Surge in employment eases recession fears The surge in employment and rise in hours worked in January suggest that GDP growth will be stronger than we anticipated this quarter. However, the decline in wage growth means that unexpected strength is unlikely …
10th February 2023
Credit growth is bottoming out After slowing last year, bank loan growth jumped to a 10-month high in January. After accounting for seasonal effects, broad credit growth looks to have ticked up too. We expect the recovery to continue in the near-term as …
Recession may come this year as resilience recedes The economy escaped a recession in 2022 by the skin of its teeth (£77m to be precise). But with the full drags from high inflation and high interest rates yet to be felt, we think there will be a …
Rate hike next month a near certainty, more could follow The strength of consumer price inflation in January makes it all but certain that the Norges Bank will raise its policy rate at its next meeting in March, most likely by 25bp. And with house …
Economy likely to have rebounded strongly in Q4 The rebound in industrial production in Turkey in December and the strength of retail sales in recent months point to an expansion of GDP in the order of 0.5-1.0% q/q in Q4. Activity will be disrupted this …
GDP contracted sharply in Q4 2022 and we think the economy will continue to struggle in the coming quarters as high interest rates, weak external demand and tepid consumption activity drag on prospects. Economic output fell by 2.6% q/q in Q4 after growing …
Inflation ticking up on reopening effects Factory-gate prices continued to decline last month thanks to falling commodity prices and waning supply chain disruption. But at the same time, a jump in demand for travel and other services following the removal …
Rise in Mexican inflation paves the way for 25bp rate hike later today Mexico’s headline inflation rate edged up to 7.9% y/y in January, setting the scene for Banxico to raise interest rates by 25bp, to 10.75%, later today. We think that this will mark …
9th February 2023
Survey delivers reality check to new year optimism There was some hope that, in keeping with the pause in house price falls recorded by Halifax in January, the RICS survey would show a recovery in demand on the back of the modest decline in mortgage …
Refinery activity to remain subdued this quarter Commercial crude stocks rose again this week, despite a rise in inputs to refineries. That said, refinery activity is unlikely to pick up markedly in the coming weeks given ongoing maintenance and only …
8th February 2023
Q4 stronger than expected The latest industrial production and retail sales data for Russia for December were relatively weak, but Q4 was a bit stronger than we had expected and the economy is likely to have expanded slightly in the final quarter. Over …
Q1 2023 to still see decent consumption growth Current readings dipped slightly in January's Economy Watchers Survey but the jump in outlook readings, suggests spending growth this quarter will still be decent. “Current conditions” dipped slightly from …
Deficit rebounds as easing supply shortages boost imports The December trade data show a rebound in both real exports and imports but, with those gains following steep declines in previous months and the surveys pointing to renewed weakness to come, the …
7th February 2023
Rebound in auto exports offsets decline in commodity export prices A surge in motor vehicle exports drove export volumes higher at the end of 2022, even as lower commodity prices weighed on export values. While there is scope for motor vehicle exports …
Slump in industrial production points to recession After proving resilient for most of 2022, German industrial production slumped in December, adding to the reasons to expect the economy to fall into recession. December’s 3.1% m/m fall in industrial …
House price falls pause (for now) We suspect that the pause in house price falls in January reported by Halifax will prove temporary. Despite the slight decline in mortgage rates, affordability still looks far too stretched for house prices to have …
Boost from net trade should ensure decent rise in Q4 GDP Export volumes probably edged up last quarter while import volumes plunged so net trade should provide a boost to Q4 GDP growth. The decline in the trade surplus in December, from $13.5bn to …
Decades-high wage growth won’t be sustained The large jump in wage growth in December was mostly due to a surge in volatile bonus payments and it will slow over the coming months. The much quicker wage growth in December, rising from 1.9% y/y to 4.8%, …
Commercial and housing activity falls further, but expectations brighten The headline CIPS construction index showed a contraction in activity in January, with the housing index seeing a substantial decline. But the forward-looking indicators improved, …
6th February 2023
Consumer spending weakened at the end of last year December’s retail sales data show that the sector ended 2022 on a weak note. We think total household consumption will fall in the first half of this year, pulling the economy into recession. The chunky …
Economic growth in Indonesia slowed in the final quarter of last year and further weakness is likely as weak global demand, high inflation and elevated interest rates drag on activity. Today’s figures show that Indonesia grew by 5.0% y/y in Q4 2022, which …
Robust payrolls not preventing wage growth slowdown The robust 517,000 gain in non-farm payrolls in January means that, despite most leading indicators of recession flashing red, the economy is clearly not as close to recession as we had suspected. …
3rd February 2023
Industry leads Brazil’s slowdown The stagnation in Brazilian industrial production in December is consistent with a 0.5% q/q fall in output over Q4 as whole, indicating that the sector was a drag on the economy. And the early signs are that January was no …
Price pressures intense in the services sector Today’s final PMIs confirmed that economic activity in the euro-zone as a whole continued to roughly stagnate in January but picked up in Italy and Spain. They also show that inflationary pressures remain …
Slow refinery rebound continuing to boost commercial crude stocks Commercial crude stocks continued to climb last week as refinery activity remained in the doldrums and net imports rose. We believe that a recovery in refinery activity and higher demand …
1st February 2023
The latest manufacturing PMIs suggest that output has continued to weaken, although the pace of contraction is slowing in several economies. Product shortages have diminished further at the global scale, and weakening demand is also allowing price …
Another recession signal flashing red The further fall in the ISM manufacturing index to 47.4 in January, from 48.4, suggests that the factory sector has yet to benefit from the improvements in manufacturing prospects in Europe and China. In particular, …
Office-based employment prospects have taken a dive Despite the solid payrolls data for December, there was a clear softening in employment growth in several large metros. But those that have performed the best since the pandemic continue to outperform, …
Falling mortgage rates lift housing demand from trough The sharp rise in mortgage applications in January adds to the evidence that housing demand has bottomed out. As mortgage rates continue to trend lower and house prices fall a further 6%, we expect …
Headline inflation to fall sharply, but core rate will be sticky January’s drop in headline inflation should be taken with a pinch of salt because a “data processing problem” meant that the data for Germany had to be estimated and might therefore be …
Unemployment steady as the labour market remains tight The euro-zone unemployment rate was unchanged at 6.6% in December but is likely to increase over the coming months as the economy falls into recession. That said, the increase will probably be …
Signs of improvement The manufacturing PMIs for January rose in most countries and add to evidence from other surveys that, while economies in Central and Eastern Europe may struggle in the early part of this year, the outlook for economic activity is …
Return of tourists will help drive the city’s recovery Hong Kong’s GDP was unchanged in q/q terms last quarter. This was largely due to a further decline in exports but the worst may be over on that front given that global growth is probably close to a …
High mortgage rates maintain downward pressure on prices Given very stretched mortgage affordability, it was unsurprising to see house prices continue to decline at the beginning of 2023. The fall in house prices since their peak last August grew to 3.2% …
Indian manufacturing remains resilient India’s manufacturing PMI showed signs of moderation in January after defying gravity for several months previously. It should drop further over the coming months as the economy comes off the boil. The manufacturing …
Manufacturing still downbeat and outlook remains bleak Manufacturing PMIs edged up slightly in January but remained subdued overall. We continue to expect weak global demand and elevated interest rates to drag on manufacturing activity in the coming …
Industrial activity steady as services rebound The Caixin manufacturing PMI published today edged up slightly in January as disruption from the reopening wave eased but it remained at a subdued level. Taken together with the official survey published …
Prices down 2.5% from peak and further falls to come A fifth consecutive monthly decline in house prices in November left them down 2.5% from their peak in June on the Case-Shiller index. We think that prices will fall by a further 6% this year before …
31st January 2023
Monthly data point to healthy fourth-quarter growth The monthly data suggest GDP growth slowed to 1.6% annualised in the fourth quarter, which would be better than initially expected considering the surge in interest rates. Nonetheless, with some of the …
Economy now in a slowdown The 0.4% q/q rise in Mexican GDP in Q4 suggests that the economy held up better than its Latin American peers towards the end of last year. But even so, the economy in the midst of a slowdown, which we expect to worsen in the …
Global steel supply to remain subdued in early 2023 Global steel output slumped in December and fell sharply in 2022 as a whole. With demand likely to be weak, at least in the first half of 2023, we do not expect a marked rebound any time soon. The World …
Approvals fall to their lowest since 2009 A further slump in mortgage approvals in December, to the lowest level since the height of the pandemic, confirmed that the extremely high cost of mortgage borrowing has caused more buyers to withdraw from the …
Banks still willing to lend even as capital values fall Even as investors have pulled back from the market, net lending to property remained positive in December. That may reflect some distressed borrowing as investors looks to boost liquidity in the face …
Drag from higher interest rates intensified in December December’s money and credit figures revealed that higher interest rates further dampened economic activity at the end of last year. Moreover, the drag on activity will continue to intensify this …
Recession likely in first half of this year The small increase in euro-zone GDP in Q4 was better than we feared a few months ago but the economy excluding Ireland still flat-lined. As the data deteriorated towards the end of the quarter and tighter …
Further weakness in bank lending to come Much like the latest money and credit data, the Q4 Bank Lending Survey painted a much more downbeat picture of economic prospects than the latest business surveys. Banks are tightening their lending standards and …
Recession underway The 0.3% q/q contraction in Czech GDP in Q4 confirmed that the economy was in recession over the second half of last year. The outlook for the economy has brightened a bit in recent months as natural gas prices have fallen sharply and …
Reopening kick starts a rapid recovery The official PMIs add to evidence of a rapid rebound in economic activity this month as disruption from the reopening wave faded. More shoppers returned to the street boosting services activity while easing labour …
Further rise in services spending will prevent fall in Q4 consumption Retail sales volumes declined last quarter on the back of a weaker-than-expected end to 2022. A solid increase in services spending means overall consumption should still have risen at …
Recession may have already begun The unemployment rate stayed unchanged in December, but labour market conditions are beginning to betray signs of loosening. Similarly, the strong rebound in retail sales is likely to give way to slower growth as the …