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Small rebound in confidence suggests no big hit from bank turmoil The small rebound in the University of Michigan consumer sentiment index in early April suggests that the easing of the crisis in the banking sector has reassured consumers. Nevertheless, …
14th April 2023
Further evidence of fading economic momentum The 0.5% m/m fall in manufacturing output in March provides more evidence of a loss of economic momentum going into the second quarter. While the return of temperatures to seasonal norms last month appears to …
Sales saved by online strength Retail sales fell by 1.0% m/m in March, adding to the evidence that the strong start to the year was partly due to the unseasonably mild winter weather. With control group sales only falling by 0.3% m/m last month, …
Further evidence of fading economic momentum The 0.5% m/m fall in manufacturing output in March provides yet more evidence of a significant loss of economic momentum going into the second quarter. While the return of temperatures to seasonal norms last …
Surge in household incomes unlikely to be sustained The UK economy has continued to be more resilient to the twin drags of higher inflation and higher interest rates than we thought. Real GDP was flat in February despite an extra drag from the strikes. …
Sales boosted by online strength Retail sales fell by 1.0% m/m in March, adding to the evidence that the strong start to the year was partly due to the unseasonably mild winter weather. With control group sales only falling by 0.3% m/m last month, …
Data point to positive growth in Q1 The latest official activity data suggest that the euro-zone economy posted a small expansion in Q1. Admittedly, retail sales fell in February, continuing the downward trend they have been on for over a year. But lower …
On April 13 th a three-member panel delivered its review of Australia’s migration system to the Home Affairs minister, Claire O’Neil. Although the review is unlikely to be published before next month, it is already stoking debate over whether the ongoing …
Ueda has his eye on wage growth Bank of Japan Governor Kazuo Ueda noted in his inaugural press conference this week that more time is needed to see if wage growth can be sustained at a level where it will support inflation at or above the 2% target. So …
Recent data appear to confirm that economic activity held up better than feared at the start of 2023. Retail sales rose in most major economies over the first two months of the year, world industrial production was broadly stable and China’s zero-COVID …
13th April 2023
The fading effects of the mini-budget meant that bank lending conditions to households and businesses didn’t deteriorate any further in Q1. But the latest credit conditions survey doesn’t capture the full extent of the tightening triggered by recent …
Despite the cost-of-living crisis, the leisure sector did better than expected last year as households used the savings they had built up during the pandemic to boost spending on recreation and restaurants. But with those savings now exhausted and real …
Mortgage demand still the limiting factor The headline mortgage availability balance of the credit conditions survey turned positive for the first time in over a year in Q1. The collapse of SVB while the survey was in the field probably helps explain why …
Bank of England may yet need to generate a recession The stagnation in real GDP in February means the economy probably avoided recession in Q1. But it also increases the chances that the Bank of England will need to raise interest rates further to …
Continuing to dodge recession The stagnation in real GDP in February (consensus +0.1%, CE 0.0%) means the economy probably avoided recession in Q1. But it also increases the chances that the Bank of England will need to raise interest rates further to …
Survey undermines hopes of a spring awakening The marginal improvement in the headline prices paid and new buyer enquiries balance of the RICS Residential Survey did not alter the overarching message that prices are falling and sales slumping. While the …
Resilient labour market will prompt RBA to hike rates further in May The strength in March’s labour market data will probably prompt the Reserve Bank of Australia to deliver a final 25bp rate hike next month, but unemployment will rise before long . The …
The strength in March’s labour market data will probably prompt the Reserve Bank of Australia to deliver a final 25bp rate hike next month, but unemployment will rise before long. The 53,000 rise in employment last month was much stronger than most had …
Fed uncertain about impact that banking turmoil will have on economy The minutes of the Fed’s mid-March policy meeting are, overall, arguably dovish since in the wake of the collapse of SVB and Signature Bank, “several participants noted that…they …
12th April 2023
The Bank of Canada delivered a mixed message today, noting that it is more confident inflation will decline in the next few months, but less confident that inflation will fall all the way to 2.0% as quickly as previously anticipated. Nonetheless, with the …
We expect a surge in completions and a slowdown in employment growth to push vacancy substantially higher in all markets over the next few years. That will slam the brakes on rental growth, causing an outright fall in several of the major markets as well …
The Bank of Canada delivered mixed messages today, noting that it is more confident that inflation will decline in the next few months but less confident that inflation will return to 2% as quickly as it previously anticipated. Nonetheless, with the …
Core inflation remains elevated despite easing in shelter There were some encouraging signs in the March CPI report, including the first evidence that shelter inflation is slowing, but core prices still increased by 0.4% m/m which, on an annualised basis, …
Core inflation remains elevated despite easing in shelter There were some encouraging signs in the March CPI report, including the first evidence that housing cost inflation is slowing, but core prices still increased by 0.4% m/m which, on an annualised …
Japan has escaped the recent banking turmoil in the US and Switzerland relatively unscathed. While banks face some risks arising from their lending exposure overseas , there are no signs of liquidity stress. And unrealised losses on bonds are less of a …
Another bearish signal on Q1 business investment The fall in “core” machinery orders in February is another bearish signal on business investment last quarter. Domestic machine tool orders suggest a further fall in March, but even if “core” machinery …
Another bearish sign for business investment in Q1 “Core” machinery orders fell by 4.5% m/m in February, following a 9.5% rise in January. Orders from the manufacturing sector saw a strong 10.2% m/m rebound, largely due to a huge spike in orders from the …
House prices rebounded in March but we aren’t convinced that this marks the beginning of a sustained rebound. Affordability is set to become the most stretched since the early 90s and if the unemployment rate rises as rapidly as we anticipate, house …
11th April 2023
Strong consumption momentum to carry over into Q2 Both the current and outlook readings in March hit their highest in more than a year, capping off a strong first quarter for the EWS. This is another sign that private consumption remained resilient in Q1 …
10th April 2023
Economy losing forward momentum Only two months later the economy’s apparent strong start to the year in January looks increasingly like it was a brief sugar high, in part due to the unseasonably mild winter and possibly the outsized cost-of-living …
7th April 2023
Employment and wage growth continue to trend lower The 236,000 gain in non-farm payrolls in March adds to the evidence that the economy’s strong start to the year was partly weather related, with momentum fading again. With the sharp fall in job openings …
Employment and wage growth continue to trend lower The 236,000 gain in non-farm payrolls in March adds to the evidence that the economy’s strong start to the year was partly a weather-related blip, with momentum now fading again. With the sharp fall in …
Overview – We have made substantial downgrades to our forecasts this quarter. Aside from their direct impact through tighter lending conditions, last month’s regional bank failures appear to be helping crystallise some of the risks to commercial real …
6th April 2023
The local real estate board data suggest that new listings fell again in March, defying expectations that high interest rates could lead to forced home sales. With supply falling by more than demand, the risks to our house price forecasts lie to the …
Current market pricing suggests that there is around a 60% chance that, at the next policy meeting in May, the Monetary Policy Committee (MPC) raises interest rates by 25bps, from 4.25% now to 4.50%. This isn’t surprising given the decision will probably …
Commercial real estate (CRE) has become an area of particular concern against a backdrop of higher interest rates and a pandemic-induced reduction in demand for office space. Sweden’s economy looks particularly vulnerable to a downturn in the sector for …
Expansion in Q1 likely… After stagnating in Q4, euro-zone GDP probably rose in the first quarter. The final Composite PMI , released this week, confirmed that economic conditions improved further in March (though a bit less than implied by the flash …
The Land Registry report that London house price growth slowed to 3.2% y/y in January and more timely data based on mortgage approvals show a 2.2% y/y fall in prices in Q1. The detail suggests that affordability is becoming the primary driver of pricing. …
The RBA’s decision to keep rates on hold at its April meeting has reignited debate over whether the Bank’s tightening cycle is at an end. Financial markets certainly seem to think this is the case. However, our view, and the analyst consensus, is that the …
We anticipate that the S&P 500 will fall back later in 2023, largely because analysts are far from pricing in a recession in the US that we think is even more likely after the recent banking turmoil. Our forecast is that the index will reach a trough of …
Construction activity holds up as housing enters the doldrums The March headline CIPS Construction PMI reversed some of its surprise jump in February, but it remained in expansionary territory. That was driven by the commercial sector, where strong …
House price indices diverge The third consecutive monthly increase in house prices recorded by Halifax suggests that pricing is proving remarkably resilient to higher mortgage rates. But it is at odds with the consistent fall in the Nationwide house …
Industrial resilience won’t prevent recession The second consecutive big increase in German industrial production in February all but confirms that GDP returned to growth in Q1. The industrial resilience may continue in the coming months but we still …
Falling international trade points to weaker growth The widening of the trade surplus in February largely reflects the fact that imports of goods and services fell at a much faster rate than exports. Therefore, even though net trade will make a positive …
Tankan paints gloomy picture This week’s Q1 Tankan headline indices supported our assessment that Japan’s economy will slip into a mild recession in the first half of this year. The Bank subsequently released the comprehensive data from the survey on …
Note: Office-based employment data for several metros were missing for February. February employment growth slowed after January’s high February saw a slowdown in jobs growth after a strong month prior, suggesting January’s jump in employment was an …
5th April 2023
Will underlying inflation prove to be stickier than we thought? Paul Ashworth and Andrew Hunter from our US Economics team held an online briefing shortly after the release of the March CPI report. During this 20-minute briefing, Paul and Andrew answered …
Models suggest recession coming soon Our composite models suggest the economy was on track to fall into recession soon even before the impact of the banking turmoil feeds through. There also appears to be a lower, but rising, chance that a recession has …
Underlying inflation pressures are still well above the 2% mid-point of the Bank of Canada’s target range, but there are several reasons to expect disinflationary forces to build. We forecast that CPI inflation excluding food and energy will fall to 2% at …
