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On the face of it, core disinflation seems to have stalled or even reversed in the US but not in Europe, suggesting that Fed cuts will come much later than those by the ECB and BoE. However, there are definitional issues at play that exaggerate the recent …
18th April 2024
As things stand, higher oil prices will boost inflation in advanced economies by only a few tenths of a percentage point in the months ahead and we still expect this boost to fade as the year goes on. There are upside risks relating to tensions in the …
16th April 2024
There are clearly many ways in which tensions between Iran and Israel could escalate and push up oil prices following the Iranian drone strike at the weekend. But the risk that a conflict involving Iran disrupts oil production in the Gulf states is much …
15th April 2024
After a historically weak 2023, there are early signs of a modest turnaround in world goods trade which we expect to endure. Meanwhile, global container shipping costs have halved – and those for commodity freight more than halved – from recent peaks, …
9th April 2024
March’s manufacturing PMIs provided further evidence that global industry is past the worst. And although higher industrial output has caused price pressures to increase in some advanced economies, it won’t prevent central banks from cutting interest …
2nd April 2024
Click below to visit our Shipping Disruption Dashboard, which we have updated and extended to include analysis of the Baltimore port closure. Explore the dashboard … Shipping Disruption Dashboard: New Charts on …
28th March 2024
We held an online Drop-In session last week to discuss the outlook for monetary policy following the US Fed and Bank of England policy meetings and comments by the ECB’s Christine Lagarde. (See a recording here .) This Update answers several of the …
25th March 2024
The flash PMIs for March suggest that the euro-zone economy is still flatlining, while the UK and Japan seem to be pulling out of recession heading into Q2. The survey indicators of price pressures moved in different directions, but in general remain a …
21st March 2024
The latest data suggest that global industry may be coming back to life. Much of the improvement so far has related to China, where policy will continue to support domestic production. But falling energy prices, loosening financial conditions and …
19th March 2024
There are so many uncertainties that it remains unwise to get carried away by the potential economic boost from the latest wave of weight loss drugs. Nonetheless, if use of the drugs continues to grow rapidly, it could ultimately give a significant boost …
14th March 2024
The latest data from major advanced economies typically show that unemployment rates are rising and pay pressures are easing. While wage growth is still too high for comfort in most cases, we suspect that further signs of a slowdown will support the case …
12th March 2024
February’s manufacturing PMIs suggest that global industrial activity improved at the start of this year, but that activity in emerging markets continued to outperform that in advanced economies. Meanwhile, Red Sea disruptions don’t seem to be having a …
1st March 2024
Although world goods trade rose in December, it wasn’t enough to change the fact that 2023 was one of the weakest years for trade in over 70 years, as we forecast a year ago. As for 2024, we expect a bit of a cyclical recovery as the year progresses, but …
Larger government stimulus during the pandemic and a higher propensity to run down “excess savings” have contributed to particularly strong growth in the US. On the other hand, a significant terms of trade shock from the war in Ukraine and feeble …
27th February 2024
Deflation in China has added to disinflationary forces in the advanced economies as its export prices have fallen sharply. The direct impact has not been huge, accounting for only a small fraction of the 4ppt drop in DM headline CPI inflation last year, …
26th February 2024
Februarys’ flash PMI surveys suggest that economic activity improved in Europe at the start of this year. But services prices pressures remained elevated, especially in the UK and euro-zone, meaning that the ECB and Bank of England won’t be in a rush to …
22nd February 2024
The S&P Global PMI surveys have not been fully reliable guides to activity in major advanced economies over the past few years. But their relationship with GDP outside the US is still fairly strong and the detail in the surveys offers useful information …
21st February 2024
We have argued that most of the inflation battle is already won and fears that “ the last mile will be the hardest ” are overdone. But during our online Drop-In session last week, clients asked whether inflation in the major advanced economies might …
7th February 2024
The big picture from January’s manufacturing PMIs was the growing outperformance of industry in major EMs compared to their advanced economy peers. The surveys also highlighted that Red Sea disruptions are causing delivery times to lengthen. For now, …
1st February 2024
World goods trade looks to have had one of its weakest years in over 40 years in 2023. While shipping diversions may weigh on trade in the very near term, we think that they are unlikely to dent trade activity over a longer period. The bigger headwind is …
January’s flash PMI surveys suggest that GDP growth in advanced economies ticked up from a very weak pace at the start of 2024. And with price pressures still strong, central banks will probably continue to push back against expectations for rate cuts in …
24th January 2024
Central banks will probably continue to push back on expectations of rate cuts at their scheduled policy announcements in the coming weeks. But with inflation and wage pressures clearly moderating, we still think the Fed, ECB and Bank of England will cut …
23rd January 2024
The redirecting of trade ships away from the Red Sea and the associated rise in shipping costs are unlikely to lead to a resurgence in global inflation. However, if the warfare underpinning the disruption to shipping escalates into a wider regional …
4th January 2024
Although the manufacturing PMIs have overstated the weakness of industry for a while, the big picture from December’s surveys was that global industrial activity was barely growing at the end of 2023. The forward-looking indicators point to further …
2nd January 2024
The rerouting of trade ships away from the Red Sea has come at a time of disruption to shipping elsewhere in the world, but it is unlikely to alter the broad pattern of falling core inflation in 2024. We expect the recent rise in oil prices to prove …
21st December 2023
Most major DMs need to shrink their primary budget deficits significantly and, for various reasons, most are likely to find it hard to do so. This will exacerbate growing worries about fiscal sustainability. Fiscal deficits increased significantly in …
20th December 2023
Some of the negotiations by trade unions and large firms in advanced economies over recent months have resulted in large pay rises of up to 10%. However, they have typically also locked in much smaller gains for next year and hence shouldn’t cause serious …
18th December 2023
We recently held an online Drop-In session to discuss the December policy meetings and the outlook for monetary policy in the year ahead. (See a recording here .) This Update answers several of the questions that we received. Would the Fed ease policy …
Although the flash PMIs ticked up in most cases in December, they suggest that advanced economies will start 2024 on a weak footing. Meanwhile, outside of the US, the subdued outlook for demand seems to be weighing on employment growth, which should take …
15th December 2023
We held two online Drop-In sessions today to discuss the outlook for 2024 and the risks to our forecasts. (See a recording here .) This Update summarises the answers to several of the questions that we received. Are there recessions coming in advanced …
5th December 2023
The manufacturing PMI surveys have overstated the weakness in industrial production over the past couple years. But, even taking this into account, November’s PMIs suggest that while global industry might be past the worst, it looks set to end 2023 and …
1st December 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
While global goods trade rose in September, timelier indicators suggest that it has softened so far in Q4. And with props to Chinese exports likely to prove temporary, and advanced economies set to slow, we think that the general weakness of world trade …
29th November 2023
The S&P Global PMIs have provided misleading signals about the strength of activity in the US and Europe this year. But, for what it’s worth, the flash surveys for November suggest that DMs are ending 2023 on a weak note, with activity stagnating or …
24th November 2023
We expect growth to slow and inflation to drop to central bank targets in major DMs in 2024. But the latest business expectations surveys on the face of it suggest that the risks to our forecasts are tilted towards activity and inflation being more …
15th November 2023
Bank lending data from the major advanced economies confirmed that lending was very subdued in September and the latest bank lending surveys show that banks have since tightened their lending criteria further. With demand for loans also falling, the drag …
9th November 2023
We held a Drop-In last week to explain our thoughts on the latest policy communications from the Fed, ECB, and Bank of England following their decisions to leave rates on hold. (See the recording here .) This Update answers several of the questions that …
6th November 2023
October’s manufacturing PMIs suggest that global industrial activity continued to contract at the beginning of Q4 and forward-looking indicators point to further weakness ahead. The output component of the global manufacturing PMI fell from 49.7 in …
2nd November 2023
Although consumer spending has remained remarkably resilient in the US so far this year, it has weakened in other advanced economies. And as the lagged effects of high interest rates filter through to households in an environment of low consumer …
Global goods trade rose slightly in August and timelier data point to further gains in September. But we expect global trade to fall again in due course as economic downturns in several advanced economies weigh on their demand for traded goods. According …
27th October 2023
The October flash PMI surveys suggest that economic activity got off to a weak start in Q4, especially in Europe. And with weak activity taking some of the steam out of labour markets and inflation, we are growing more confident in our view that the Fed, …
24th October 2023
Perceptions matter at least as much as actual policies in determining fiscal stability. Accordingly, the surge in bond yields over the past month poses the greatest risk to those countries where the government’s commitment to fiscal rectitude over the …
16th October 2023
The ‘higher for longer’ narrative on interest rates that is baked into market pricing is at odds with evidence of widespread falls in inflation. Higher oil prices mean that fuel inflation will be a bit higher than seemed likely a few months ago. But the …
5th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
September’s manufacturing PMIs suggest that global industrial activity stagnated at the end of Q3, and forward-looking indicators point to further weakness ahead. The recent rise in oil prices seemed to push up the prices of manufactured goods. But …
2nd October 2023
Global goods trade fell at its fastest pace since the pandemic in July and the timelier trade and survey data point to further declines in August and September. What’s more, given that we still expect several advanced economies to fall into mild …
28th September 2023
The September Flash PMIs add to evidence that economic activity in the US and Europe is weakening. This supports our view that the Fed, ECB, and Bank of England have finished hiking interest rates. Our estimate of the DM average composite PMI edged down …
22nd September 2023
We held a Drop-In yesterday to discuss the latest policy meetings of the Fed, ECB, and Bank of England and what they might mean for the future path of policy and financial markets. (See the recording here .) This Update answers several of the questions …
Despite all the talk of “higher for longer”, we believe that the global monetary policy tightening cycle is drawing to a close. In Q4, any final rate hikes in advanced economies will coincide with a number of cuts in emerging markets. And as we head into …
21st September 2023
On Tuesday 19th September, our Energy and Global Economics teams discussed the oil market outlook and its implications for inflation and monetary policy in an online briefing for clients. Watch the recording here . We are not convinced that the increase …
19th September 2023
