Labour market defying economic weakness The labour market has been remarkably strong so far this year and we think it will continue to hold up much better than the GDP data might suggest in the coming quarters. The second estimate of Q1 GDP confirmed that …
16th May 2023
Downturns ease, but growth to remain weak Q1 GDP data for Central and Eastern Europe were fairly weak, but Poland’s economy beat expectations and the worst of the regional downturn appears to have passed. Even so, headwinds remain strong and a sustained …
Cooling labour market eases some pressure on BoE to raise rates further The labour market loosened by a bit more than the Bank of England expected in March. That may alleviate some pressure on the Bank to raise rates above 4.50% at the next policy meeting …
Lending against commercial turned increasingly negative in April Net commercial real estate (CRE) lending slowed sharply once again in April. Lending against all commercial sectors turned negative for the first time in nearly six years, and with little in …
15th May 2023
Drop in wholesale inflation reinforces our view of no more rate hikes The drop in Indian wholesale price inflation in April, to a 33-month low, further reinforces our view that the central bank’s tightening cycle has come to an end. Headline wholesale …
GDP figures released earlier today show the economy bounced back strongly in the first quarter of the year. Provided political stability is maintained, the economy is well placed to grow strongly in 2023. GDP rose by 1.9% q/q in Q1 following the 1.1% fall …
Inflation hits a new multi-year low Russian inflation continued to defy expectations in April as it slumped to a joint three-year low of 2.3% y/y, which will comfort the central bank . But it is a puzzle as to why inflation pressures remain so soft. We …
12th May 2023
Sharp drop in headline inflation suggests no more rate hikes The sharp drop in headline consumer price inflation in April, to an 18-month low, supports our view that the central bank’s tightening cycle has come to an end. Headline CPI inflation fell from …
Copom to stay hawkish despite inflation decline The sharp fall in Brazilian inflation, to 4.2% y/y last month, was encouragingly broad based among the sub-categories of the CPI basket. But we think the central bank will want to see more evidence that core …
Still no recession, but economic growth soggy The news that the economy contracted by 0.3% m/m in March and grew by just 0.1% q/q in Q1 as a whole (consensus +0.1% q/q, Bank of England 0.0% q/q, CE +0.1% q/q) suggests that lower real household incomes …
Activity bounces back after earthquake disruption Industrial production and retail sales bounced back strongly in March, supporting our view that the impact of the earthquakes was short-lived. GDP growth is likely to have remained positive in Q1. But the …
The economy expanded in Q1 but failed to completely offset the decline from the previous quarter. Growth is likely to remain weak over the coming quarters as elevated interest rates and weak external demand drag on activity. According to figures published …
Demand continues to slump In contrast to signs of a stabilisation in house prices and sales volumes in other indicators, the RICS survey remained downbeat in April. In particular, the renewed fall in the new buyer enquiries balance left it little higher …
11th May 2023
Brighter outlook in Q2 The further rise in both the current and outlook readings point to continued upward momentum in services spending this quarter. Meanwhile, manufacturing conditions fell slightly but remained robust, boding well for industrial …
Growth slowed in Q1 and we expect the economy to weaken further over the coming quarters against a backdrop of weak global demand and high interest rates. According to the advanced estimate published today, GDP rose by 1.1% q/q last quarter, down from …
Oil demand holding up, but prices likely to remain subdued Today’s stocks report showed a rise in commercial crude inventories last week, confounding analyst expectations of a drawdown. However, total stocks fell, which helps to explain why oil prices …
10th May 2023
Core inflation refusing to budge The 0.4% m/m gains in headline and core consumer prices in April leaves core inflation at 5.5%, broadly unchanged from its level at the start of this year, further illustrating that the previous downward trend has …
A stronger finish to Q1 The surprisingly strong 1.1% m/m increase in Brazilian industrial production in March suggests that the economy fared a bit better than we’d expected in Q1. The risks to our GDP growth forecast for this year of 1.0%, which had …
Inflation drops, but 25bp hike next week still more likely than not The drop in Mexico’s headline inflation rate, to 6.3% y/y in April, was broad-based and will provide some comfort to officials at the central bank that price pressures are finally easing. …
9th May 2023
Prices slip in April, but remarkably resilient overall The small slip in the Halifax House Price index in April bought it a little more in line with the Nationwide figures. But prices remain remarkably resilient to the largest rise in mortgage rates since …
Gloomy wage growth outlook in H2 2023 Wage growth held steady in March from February, as a further slowdown in regular and overtime pay growth was offset by a decent increase in volatile payments. We still see further scope for wage growth to slow this …
April strength offset by downward revisions to earlier months The 253,000 gain in non-farm payrolls in April suggests that the labour market remains resilient despite the banking sector turmoil and broader signs of an economic slowdown. That said, the …
5th May 2023
Labour market conditions easing despite unchanged unemployment rate The decline in full-time positions in April means that the large rise in total employment was weaker than it looks. Hours worked only crept up during the LFS reference week and, given the …
Divergence opens up between housing and commercial construction The April CIPS Construction PMI showed a growing divergence between the housing and commercial sectors, with activity in the latter seeing a gradual recovery while the former declined to a …
Headline inflation falls sharply, but core rate unchanged Falling headline inflation in Switzerland will provide relief to consumers but does not change the picture for the SNB. Underlying price pressures remain near all-time highs, which will convince …
Economic growth in Indonesia was unchanged at 5.0% y/y in the first quarter of the year, but we think growth will slow over coming months as tight monetary policy and weaker exports drag on activity. Before the pandemic GDP growth was very close to 5.0% …
Strength of exports and unit labour cost growth unlikely to last A rebound in exports drove a sharp narrowing of the international trade deficit to a four-month low of $64.2bn in March, from $70.6bn in February, but the surveys continue to suggest that …
4th May 2023
Downside risks to first-quarter GDP growth despite export outperformance The small rise in export volumes and slump in imports in March confirms that net trade improved last quarter. However, the weakness of imports means there is a risk that the …
The latest RICS Construction Survey showed an improvement in construction workloads and surveyors’ expectations also brightened. That is in line with other data showing the economy is proving more resilient than expected. That said, we still expect a mild …
Decline in bank deposits doesn’t look like a bank run March’s money and credit data showed that the collapse of the US bank SVB and the takeover of Credit Suisse in early March triggered a small withdrawal of funds from the overall UK banking system. …
Net lending stable as investors wait for the bottom Even as commercial property investment has collapsed, net lending to property has been stable at close to zero since the start of the year. That suggests investors are building up war chests to snap up …
Recovery unlikely to continue The rise in mortgage approvals in March was stronger than consensus expectations, reflecting the reversal of the spike in mortgage rates since the autumn. However, we don’t think that mortgage rates can fall any further …
Net exports won’t have boosted GDP in Q1 The widening of the trade surplus in recent months belies the negligible contribution that net exports will have made to Q1 GDP. Indeed, we think the weakness in import values last quarter primary reflected …
Economy posts strong growth in activity in Q1 Industrial production and retail sales continued to recover strongly in Russia in March and suggest that GDP growth may have accelerated in Q1. The economy appears to be receiving a boost from the recent surge …
3rd May 2023
Tentative signs of weaker demand Commercial stocks continued to fall last week despite lower refinery runs and higher net imports. On the products side, total demand eased back. Of course, one week's data are not sufficient to mark a turning point, but we …
Metro employment growth remained resilient in March The rate of job growth in March remained virtually unchanged from the previous month, signalling resilience across our covered metros despite a slowdown in non-farm payrolls. Within the tech sector the …
Demand in line with post-GFC lows The slight rise in mortgage applications in April left them little changed from their recent lows, pointing to further near-term weakness in sales. While we expect affordability will gradually improve, growing economic …
Unemployment falls as the labour market remains tight The euro-zone unemployment rate fell slightly in March and looks set to stay low in the coming months amid evidence that hiring intentions have increased. Even if the labour market softens further …
Disinflation process continues, but smaller falls from here Inflation in Turkey fell a bit more than expected in April, to 43.7% y/y, driven largely by a sharp decline in energy inflation, but m/m price growth remained strong and the disinflation process …
PMI readings continue to be at odds with the hard activity data India’s manufacturing and services PMI readings rose in April but are at odds with the hard activity data that point to more subdued domestic and external demand. The composite PMI rose from …
Weakness in consumption growth While retail sales values rose at a decent pace in March, we estimate that sales volumes fell the most since 2021’s lockdowns last quarter and that weakness has further to run. That in turn should prevent the Reserve Bank of …
Labour market continues to run red hot New Zealand’s labour market remained extremely tight last quarter, presenting upside risks to our forecast for a 25bp rate hike later this month. The 0.8% q/q rise in employment was stronger than most had …
Strong core inflation leaves ECB decision finely balanced The fact that core HICP inflation edged down in April will not resolve the debate between a 25bp and 50bp hike for the ECB this week – particularly as the core rate is still close to its all-time …
2nd May 2023
Pick-up in headline PMI hiding underlying weakness The rise in South Africa’s manufacturing PMI last month was due to a jump in inventories, while other indicators pointed to further weakness in the sector. The country’s severe energy crisis continued to …
The 0.1% q/q expansion in Czech GDP in Q1 means that the economy avoided remaining in a technical recession by the skin of its teeth, but we think that growth will still disappoint consensus expectations this year. Meanwhile, the manufacturing PMIs for …
House price falls pause in April The pause in house price falls in April suggested that the reversal of the autumn spike in mortgage rates has allowed prices to stabilise. But with affordability still very stretched by historical standards and the economy …
Manufacturing sector remains under pressure A simple average of manufacturing PMIs in Emerging Asia rose slightly in April but this was almost entirely driven by a large jump in Thailand’s headline index to a record high. Weak global demand and high …
House price rebound will prove fleeting The ongoing rebound in house prices is living on borrowed time. With affordability extremely stretched and the economy poised for a sharp downturn, we’re sticking to our forecast that house prices will fall another …
Manufacturing outlook weak, but hi-tech revival boosting construction The trivial rebound in the ISM manufacturing index to a still depressed 47.1 in April, from 46.3, contrasts with the more substantial recovery in the alternative S&P Global PMI but …
1st May 2023
Decent first quarter likely to be followed by contraction The small rise in GDP in February points to healthy first-quarter growth but, with the preliminary estimate pointing to a contraction in March and activity set to suffer in April due to the federal …
28th April 2023