Subdued wage pressures need not delay BoJ tightening Although regular earnings growth has been struggling to gain momentum, we think it will do so before long. Accordingly, the data shouldn’t stand in the way of the Bank of Japan resume its tightening …
6th August 2025
Weak labour market bolsters the case for further easing With New Zealand’s labour market continuing to slacken in Q2, the RBNZ is all but certain push ahead with a 25bp cut at its meeting later this month. The 0.1% q/q fall in employment last quarter was …
The July Employment Report was a taste of what is to come, with payroll gains set to be much weaker in the coming quarters than has been the case in recent years. This is the new normal amid the crackdown on immigration, and there is little evidence from …
5th August 2025
Key insights into the US labour market with this new interactive dashboard; track and download all the important data. 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 …
Oil market remains unfazed by geopolitics for now Despite President Trump’s threat to enforce 100% secondary tariffs on buyers of Russian energy, which could effectively choke off up to 5% of global oil supply, oil prices are roughly where they were at …
We don’t expect the relentless march of ‘growth’ over ‘value’ in the S&P 500 to end soon, regardless of what happens to ‘risk-free’ real Treasuries. The past few months have seen growth outperform value in the S&P 500 as the 10-year TIPs yield has dropped …
Survey implies employment weakening, prices rising The ISM services survey highlights the challenges for the Fed in the coming months, with the activity and employment indicators weakening even as the prices paid index rose to a new cyclical high. The …
Consumer spending in Korea rebounded last quarter and should remain strong over the coming year as government stimulus, rate cuts, and rising wages support demand. But the ongoing downturn in the property sector and weak exports mean overall GDP growth …
The fall in world trade in Q2 was just a reversal of tariff front-running in Q1. But export orders are continuing to weaken, and with US tariff rates now about 15-25% in most economies, we expect global goods trade to slow significantly over the next two …
Deficit narrows as pharmaceutical imports normalise The narrowing of the trade deficit was mainly due to a normalisation in pharmaceutical imports and while exports appeared weak, this was primarily due to a fall in gold exports. The big picture is that, …
Trade deficit edges higher amid continued export weakness The small deterioration in Canada’s goods trade balance in June was driven by a large one-off import of a module for an offshore oil project in Newfoundland. The deterioration may have reversed in …
India could in principle find suppliers other than Russia to meet its energy needs relatively easily with little economic impact. Indeed, Indian oil refiners are reportedly reducing their purchases from Russia. But we doubt that India would make a …
A softer start to Q3 for the Gulf, but Egypt’s economy picking up July’s batch of whole economy PMIs were soft across the Gulf as fiscal policy becomes less supportive of non-oil sectors. Elsewhere, Egypt’s economic recovery has continued to strengthen, …
With inflation trending lower, RBA will cut by 25bp next week Nascent recovery and still-tight labour market will keep the Board vigilant However, as incoming data remain soft, Bank will ease further than most expect With underlying inflation within …
Growth likely to slow ahead Officials figures released today showed that Indonesia’s GDP growth stood at 5.1% y/y in Q2, but we don’t have much faith in the data – growth has been close to 5% for the past few years. Our proprietary activity tracker …
Household consumption showing signs of life The strong pickup in household spending last quarter won’t keep the RBA from handing down a 25bp cut when it meets next Tuesday. Looking ahead, however, the data do suggest upside risks to our below-consensus …
Financial markets have stabilised after Friday’s US payrolls shock and, unlike this time last year, there are few signs that large swings in government bond and currency markets are leading to a broader unravelling in risk sentiment. We continue to …
4th August 2025
We suspect that OPEC+ will have to take a break before unwinding the next layer of voluntary cuts or otherwise face a ballooning surplus in the oil market. Our base case is that the group will begin raising output again from Q2 2026, which we think is …
Morocco’s autos production has surged over the past decade and now rivals major producers in Europe, such as Poland and Hungary and output could soon surpass Italy. This growth in the manufacturing sector should support stronger GDP growth in the coming …
Disinflation paves the way for easing cycle to continue in large steps The larger-than-expected fall in Turkish inflation in July, to 33.5% y/y, will encourage the central bank to continue its easing cycle next month. For now, we maintain our forecast for …
Today’s weak US non-farm payrolls data has undone much of the dollar’s rally this week. While the DXY index is still on up the week, and ~2.5% stronger since the start of July, the increased risk of a recession in the US and the consequent drop in US …
1st August 2025
The Bank of Canada justified its decision to keep interest rates unchanged at 2.75% this week on three factors: persistent uncertainty, signs of economic resilience, and concerns about underlying inflation. In our initial reaction during an online …
Payrolls shocker The rift among the FOMC, with Governors Christopher Waller and Michelle Bowman this week voting against the decision to leave rates between 4.25% and 4.50% (see here ), will presumably have grown even wider following the July Employment …
Weak non-farm payrolls data have left investors concluding that a September Fed rate cut is almost nailed on and sparked a reassessment of risk across markets. We think this reassessment is slightly overdone, and that sentiment around AI is likely to …
The latest PMIs suggest that global industrial activity lost some momentum at the start of Q3 and will probably weaken further from here. The output component of the global manufacturing PMI fell to 49.7 in July from 51.3 in June, which at face value …
Africa’s easing cycle continues The easing cycle in Sub-Saharan Africa was in full flow this week as central banks in Ghana, Mozambique and South Africa all delivered interest rate cuts. Nigeria will soon follow suit. Ghana moved first, slashing its …
Does July's grim US jobs report vindicate the Fed's dissenters who pushed for rate cuts this week? Deputy Chief North America Economist Stephen Brown and Deputy Chief Markets Economist Jonas Goltermann unpack what the latest data reveal about the health …
Manufacturing sector holding up The fall in the ISM manufacturing index in July paints a slightly bleaker picture of the sector than is the reality. The rise in the production and new orders sub-indices, along with the fall in the prices paid index, …
Some reprieve on the tariff front Having found itself in Trump’s firing line a few weeks ago , this week’s tariffs announcements were better for much of Latin America than had been feared. Admittedly, that seems hard to square with President Trump’s …
Tariff agreement reduces downside risks for CEE US President Trump and EU Commission President von der Leyen closed a trade deal this week which will impose a 15% tariff on most EU goods to the US. This was broadly in line with what we had expected, and …
The surveys published this week have sent vastly different signals on the health of the economy in Q3. The backward-looking balance of the CBI’s Growth Indicator fell to a record-low in July (the series began in October 2003), barring the Global Financial …
Tariffs are now firmly back in the driver’s seat when it comes to commodity prices, with this week bringing fresh news on reciprocal, metals and energy tariffs. Arguably the most straightforward to digest was the confirmation of 50% copper tariffs. While …
Weak report will embolden the FOMC doves The muted 73,000 rise in non-farm payrolls in July, combined with large downward revisions to May and June as well as an uptick in the unemployment rate to 4.2%, will strengthen the case for those on the FOMC …
Although European equities declined significantly this week, it seems unlikely that this is due to the US-EU trade agreement that was announced last Sunday and confirmed in the US Executive Order towards the end of the week. After all, the deal was in …
Trump tariffs – impact will be manageable for most Following a flurry of trade deals agreed over the past couple of weeks and a new Executive Order last night, from next Friday (US time) most countries in Asia will face tariffs of 15-25% on their exports …
25% US tariff on India may not be the endpoint President Trump’s latest executive order, issued yesterday, confirmed his threat from Wednesday that India will be hit by a 25% tariff. That puts India on a higher rate than many of its Asian peers. (See …
We think the surprisingly high tariff rate on Switzerland of 39% that the US announced yesterday is likely be negotiated down in future and, importantly, pharmaceutical goods still appear to be exempt for the time being. However, if this tariff were to …
China wins and loses from new US tariffs Chinese exports will become more competitive in the US once the new reciprocal tariff rates on other countries come into force next Friday – duties on most other Asian economies are rising by 5-15%-pts while those …
Inflation at the target, ECB in no rush to cut again Headline inflation remained at the target in July and core inflation was only a touch higher. Both were broadly in line with the ECB’s forecasts. So there was little in the data to suggest that the Bank …
President Trump’s latest flurry of tariffs implies that the US effective tariff rate will rise to about 17%, from 2.3% last year. That is a little higher than we assumed and so presents modest downside risks to our forecast for global GDP growth and a …
Industry continuing to struggle across Emerging Europe The weak July manufacturing PMIs out of Emerging Europe suggest that industry remains a drag on regional growth, and we expect that incoming tariffs will keep external demand conditions subdued over …
This page has been updated with additional analysis since first publication. Recovering, but not off to the races The bigger-than-expected rebound in the Nationwide measure of house prices in July shows that the recovery in the housing market after the …
Minimum wage set to rise the most on record The Bank of Japan sounded more optimistic about the outlook for inflation when it kept policy settings unchanged at its meeting this week. However, we still think that the Bank is underestimating the strength of …
Bank will cut further than most expect The Reserve Bank of Australia is likely to breathe a sigh of relief that its consternations about lingering price pressures in the economy didn’t come to pass. Indeed, as Deputy RBA Governor Andrew Hauser noted in a …
The July PMI readings for most countries in Asia were subdued and we continue to expect activity in Asia’s export-oriented manufacturing sectors to struggle in the coming months. And with inflation set to stay low, we think that most central banks in the …
The latest RICS survey showed that overall sentiment in Asia-Pacific is weaker than in other regions, but that there is significant variance within the region. Japan and Australia stood out as clear leaders, while Hong Kong remained the laggard – a view …
Australia’s housing market gained traction in June, and leading indicators suggest the housing rebound has further to run. But with affordability set to remain extremely stretched despite the RBA’s easing cycle, we think the incipient house-price rally …
The latest RICS survey indicated that the recovery in occupier and investor demand in the euro-zone was muted in Q2. While the reduction in tariff uncertainty should support demand further ahead, the survey is consistent with our view that euro-zone …
31st July 2025
UK spending pledges still insufficient for net-zero The UK’s seventh round of Contracts for Difference (CfD) auctions is set to open next month and, ahead of that, the government has announced increases to the maximum guaranteed price, or strike price. By …
