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The Fed’s new FCI does a better job of illustrating the tightness of US financial conditions than various other measures. But our own FCI has had a better record at capturing turning points in real activity in recent decades, is timelier, more versatile, …
6th July 2023
The latest PMIs suggest that not only did global manufacturing activity contract at the end of Q2, but the outlook for the manufacturing sector also seems to have deteriorated further. At least the improved supply-demand imbalance seems to be having an …
3rd July 2023
World trade fell in April and timelier data point to a further fall in May, partly due to a sharp drop in Chinese exports which reversed all of their rebound from earlier this year. And weak demand looks set to weigh on trade in the months ahead. …
29th June 2023
Note: We discussed the economic and policy risks around the ‘greedflation’ debate in a 20-minute online briefing on Thursday, 6 th July. Watch the recording here . The surge in inflation in advanced economies has not been driven by a widening of firms’ …
Central bankers have struck a hawkish tone at the ECB’s forum in Sintra this week, suggesting that rates haven’t yet peaked and cuts are not on the cards for some time. But there were some interesting differences in tone. Most notably, the ECB and BoE …
Global Overview – Most advanced economies have so far dodged the recessions that we, and many others, had expected to start in the first half of this year. The relative resilience of activity can be pinned on several supply- and demand-side props to …
27th June 2023
June’s flash PMIs suggest that not only has activity in advanced economies slowed at the end of Q2, but the outlook has also deteriorated further. This is particularly true in the manufacturing sector, where orders have fallen sharply. Meanwhile, …
23rd June 2023
A series of high-level diplomatic meetings this week have raised hopes that strains in US-China relations will start to ease. But the politics of fragmentation was never likely to proceed in a linear direction. And even if there is a thaw in political …
20th June 2023
The recent resilience of labour markets partly reflects a lag before higher interest rates feed through fully to economic activity. But employment has also been supported by the industry-led nature of the economic slowdown and by the fact that firms are …
15th June 2023
While headline CPI prints have been encouraging in recent months, policymakers will be nervous about the stickiness of core inflation. Average headline inflation in major advanced economies had dropped from 8.5% late last year to below 6% in April, and …
14th June 2023
According to our proprietary interest rate-sensitive indicators, activity in advanced economies has so far proven remarkably resilient to higher interest rates. A lot of this has been due to a rebound in auto sales related to pandemic distortions, whereas …
7th June 2023
Although activity in the manufacturing sector looks to have improved somewhat in May, that was mainly due to stronger growth in some large emerging markets. The outlook for industry remains bleak, with new export orders in particular falling sharply. The …
1st June 2023
Although world trade rebounded in March amid the reopening recovery in China, we don’t think this marks the beginning of a broader turnaround in global trade. In fact, timelier data point to renewed falls in April, and the latest business surveys suggest …
31st May 2023
May’s PMIs suggest that activity in advanced economies has continued to hold up well amid a strong rebound in the service sector. Meanwhile, weak demand for manufactured goods is weighing heavily on the outlook for industry. And although this means that …
23rd May 2023
The rebound in global auto production and sales over the past year has been partly responsible for the better-than-expected activity data over the past several months. And with auto sales in most advanced economies still well below pre-virus levels, there …
Any impact of QT has so far been modest and swamped by the effects of higher policy rates. Asset disposals might put some upward pressure on yields in the euro-zone in the near term, but the process of balance sheet normalisation will be slow and in some …
18th May 2023
Inflation is now on a downward trend and interest rates are at, or very close to, a peak. But central banks will only cut interest rates once there are clearer signs that underlying price pressures are under control. That could be as early as later this …
17th May 2023
The downturn in the housing market appears to have paused in many countries in recent weeks. However, we doubt that this marks the bottom of the market. With higher interest rates yet to take their full effect, and affordability generally still stretched, …
15th May 2023
Q1 GDP releases have confirmed that the major economies avoided recession at the start of the year and some of the more recent survey data suggest that this resilience continued into Q2. The composite PMI output index for developed economies rose from …
12th May 2023
While world trade fell further in February, the available data point to a rise in March, especially due to a strong rebound in China. But that rebound looks to have already reversed in April. And with high interest rates set to weigh on demand for goods …
9th May 2023
While the hiking cycles of all major central banks will soon be in the rear-view mirror, most of their impact on activity lies on the road ahead. Based on the latest national accounts data, we estimate that there is still plenty of scope for higher …
5th May 2023
While food CPI inflation remains very high in all major advanced economies – and especially so in Europe – we expect it to fall sharply in the coming year. Energy and labour costs have been key in keeping consumer food inflation so high, but these props …
4th May 2023
Available data for Q1 suggest that the global economy had a better start to the year than previously feared. That seems to have reflected the post zero-COVID rebound in China and its effects, a boost to spending from a mild winter in the US and ongoing …
3rd May 2023
This dashboard tracks the trajectory of inflation in major economies and provides a comprehensive set of CE forecasts. If you can't see the full interactive experience, including all of the charts and tables, and would like to enquire about upgrading, …
Table of Key Forecasts Overview – Headline inflation looks set to fall sharply as energy effects subside and the let-up in product shortages reduces goods inflation further. We also expect services inflation to decrease as demand weakens, allowing …
26th April 2023
Once again the PMIs suggest that real activity in advanced economies continues to shrug off the effects of higher interest rates. According to the flash PMIs, GDP and employment growth both got off to a strong start in Q2, even amid the banking sector …
21st April 2023
We held an online Drop-In yesterday to present our new financial conditions indices and discuss how conditions have evolved in the wake of SVB’s collapse. (See a recording here ). This Update addresses some of the questions we received, a couple of which …
Note: We discussed our revamped FCIs and took your questions on global financial conditions in a 20-minute online briefing on Thursday, 20 th April . Watch the recording here . We have revamped our financial conditions indices (FCIs) for advanced …
18th April 2023
Recent data appear to confirm that economic activity held up better than feared at the start of 2023. Retail sales rose in most major economies over the first two months of the year, world industrial production was broadly stable and China’s zero-COVID …
13th April 2023
As of January, world trade had already fallen by more than 5% from its peak in September. And despite a slight boost from reopening in China, several leading indicators still point to further falls in trade in the months ahead. One upside is that this …
11th April 2023
Central banks focused on inflation for now, but will monitor credit in the months ahead Conditions were already tightening before recent turmoil… …and by Q3, lending surveys and spending data will show clear signs of strain Central banks are now in a …
5th April 2023
Manufacturing PMIs: weaker activity and inflation The latest manufacturing PMIs suggest that global industrial activity was broadly flat in Q1, and confirm that the post-COVID rebound in China was concentrated in the service sector. The upside is that …
3rd April 2023
In the wake of the surprise move by OPEC+ to cut oil production, we held a special online briefing about the decision’s economic and market implications – as well as what this signals about global politics. Economists from across our Macro and Commodities …
Table of Key Forecasts Global Overview – The strongest headwind for the global economy has shifted from an energy crisis and the related squeeze on real incomes to a potential banking crisis and associated drag on credit. Since banks are relatively …
30th March 2023
Inflation is now being driven by wage growth rather than just the temporary influence of energy effects and goods shortages, raising fears that central banks will be forced to engineer sharp increases in unemployment to tame it. But we argue that …
29th March 2023
The flash PMIs for March suggest that not only did advanced economies avoid recession in Q1, but the outlook for activity has improved as well. However, we still think the hit from higher interest rates will intensify . And with services price pressures …
24th March 2023
While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
20th March 2023
Even before SVB’s collapse prompted a reassessment of the health of the global banking system, bank credit conditions were already tightening in response to higher interest rates. (See Chart 1.) We have written many notes to help navigate the …
17th March 2023
The ghosts of 2008 have made a sudden reappearance. Many metrics of core market functioning have worsened worryingly fast, but the overall situation is still long way short of the type of strains seen during the worst parts of the Global Financial …
16th March 2023
This dashboard tracks medium-term inflation expectations in the US, euro-zone and UK. In a world where the Phillips curve is flat, inflation expectations become the key driver of actual inflation over the medium term. But getting a true handle on …
We have already outlined some different scenarios of how things might evolve from here and it is still possible that the situation calms down quickly. But in this Update , we think through how the more adverse of our scenarios might evolve. There are …
Given the large amount of uncertainty about how the fallout from SVB’s collapse will evolve, we have grouped possible outcomes into three broadbrush scenarios. Only in the worst scenario of financial problems spreading overseas will the global effects …
14th March 2023
This Global Economics Update answers 5 key questions about the fallout from SVB’s collapse. While the situation remains in flux, there are good reasons to think that it does not call into question the solvency of the US or wider global financial system …
13th March 2023
We think that most – perhaps two thirds – of the drag on activity from tighter monetary policy in advanced economies is still to come through in 2023. So, despite some surprisingly resilient data recently, we are sticking to our forecasts for advanced …
7th March 2023
With much of the global economy holding up surprisingly well and inflation not coming down as quickly as expected, investors are weighing up the risk that policy rates remain elevated for much longer than previously thought. This Update discusses what …
3rd March 2023
The broad-based improvement in the output components of February’s manufacturing PMIs suggests that the worst of the global industrial downturn is already in the rear-view mirror. That said, it is too early to call a durable turnaround in industrial …
1st March 2023
One development that would help to ease wage pressures would be an increase in the labour supply; there is still a significant group of countries where the pandemic is having lingering effects. The good news is that the size of the workforce is now …
28th February 2023
While a slew of recent data from advanced economies have surprised to the upside, world trade data are still very much consistent with economic weakness in the near term. Not only did Q4 see one of the biggest drops in world goods trade since the 1980s, …
The flash PMIs for February provided more evidence that advanced economies have remained more resilient than expected so far this year. Both the manufacturing and services sectors contributed to this strength, with improved sentiment and easing supply …
21st February 2023
A raft of strong data out of the US have poured cold water on the idea that its economy has tumbled into recession at the start of 2023. And this comes after GDP data revealed that the euro-zone and UK economies (narrowly) avoided outright contraction …
16th February 2023