German Industrial Production (January) January increase but activity still weak The rise in Germany industrial production in January reverses only a fraction of the previous falls and does not change our view that the sector will struggle this year. The …
8th March 2024
Imports set for stronger gain in first quarter The January trade data point to a potentially larger drag on first-quarter GDP growth than we had assumed, albeit mainly because imports look to have been stronger than previously believed. In nominal terms …
7th March 2024
Improvement in trade balance may not be a good thing Although the economy appears to have received a large boost from net trade at the start of 2024, the plunge in imports does not bode well for domestic demand and raises the risk that an inventory …
Lagarde likely to dash remaining hopes of April rate cut The ECB decision to leave rates unchanged and the key messages in the press release were in line with expectations. In the forthcoming press conference we suspect that Christine Lagarde will kill …
Inflation drops, Banxico on course for rate cut this month The drop back in Mexico’s headline inflation rate to 4.4% y/y in February, alongside the weakness of the latest activity data, leaves Banxico on course to cut interest rates at its next Board …
Rates on hold throughout 2024 Bank Negara Malaysia (BNM) left its overnight policy rate on hold (at 3.0%) today, and hinted in its statement that it was in little rush to change interest rates any time soon. This supports our view that the policy rate …
End of mortgage rate fall slows prices The smallest month-on-month increase in house prices since September suggested that the boost to house prices from the decline in mortgage rates since last summer is over. With mortgage rates now edging up, house …
Export volumes hit record high China’s export values rose y/y at the fastest rate since May, with export volumes reaching a record high. We doubt the sustainability of this strength, however, since exporters now have more limited scope to reduce prices to …
This page has been updated with additional analysis since first publication. Regular wage growth will receive a boost in Q2 While the jump in overall wage growth in January was entirely driven by volatile bonus payments, regular wage growth will receive a …
6th March 2024
Bank gives little away The Bank of Canada gave little away about the potential timing of interest rate cuts today, although its communications suggest that the Bank is gaining greater confidence that inflation is moving in the right direction. We …
NBP keeps rates on hold, limited window for rate cuts this year The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and the scope for monetary easing this year looks relatively limited. We still think there is a …
Powell content to wait for more data Fed Chair Jerome Powell looks set to stick to his previous script in his testimony to Congress today and, assuming we are right that the January strength in core inflation will prove to be a blip, his remarks do not …
Mortgage rates back above 7% stifle demand recovery February’s mortgage applications data show rising mortgage rates put an end to what had been the start of a fairly promising recovery, following the low for applications in October 2023. We think this is …
Boost to the economy now comes ahead of a bigger drag after the election The net fiscal giveaway of £13.9bn (0.5% of GDP) in 2024/25 in the Budget may at the margin help lift the economy out of its mild recession before an election later this year. But a …
This page has been updated with additional analysis since first publication. Euro-zone sales rose but still weak January’s retail sales data are consistent with our view that the near-term outlook for consumption is poor. While retail sales edged up by …
Construction PMIs edge closer to expansionary territory The headline CIPS construction PMI rose to 49.7 in February, just under the no change level. The rise was driven by the housing component, with commercial activity edging back a touch. As interest …
We hosted a Drop-in following the announcement that can be viewed on demand here . Central Bank of Egypt shifts back towards orthodoxy The announcement minutes ago from the Central Bank of Egypt that it has devalued the pound and hiked interest rates by a …
This page has been updated with additional analysis since first publication. Subdued activity will pave the way for rate cuts Although GDP growth last quarter was in line with what the RBA had expected, the Bank will take comfort from the fact that …
5th March 2024
Survey shows little signs of growth or inflation acceleration The fall in the ISM services index to 52.6 in February, from 53.4, left our weighted composite index consistent with a stagnation in GDP in the first quarter. That said, with the survey …
Very modest growth in Q4, but 2024 should be better South Africa’s economy posted a measly 0.1% q/q increase in GDP in the final quarter of last year and the latest evidence points to a soft start to 2024 too. But we still think that, with the drags from …
Gulf non-oil sectors strengthen in Q1; Egypt’s economy knocked by Israel-Hamas spillovers February’s batch of PMIs from the Middle East and North Africa continued to show that the Gulf’s private non-oil sectors have started 2024 on a strong footing. But …
This page has been updated with additional analysis since first publication. Above 2% inflation will allow BoJ to end negative rates in April Inflation jumped to well above 2% in Tokyo in February and will remain around that level for a few months. …
4th March 2024
Swiss CPI (February) Swiss disinflation ending but rate cuts now likely The period of disinflation in Switzerland is close to an end, but with inflation likely to remain close to 1% for the foreseeable future we think policymakers will start lowering …
This page has been updated with additional analysis since first publication. Inflation continues to rise, tightening cycle now at risk of restarting The stronger-than-expected rise in Turkish inflation to 67.1% y/y in February adds to our concerns given …
No evidence to support inflation rebound The unexpected fall in the ISM manufacturing index in February still leaves it on a gradual upward trend, but the more important news for the Fed is that there is still no sign that a material rebound in goods …
1st March 2024
Consumer resilience comes to an end The stagnation in Brazil’s GDP in Q4 and the decline in household consumption confirmed that the economy lost momentum sharply and, while we expect a pick-up in growth in the coming quarters, we’re now more confident in …
This page has been updated with additional analysis since first publication. ECB rate cut in April is not going to happen February’s euro-zone inflation data look like the final nail in the coffin for an April interest rate cut . The decline in headline …
PMI bounces, but still looks like a soft start to 2024 Although South Africa’s manufacturing PMI jumped in February, the sector appears to have made a soft start to the year. We still expect growth to pick up over the rest of this year as loadshedding …
Turkey and Russia continue to show signs of resilience The manufacturing PMIs out of Central and Eastern Europe (CEE) generally ticked up last month, but still suggest that industrial sectors remained weak. In contrast, the increases in the PMIs in Turkey …
Further substantial rise puts doubt on downbeat consensus forecasts Another sizeable monthly increase in the Nationwide house price index in February confirmed that lower mortgage rates are feeding through to higher prices. (See Chart 1.) But recent …
This report was first published on Friday 1 st March covering the official PMIs and Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on Tuesday 5 th March. An encouraging improvement in services activity The PMIs are …
Economy looking a bit better than the Bank expected The 1.0% annualised rise in fourth-quarter GDP was stronger than the stagnation that the Bank of Canada expected and, together with the downward revision to the third-quarter contraction, is reason to …
29th February 2024
Resurgence in core prices a speed bump rather than pothole The surge in core PCE prices in January was largely as expected after the hot CPI and PPI reports. Although that surge has ruled out an early Fed rate cut, particularly in an environment where …
This page has been updated with additional analysis since first publication. Exceptional economic performance suggests no imminent rate cuts The GDP data for Q4 confirm that India’s economy ended last year with a bang. Looking ahead, we expect economic …
Net lending increases in January but new development still subdued Net lending to commercial property increased for the eleventh consecutive month in January. Over H1 2024, we expect investment and lending to new development to slowly recover, as capital …
German state figures point to fall in euro-zone inflation The fall in CPI inflation in most German states in February all but confirms that both German and euro-zone HICP inflation will have declined broadly in line with expectations this month. This …
Swiss economic growth likely to accelerate further The second successive 0.3% q/q increase in Swiss GDP in Q4 was better than the consensus and our own forecasts of 0.1% and we now think economic growth is likely to accelerate further in the coming …
This page has been updated with additional analysis since first publication. Drag on consumption from higher interest rates fading January’s money and credit figures suggest the drag on consumer spending and the housing market from higher interest rates …
This page has been updated with additional analysis since first publication. Economy re-accelerates in Q4 The pick-up in Turkish GDP growth to 1.0% q/q in Q4 was driven by a rebound in private consumption and suggests that aggressive monetary tightening …
This page has been updated with additional analysis since first publication. RBA will take comfort from spending restraint Notwithstanding the rebound in January, we suspect retail sales will make only modest gains across Q1 as a whole. The softness in …
This page has been updated with additional analysis since first publication. Huge fall in industrial production suggests continued weakness in activity The plunge in industrial production January suggests that GDP will fall yet again this quarter, which …
28th February 2024
Economy maintains strong momentum The latest activity data for January suggest that Russia’s economy maintained solid growth at the start of this year, which supports our forecast for above-potential GDP growth of 3.0% over the course of 2024. Retail …
Sentiment edges lower, but still points to recovery The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally fell in February, but still point to regional GDP growth strengthening in Q1. Economic sentiment …
EC Survey points to stagnant economy and still-high price pressures The EC business and consumer survey for February reinforces the message that the economy is close to recession and that, although price pressures in the services sector eased slightly, …
RBNZ holds rates steady while retaining hawkish bias As had been widely expected, the Reserve Bank of New Zealand left its official cash rate unchanged at 5.50% today. 28 out of 29 analysts polled by Reuters, including ourselves, correctly predicted the …
Inflation will continue to undershoot RBA's expectations The weaker-than-expected inflation print for January all but ensures that the RBA won’t hike rates any further, even if it does retain its hawkish bias at its next meeting in March. And with price …
House price data playing catch up Another small rise in house prices in December suggests the extremely backward-looking data are still capturing a slowdown in price growth following the October peak in mortgage rates. That’s mainly due to the fact …
27th February 2024
Drop in durable goods orders will not derail business investment The sharp drop in durable goods orders in January was mostly driven by volatile transport orders, with the fall in core orders much more moderate. The strengthening in underlying capital …
New MPC delivers large rate hike After a seven-month hiatus, the Central Bank of Nigeria’s (new-look) Monetary Policy Committee stepped up to the plate and hiked interest rates by 400bp, to 22.75%, as it showed greater appetite to tackle the inflation …
Step up in pace of easing will soon be reversed The decision by the Hungarian central bank (MNB) to step up the pace of its easing cycle today, with a 100bp interest rate cut, will probably be followed by further large interest rate cuts over the next few …
