening in the labour market, with a more …
This page has been updated with additional analysis since first publication. A bumpy landing so far, but recession risks remain On the face of it, the upward revision to second-quarter GDP growth combined with the preliminary estimate of a strong monthly …
Falling PCE inflation suggests rate cut speculation likely to grow The muted rise in real consumption and further decline in core PCE inflation in October will reinforce the growing belief in markets that interest rate cuts are on the horizon. Real …
Office-based jobs contracted for the first time in over three years Total employment grew by 0.3% 3m/3m once seasonally-adjusted in October across our 30 metros, which is weak both by this year’s standards and of the previous decade. Meanwhile, …
The key indicators that have usually convinced the Bank of England to cut interest rates suggest the first cut could come in Q1 2024. That said, rates have risen to a lower peak than most models suggest, which implies they need to stay higher for longer …
This page has been updated with additional analysis since first publication. Slowdown in private capex has further to run Private investment growth softened in Q3 and firms’ forecasts for 2023/24 suggest that this slowdown has further to run. The 0.6% …
This page has been updated with additional analysis since first publication. Weakness in consumption raises risk of recession While industrial production kept rising in October, firms’ output forecasts for the coming months are weak and the slump in …
While global goods trade rose in September, timelier indicators suggest that it has softened so far in Q4. And with props to Chinese exports likely to prove temporary, and advanced economies set to slow, we think that the general weakness of world trade …
29th November 2023
The usually strong relationship between NAHB homebuilder confidence and housing starts has broken down recently. That can be explained by the composition of the NAHB’s builder members, which are largely smaller private homebuilders. Unlike their larger …
Economic growth and inflation both weaker than Bank expected Bank likely to tone down, or even drop, its tightening bias Policy rate to be cut by much more than markets expect in 2024 The second consecutive month of muted core inflation pressures in …
Even though we expect the Fed to go into cutting mode within the next six months and the 10-year Treasury yield to fall below 4% in 2024, we don’t expect this to provide any respite for real estate. Indeed, given we think the 10-year yield will range …
This page has been updated with additional analysis since first publication. Higher interest rates will continue to percolate through the economy October’s money and credit data suggest that higher interest rates are continuing to percolate through the …
Trough in mortgage approvals behind us With mortgage rates easing, the rise in mortgage approvals in October confirms that the trough in mortgage approvals is behind us. But with mortgage rates unlikely to fall much below 5% until the second half of 2024, …
Bullock has continued to sound hawkish, leaving the door open for another rate hike Trimmed mean inflation still stubbornly high, but set to slow further Bank’s next move will be a rate cut, perhaps as early as Q2 next year We expect the Reserve Bank …
This page has been updated with additional analysis since first publication. RBNZ will cut rates in the second half of next year While the RBNZ signaled that it could hike rates further, we still think that the tightening cycle is now over and that the …
This page has been updated with additional analysis since first publication. Trimmed mean inflation set to fall in earnest before long With trimmed mean inflation only moderating slowly, the RBA may well decide to hike interest rates further next year, …
The rebound in the activity data in November has convinced investors that the first interest rate cut will happen later, in August next year instead of June. Our view that core inflation will ease only slowly explains why we think interest rates won’t be …
28th November 2023
House prices continue to defy gravity Another large monthly gain in house prices in September suggests that the extremely limited supply of existing homes for sale continued to outstrip the drag on demand from high mortgage rates. This was a stronger …
We expect 10-year Treasuries to outperform 2-year Treasuries between now and the end of 2024, even though we forecast the 2-year Treasury yield to fall by more than the 10-year Treasury yield in that period. The Treasury yield curve went through a period …
Black Friday may result in further rise in sales volumes in Q4 While retail sales values fell in October, a renewed boost from Black Friday in November may yet result in a second consecutive rise in sales volumes across Q4. The 0.2% m/m fall in sales …
Temporary pause in strength of new home sales New home sales reversed most of their rise in the previous month as mortgage rates spiked to 8%. However, we don’t think this marks an end to the strength in new homes sales. That’s because the supply of …
27th November 2023
The recent period of high inflation in Japan has kick-started a virtuous cycle between wages and prices. If inflation expectations remain elevated and structural forces push up the neutral rate of interest over the coming years, monetary policy will …
The S&P Global PMIs have provided misleading signals about the strength of activity in the US and Europe this year. But, for what it’s worth, the flash surveys for November suggest that DMs are ending 2023 on a weak note, with activity stagnating or …
24th November 2023
Overview – Property yields rose further in Q3, but with risk-free rates now falling back, we think they will peak by the end of 2023. That will help stabilize capital values, but, given historically narrow yield spreads, we doubt we will see much yield …
It would be a stretch to say the government showed fiscal restraint in the Fall Economic Statement , but the announcement of only a few billion dollars in extra spending measures means that Finance Minister Chrystia Freeland did not pour much more fuel on …
Retail sales perk up after weak Q3 The renewed rise in retail sales volumes in September was not enough to prevent a large contraction in sales volumes over the third quarter. The balance of risks is probably now skewed to the downside surrounding our …
It’s true that the Chancellor’s pre-election splurge unveiled in this week’s Autumn Statement was the largest discretionary fiscal loosening (outside of the Covid period) since 2010. And at £20.3bn (0.6% of GDP) in 2028/29, it was the biggest tax-cutting …
Disapproval rating highest since Suga resignation The Cabinet Office’s disapproval rating has surpassed 50% for the first time since Fumio Kishida became Prime Minister two years ago. Surely one reason is the 5% plunge in real household disposable …
Surveys point to renewed slowdown in inflation Following a rather hawkish speech by Reserve Bank of Australia Michele Bullock, the financial markets now price in a 60% chance of another 25bp rate hike at the Bank’s February’s meeting, up from 40% before …
This page has been updated with additional analysis since first publication Decreases all across the board suggests another weak quarter The further slowdown in the composite PMI in November suggests that GDP growth remained sluggish this quarter. The …
This page has been updated with additional analysis since first publication. Inflation will only reach 2% by the end of next year The jump in headline inflation in October isn’t as bad as it looks as underlying inflation kept falling. Nonetheless, it …
23rd November 2023
A year of the most aggressive monetary tightening in a generation is expected to end with the major DM banks leaving rates on hold at their December meetings. Following our briefings on the world in 2024 , our senior economists will be held a special …
This page has been updated with additional analysis since first publication. Something for everyone, but bigger point is labour supply is too low The net migration figures for the year to June 2023 give some ammunition to both sides of the political …
This page has been updated with additional analysis since first publication. Sticky price pressures will add to the Bank of England’s unease The rise in the flash composite activity PMI, from 48.7 in October to 50.1 in November, is still consistent with a …
While subdued capital spending has contributed to the slump in productivity, the recent plunge in the capital/labour ratio can only partly be explained by the surge in net migration. It is now a well-documented fact that Australia’s labour productivity …
The net giveaway the Chancellor announced in the Autumn Statement is designed to curry favour ahead of an election late in 2024. However, fiscal policy is still being tightened in 2024/25 and it looks as though whoever wins the election will have to …
22nd November 2023
Post-SVB bank lending holding up well Credit where credit is due The SVB crisis back in mid-March sparked fears of a credit crunch, particularly among regional banks who are the principal source of funding for commercial real estate. Post-SVB, while the …
For more detailed analysis of the Autumn Statement, see our UK Economics Focus here . Chancellor chips away at fiscal tightening ahead of an election The net new giveaway the Chancellor announced today of £14.3bn in 2024/25 (0.5% of GDP) is a bit bigger …
Equipment investment continues to struggle Aside from the plunge in the volatile transport component, the October durable goods orders data suggest that business equipment investment continues to struggle in the fourth quarter. The 5.4% m/m plunge in …
Chief Property Economist Andrew Burrell and Andrew Wishart , who leads our UK housing coverage, held a client briefing shortly after the release of the November Nationwide House Price Index for a discussion all about what to expect from the UK market …
