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Housing starts rebound but tariff concerns loom The sharp rebound in housing starts in February and healthy permit issuance shows that the housing market is still holding up well. Nonetheless, with tariff concerns continuing to weigh on homebuilders’ …
18th March 2025
Upside surprise makes the Bank of Canada’s job even harder The large upside surprise to CPI inflation in February, together with another set of above-target consistent gains in CPI-trim and CPI-median, reduces the chance of the Bank of Canada cutting …
While a notable shift in Canadian fiscal policy is likely regardless of who wins the upcoming election, we doubt this will move the needle for the loonie or Canadian government bonds, given that the outlook for Canadian financial markets depends more on …
Canada’s housing market falls victim to trade war While unseasonably severe winter weather has undoubtedly played some role in the recent weakness of home sales, we suspect the sharp drop in house prices in February can also be blamed on the growing …
17th March 2025
Consumers not completely collapsing under the weight of policy uncertainty after all Although retail sales only edged up in February, the much larger rebound in control group sales – which feeds into the BEA’s consumption estimate – is something of a …
While trade tensions create downside risks, we expect GDP growth to be around trend this year. And following another strong showing in this year’s spring wage negotiations, wage growth will remain high enough to keep inflation above the Bank of Japan’s 2% …
Prime Minister Starmer’s announcements this week to abolish both NHS England and the Payment Systems Regulator are the government’s latest initiatives aimed at boosting productivity and, in turn, improving the UK’s medium-term economic prospects. It’s …
14th March 2025
Trump torments Tiff The Bank of Canada’s decision to lower its policy rate by a further 25bp, to 2.75%, at its meeting on Wednesday was largely expected given the growing downside risks to the economy from US tariffs. While the temporary carveout …
What Trump put? Investors had until recently been relatively sanguine about the economic and financial market risks posed by President Donald Trump’s more extreme policy inclinations. His cabinet lacks the establishment types that served as a check on …
Policy concerns weigh heavily on sentiment The plunge in the University of Michigan Consumer Sentiment Index in March, paired with the surge in inflation expectations, indicates that consumers’ concerns about the impact of the Trump administration’s …
Strong start to the year not a sign of things to come The large rises in both manufacturing and wholesale sales volumes at the start of the year suggest that GDP may have done even better than the flash estimate of a 0.3% m/m rise in January, although …
Shunto results in largest pay hikes since 1991 Japan’s Trade Union Confederation (RENGO) today released the first round of results of this year’s spring wage negotiations (Shunto). Including seniority pay hikes, RENGO’s preliminary tally showed a 5.46% …
The 0.1% m/m fall in real GDP in January (consensus +0.1%, CE -0.2%) highlights the weakness of the economy before the full effects of the rise in business taxes and the uncertain global backdrop is felt. Only a small part of the fall in GDP in January …
There are good reasons for the BoJ to strip out only fresh food rather than all food from its preferred measure of core inflation. To be sure, the fact that inflation excluding all food and energy has fallen to just 1.6% underlines that price pressures …
Budget deficit not widening as much as feared Treasurer Jim Chalmers will hand down the 2025/26 Budget on 25 th March and he will be eager to share the good news that the budget deficit in 2024/25 will be smaller than the Treasury had predicted in the …
The surge in rental demand is over, but rental demand will probably remain stronger than pre-pandemic levels. That suggests the prop to rents growth in 2025 and 2026 from solid demand will fade only slowly. Fundamentally, changes in rental demand are …
13th March 2025
Overview – Our new forecasts have been compiled in the most uncertain geoeconomic environment for a long time. But our firmly below-consensus expectations for US CRE are led by our view that nearly three years since the market peak, appraisals still do …
Consecutive interest rate cuts unlikely Vote may again make the MPC look more dovish than it really is Even so, rates may eventually be cut to 3.50% rather than to the low of 4.00% investors expect The Bank of England will almost certainly leave interest …
CPI & PPI point to 0.35% m/m increase in core PCE While final demand and core PPI both surprised to the downside in February, the price increases in the components which matter for the PCE deflator were on the whole hotter than we had anticipated. As a …
Our Bank of England MPC Monitor helps track whether the Bank is becoming more inclined to cut interest rates faster and further or slower and not as far. This dashboard was last updated on 25th June 2025. If you have subscriber access to the data …
Weak economy finally taking its toll on housing demand February’s RICS survey suggests the downside risks to our 2025 forecasts for housing demand and prices from the weak economy continue to grow. But bigger falls in mortgage rates than most expect over …
Although the Bank of Canada cut interest rates by 25bp again today, it also warned that “monetary policy cannot offset the impacts of a trade war” and that it must guard against tariff-related rises in price inflation. This suggests that the Bank is …
12th March 2025
Bank cuts again but warns that it must protect against tariff-induced inflation Although the Bank of Canada cut interest rates by 25bp again today, it also warned that “monetary policy cannot offset the impacts of a trade war” and that it must guard …
Not as good as it looks The softer 0.23% m/m rise in core CPI in February is not as encouraging at it looks, as the components which feed into the Fed’s preferred PCE price index rose more sharply. While it will depend a lot on the PPI data tomorrow, our …
Bank will keep policy unchanged next week but we expect a 25bp hike in May Strong inflation and wage growth warrant more tightening; US tariffs key risk Rates will reach neutral territory of 1.5% in 2027 The Bank of Japan will keep policy settings …
The imposition of US tariffs and risk of more to come will weigh on exports, consumer confidence and investment. As a result, we now forecast weaker economic growth, with GDP expanding by just 1.0% annualised on average over the next four quarters. For …
11th March 2025
While January’s JOLTS report was not much to shout about, timelier labour market data suggest conditions look set to worsen amid DOGE’s gutting of the federal workforce. We remain optimistic for now, though, given the health of private sector hiring in …
* This Focus features additional analysis added following the announcement of a snap election for April 28 th . * Recent shifts in the polls suggest new Liberal Party leader Mark Carney and Conservative Party leader Pierre Poilievre are both in with a …
10th March 2025
The Chancellor, Rachel Reeves, will present her fiscal update on 26 th March against the challenging backdrop of geopolitical ruptures, tariffs threats and a stagnating domestic economy. We expect Reeves to tighten fiscal policy by a further £10bn (0.3% …
Wage growth will accelerate further Regular pay growth surged in January and with this year’s spring wage negotiations set to result in stronger pay hikes than last year, wage growth will pick up further over the course of the year. According to the …
9th March 2025
The US tariff exemption for USMCA-compliant goods still leaves considerable uncertainty for the economy because less than 40% of exports to the US last year were formally USMCA compliant. The share that could be quickly declared USMCA-compliant is likely …
7th March 2025
Tariff flip-flop amplifies confusion Markets reacted badly this week when President Donald Trump first imposed 25% tariffs on all imports from Canada and Mexico, with the only partial exemption for Canadian energy. The next day, under pressure from the …
The UK government’s decision to raise defence spending from 2.3% of GDP to 2.5% of GDP by 2027 was upstaged this week. It may have been enough to impress President Trump, but incoming German Chancellor Merz has raised the bar. The German response differs …
Labour market still in decent shape The modest 151,000 rise in non-farm payrolls in February and 0.1%-point rise in the unemployment rate to 4.1% confirms the economy started the year soft but is not plummeting towards a recession. Some of those fears may …
Weather rather than tariffs to blame for weak hiring The essentially unchanged level of employment in February was probably mostly due to the unseasonably severe winter weather during the survey reference week rather than the threat of US tariffs. …
This page has been updated with additional analysis since first publication. House prices may be starting to lose some momentum The small 0.1% m/m fall in Halifax house prices in February is at odds with the 0.4% m/m rise in the Nationwide measure and …
Biggest pay hikes since 1991 forthcoming Japan’s Trade Union Confederation (RENGO) revealed yesterday that its members are requesting a 6.09% rise in pay (including seniority pay hikes) in this year’s spring wage negotiations (Shunto). That marks an even …
RBA won't provide much interest rate relief The minutes of the RBA’s February meeting confirmed that the Bank’s decision to cut rates last month had come down to the wire. Moreover, with concerns still persisting about lingering inflation risks, the Board …
Recent strength of GDP and employment data irrelevant amid existential tariff threat Even if tariffs soon lifted, Bank could cut by more than markets are pricing in this year If tariffs are sustained, Bank could eventually return interest rates to …
6th March 2025
The unravelling of US exceptionalism in stock markets since Donald Trump returned to the White House on 20 th January has been mainly driven by concerns about the US’ dominance of AI and the relative health of its economy (which has also dragged down …
Stay on top of the global macro impact of tariffs with these interactive dashboards. If you have subscriber access to the data underlying this dashboard, you can download it via the menu options in the top right of each chart or table. If you would like …
Trade deficit hits all-time high as importers continue to rush to beat tariffs The ballooning of the trade deficit to a record high of $131.4bn in January once again stemmed from a huge surge in imports as businesses rushed to fast-track orders before new …
Exports to the US reach a record high amid tariffs The huge increase in exports in January was in line with the timely advance US data released last week and implies US importers looked to front-run tariffs ahead of Donald Trump’s return to the Oval …
Although our forecast for first-quarter GDP growth is now down to -1.9% annualised, we still believe that, on balance, the US economy will escape recession and rebound in the second quarter, as the distortion caused by the unseasonably severe winter …
Shunto set to result in stronger pay hikes than last year With Japan’s trade unions requesting an even larger pay hike in this year’s spring wage negotiations (Shunto) than they did a year ago, we now expect the negotiations to result in a base pay hike …
President Donald Trump's decision to grant a one-month exemption to the Big Three Automakers (Ford, GM & Stellantis) is something of a disappointment given the earlier heavy hints from his Commerce Secretary Howard Lutnick that more widespread relief was …
5th March 2025
While the 0.1% q/q rise in GDP in Q4 of last year was stronger than we and most other forecasters expected, the combination of higher taxes for businesses announced in last October’s Budget, a lingering drag from the previous interest rate hikes and …
Services sector holding up despite policy uncertainty After the slew of weaker activity and survey data in recent weeks, the small rise in the ISM services index in February should provide some reassurance that the floor is not falling from under the …
If the US tariffs remain in place, Canada will undoubtedly fall into recession. The limited decline in the loonie so far suggests markets are still pricing in a quick U-turn from the Trump administration. But even if the tariffs are soon lifted, their …
4th March 2025
Japanese firms will suffer some collateral damage from the 25% US tariff on imports from Canada and Mexico. And if Trump presses ahead with tariffs on imports from Japan, carmakers would be most affected. Nonetheless, we suspect that the sales of Japanese …
