Wage growth to gain further momentum While total wage growth slowed sharply in March, this was mostly driven by a plunge in volatile bonus payments. Regular wage growth held up well and given that it is set to be boosted further as the strong Shunto …
9th May 2024
Easing cycle set to enter a stop-start phase The Brazilian central bank’s decision to cut the Selic rate by 25bp to 10.50% (rather than opt for another 50bp step) and drop its forward guidance confirm that most of the rate cuts in this easing cycle are …
8th May 2024
Rise in inflation shifts odds in favour of a 50bp cut The slightly larger-than-expected rise in Chile’s inflation to 4.0% y/y in April supports our view that the central bank will once again slow the pace of easing with a 50bp cut (to 6.00%) at its …
Rising mortgage rates extend the slump in demand The small rebound in mortgage demand in March proved short-lived, as higher borrowing costs caused home purchase mortgage applications to drop 2.3% m/m in April. But the 10-year Treasury yield’s recent …
Riksbank likely to cut faster than it forecasts The Rikbsank’s decision to cut its key policy rate by 25bp today, to 3.75%, was only partly priced in by financial markets but was forecast by the majority of analysts including ourselves. Attention will now …
This page has been updated with additional analysis since first publication. German industrial recovery halts in March The renewed contraction in industrial production in March after two months of expansion, is a reminder that the German economy is still …
Commercial activity rebounds, but housing still subdued The headline CIPS construction PMI rose for the fifth consecutive month to 53.0 in April, a 14-month high. The rise was driven by improvements to the commercial and civil engineering components, …
7th May 2024
RBA content to stay put for a while The RBA’s decision to leave rates unchanged at 4.35%, despite the material upside surprise in the CPI data last quarter, suggests that the bar for a resumption of rate hikes is high. However, the other side of that coin …
The national accounts data released today suggest that economic growth in Indonesia remained broadly stable last quarter, but we don’t have much faith in the official data. With economic activity likely to remain weak and concerns about inflation and the …
6th May 2024
Fundamentals point to slower wage growth Powell leaves all options open Fed Chair Jerome Powell argued in his post-FOMC press conference this week that, despite the stickiness of inflation in recent months, additional interest rate hikes were still …
3rd May 2024
Rise in prices paid not yet a concern The fall in the ISM services index to 49.4 in April, from 51.4 in March, suggests that services spending could slow from the 4% annualised in the first quarter. The prices paid index rebounded but, for now, it is …
Labour market easing puts rate cuts back on the table April’s employment report was weaker across the board; with employment growth slowing back to the pace from last fall, the unemployment rate ticking up to 3.9% and average hourly earnings growth …
Inflation pressures stabilising, rate cuts still some way off The slightly smaller-than-expected rise in Turkish inflation in April to 69.8% y/y (consensus 70.3%) offers encouraging signs that price pressures have softened again. The 3.2% m/m increase was …
External demand still weak Despite the slump in March, export volumes grew strongly over the first quarter and net trade appears to have been behind about half of the likely 2.5% annualised rise in first-quarter GDP. Nonetheless, the fall in March and the …
2nd May 2024
Deficit narrows; Productivity growth stalls The trade deficit narrowed slightly in March to $69.4bn, from $69.5bn, with exports down by 2.0% m/m and imports falling by 1.6%. The $5.1bn decline in goods exports included a $1.2bn drop in civilian aircraft …
PMI bounces as electricity supply improves South Africa’s manufacturing PMI jumped in April, adding to signs the economy is finally moving on from stagnation as the electricity situation improves. And with price pressures still elevated, the SARB looks …
Strong Q1 growth masks lacklustre domestic recovery Hong Kong’s GDP surprised to the upside in Q1, expanding by 2.3% q/q, up from a downwardly-revised 0.4% q/q in Q4 (the Bloomberg median was +0.9 and out forecast was +0.8%). While growth slowed in y/y …
This page has been updated with additional analysis since first publication. Industry dragging on the CEE recovery The weak set of manufacturing PMIs out of Central and Eastern Europe (CEE) for April suggest that industrial sectors remained a drag on the …
Swiss CPI jumps, but will fall in the coming months The jump in Switzerland’s inflation rate in April was largely due to increases in the volatile food and fuel components. While the data increase our confidence that the SNB will not cut interest rates at …
Fed statement acknowledges inflation rebound; announces QT taper The Fed admitted in the statement issued after today’s FOMC meeting that “in recent months, there has been a lack of further progress toward the… 2% inflation objective”. Otherwise, today’s …
1st May 2024
Manufacturing struggling for momentum The fall in the ISM manufacturing index back below the theoretical 50.0 no-change level in April suggests that the nascent recovery in the manufacturing sector may already have gone into reverse. While the further …
This Rapid Response has been updated with additional analysis, as well as a chart and table of key data. Growth to strengthen over 2024 Saudi Arabia’s flash estimate of GDP showed that the economy exited recession in Q1 and we expect the recovery to …
Higher mortgage rates continue to hit prices The second consecutive decline in the Nationwide house price index in April confirms that the rise in mortgage rates since the start of the year will prevent further near-term price gains. But as we think Bank …
This page has been updated with additional analysis since first publication. Spare capacity continues to open up in the labour market The labour market loosened more forcefully than we had expected in Q1. With subdued activity weighing on labour demand, …
30th April 2024
Momentum in house prices continues The substantial shortage of existing homes for sale fueled a robust 0.4% m/m rise in house prices in February, consistent with our above-consensus call that house price growth will end 2024 at 5% y/y. The increase in the …
Strong Q1, but growth likely to slow in the second quarter Despite the weaker-than-expected rise in GDP in February, first-quarter growth still looks to be close to 2.5% annualised. The weaker flash estimate for March points to less momentum going into …
Wage growth now looks a little sticky too The persistence of wage growth is another reason for the Fed to take its time on rate cuts. According to the first-quarter employment cost index, civilian wages increased at a 1.1% non-annualised pace and the …
May rate cut off the table The slightly faster-than-expected 0.2% q/q expansion in Mexico’s economy in Q1, alongside strong underlying price pressures and the delay to rate cuts in the US, mean that Banxico is all but certain to leave interest rates …
Strong GDP data will not stop June rate cut Today’s stronger-than-expected Q1 GDP data means the euro-zone has come out of recession but, with core and services inflation both declining in April, this will not prevent the ECB from starting its easing …
Net lending has a weak start to the year Following a dip in February, net lending to commercial property ticked up in March, but the rise of £259m was modest and entirely due to lending to standing property. Looking through the monthly volatility net …
Leadership promises continued policy support, new round of reforms The readout of the Politburo’s quarterly meeting on economic affairs has just been published by state media. The tone remained dovish, suggesting that policy will remain supportive in the …
Taiwan’s economy accelerated in y/y terms last quarter and we expect growth to remain strong over the coming year, helped by robust demand for AI-related products. Economic growth slowed in q/q terms but the strength of the economy over the past year …
A strong start to 2024 The national-level data released so far this morning suggest that euro-zone GDP, which will be published in just under an hour, will show an expansion of 0.3% q/q in Q1. All of the euro-zone’s largest economies grew in the first …
Recoveries continue The slightly better-than-expected Q1 GDP figures out of Hungary and Czechia suggest that economic recoveries had a little more momentum at the start of this year than we previously thought and that the risks to our growth forecasts for …
This page has been updated with additional analysis since first publication. Further evidence the drag on activity from high interest rates is fading March’s money and credit figures provide further evidence that the drag from high interest rates is …
This page has been updated with additional analysis since first publication. Softness in retail sales probably won’t prevent a rate hike The weakness in retail sales last month suggests that sales volumes fell across Q1 as a whole. That said, with …
This page has been updated with additional analysis since first publication. GDP set to rebound this quarter Coupled with solid output forecasts for April and May, the strong rebound in industrial production in March suggests that the likely slump in GDP …
This page has been updated with additional analysis since first publication. Survey points to stagnant economy and still-high price pressures The weaker-than-expected EC business and consumer survey for April is a reminder that the euro-zone economy is …
29th April 2024
This page has been updated with additional analysis since first publication. Fairly strong start to Q2 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in April, but our regional …
Softer inflation figure (just about) keeps a 50bp cut in May in play The slightly lower-than-expected Brazilian inflation figure for the first half of this month, of 3.8% y/y, and signs of softening underlying core price pressures might just be enough to …
26th April 2024
Disinflationary trend to resume soon; real spending still strong The slightly bigger-than-expected 3.7% annualised first-quarter gain in the core PCE deflator was principally because January’s gain was revised up to 0.50% from 0.45%. Nevertheless, the …
Hawkish CBR worried about upside inflation risks The hawkish communications accompanying the decision by the Russian central bank (CBR) to leave its key policy rate on hold today suggests that monetary easing will probably arrive later than we previously …
Bank of Japan will hike rates further in July The Bank of Japan signalled growing confidence in meeting its inflation target at today’s meeting and we’re sticking to our forecast that it will increase its policy rate further to 0.3% in July. As widely …
GDP growth slows, but underlying momentum remains strong First-quarter GDP growth came in weaker-than-expected at 1.6% annualised, the weakest quarterly gain in almost two years, but the strong 3.1% gain in final sales to private domestic purchasers …
25th April 2024
Hawkish message as rates remain on hold Turkey’s central bank left its policy rate on hold at 50.00% at today’s meeting, but the statement continued to strike a hawkish tone amid persistent inflation risks in the economy. While we think the tightening …
GDP growth in Korea rose sharply in Q1 but we don't expect this strength to last. Weak global growth is set to weigh on exports in the near term while tight monetary and fiscal policy will curtail domestic demand. Today’s figures show that the economy …
Retail sales growth disappointing The surprise fall in retail sales in February and the apparent stagnation in March means they had a disappointing first quarter. That reinforces our view that the Bank of Canada is likely to cut interest rates at the next …
24th April 2024
First-quarter business equipment declined The rise in durable goods orders in March was mainly due to the volatile transport component, with core and underlying capital goods orders only inching up. While underlying capital goods shipments rose last …
Rise in inflation puts the final nail in the coffin for a May rate cut The rise in Mexico’s headline inflation rate to 4.6% y/y in the first half of April, coming alongside the delay to rate cuts in the US (and fall in the peso), mean that Banxico is all …
This page has been updated with additional analysis since first publication. Signs of life for the German economy The rise in the German Ifo in April, together with the jump in the Composite PMI in the same month, suggests that the German economy may be …
