This page has been updated with additional analysis since first publication. Consumer rebound not as strong as it seems The solid pickup in retail sales in August was driven in part by temporary factors, meaning that the underlying momentum behind …
1st October 2024
Slowdown in house-price growth has further to run With new listings rising rapidly, the housing market is shifting in favour of buyers. Accordingly, we think house price growth will ease further in the months ahead. Allowing for seasonal swings, house …
The economy is stuck in a period of below-potential GDP growth, with previous interest rate hikes weighing on consumer spending and investment. This will keep downward pressure on core inflation, which we expect will reach the Bank of Canada’s 2% target …
30th September 2024
Headline GDP growth in the Gulf economies will strengthen in 2025 as oil output cuts are unwound. But lower oil prices will prompt a turn to fiscal consolidation in most of the Gulf, causing growth in non-oil sectors to slow. Elsewhere, balance sheets in …
The trouble with European green policy Mario Draghi’s report on EU competitiveness , published this month, provided food for thought on the EU’s decarbonisation strategy. There were a couple of key points of discussion. First, Mr Draghi emphasised the …
Germany and Italy HICP (September) Fall in inflation strengthens case for rate cuts The falls in headline and services inflation in the major euro-zone economies in September, along with evidence that price pressures are softening and activity slowing, …
The strike by Israel in Lebanon that killed Hezbollah’s leader represents a major escalation of hostilities in the Middle East and all eyes are now on the next actions by Israel and Iran. On its own, this escalation would point to higher oil prices and …
We doubt China’s equities will continue to outperform Japan’s through the end of 2025, despite their recent divergence. Stock markets in two of Asia’s largest economies have continued to head in different directions today. China’s CSI 300, for example, …
Net lending to property sees further increase as investment recovers Net lending to property reached £1.26bn in August, up from £520m the previous month. While lending to standing assets was responsible for the lion’s share of the increase, lending for …
Tankan points to continued recovery This website has been updated with additional analysis since first publication. The slight rise in business conditions across all firm sizes in the latest Tankan suggests that the robust rebound in activity in Q2 will …
German state data point to sticky core inflation CPI inflation data published by the major German states this morning suggest that headline HICP inflation fell sharply in both Germany and the euro-zone in September, as was widely expected. But core and …
This page has been updated with additional analysis since first publication. Fading drag on credit from higher interest rates is supporting the economy August’s money and lending data provide further evidence that the gradual improvement in credit demand …
For good reason, much of the attention around what another Donald Trump presidency would mean for the US economy has centred on his proposals to jack up tariffs and clamp down on immigration. If he wins in November and makes good on these pledges, you can …
Asia Chart Pack (September 2024) …
This page has been updated with additional analysis since first publication. House prices rise in Q3 and will rise further next year September’s 0.7% m/m rise in Nationwide house prices suggests that August’s 0.2% m/m fall was just a blip and that the …
This page has been updated with additional analysis since first publication. Softer rebound in activity, but another major downturn unlikely Q2 GDP growth of 0.5% q/q was a bit weaker than the previous estimate of 0.6% q/q, but the ONS also confirmed …
While banks have issued more housing loans that don’t meet APRA’s serviceability guidelines over the last couple of years, we aren’t convinced that this poses significant risks to financial stability. The Australian Prudential Regulation Authority’s …
This page has been updated with additional analysis since first publication. Stimulus measures will shore up near-term activity While the official PMIs held up okay in September, the Caixin PMIs dropped quite sharply which suggests that the economy lost …
Economic recovery lost some pace in Q3 While the plunge in industrial production in August creates some downside risks to our forecasts, the continued strength in consumer spending is encouraging. According to the preliminary estimate, industrial …
GDP-GDI gap resolved Leading up to this week’s annual revisions to the national accounts, we were attuned of the risk that the expenditure-based real GDP measure might be revised lower to match up with the income-based real GDI, given the wide gap that …
27th September 2024
Economists from our China and Markets teams held a special briefing to assess the recent flurry of stimulus announcements from Beijing. During this, the team answered audience questions as they addressed key issues around the China outlook in light of …
We don’t see compelling reasons for policymakers in the US or the euro-zone to lower policy rates as much as market pricing suggests, so we expect long-dated bond yields there to edge up before long. That would probably be a wash for the euro. Today’s …
Today’s release of weaker-than-expected US PCE data for August led investors to revise down slightly their expectations for the fed funds rate, and the DXY index slipped as a result. This, alongside an upside revision to US economic growth, leaves us more …
CBN rate hikes about inflation and credibility The Central Bank of Nigeria’s surprise hike this week highlighted the greater progress that the MPC wants to see on the inflation front and also importantly its steadfast ambition to restore its trust and …
Overview – A pivot towards fiscal and monetary stimulus should support China’s growth in the near-term. But the economy continues to be propped up by investment, still elevated levels of construction, and the willingness of trading partners to allow …
Worrying signs in the CFIB Business Barometer Although the CFIB Business Barometer covers only small firms, in recent years the survey indicators have provided a fairly accurate steer to economic conditions. The headline index fell to 55.0 in September …
Fiscal risks in Romania continue to build Romania’s fiscal watchdog this week warned that the country’s budget deficit could come in at 8.0% of GDP this year. This is significantly above the government’s original target of 5.0% and also above its new …
Government hinting about more investment The government appears to be laying the ground for a rise in public investment in the Budget on 30 th October. This week the Chancellor said “growth is the challenge and investment is the solution.” That was …
Stronger monthly GDP growth will be short lived Although the rise in GDP in July was stronger than expected, the preliminary estimate of unchanged GDP in August suggests that the momentum was short lived and puts third-quarter growth on track to surprise …
A 25bp interest rate cut by the ECB at its next meeting in mid-October is now more-or-less fully priced into the market. The decision will be a close call, but a cut is far from a foregone conclusion. Our base case remains that the Bank will wait until …
Trump lashes out at Mexico Comments from Donald Trump this week highlight how big a threat his return to the White House would pose to Mexico’s free trade relationship with the US. Earlier this week, Trump threatened to hit John Deere with a 200% tariff …
Africa Chart Pack (Sep. 2024) …
The stimulus packages announced by Chinese policymakers were the main reason behind the chunky increases in industrial metals prices this week, and explain why they performed better than most other commodity prices. However, the stimulus measures are no …
Fiscal policy to hold back Pakistan’s recovery The IMF this week approved a new long-term US$7bn loan for Pakistan. The country will receive the first US$1bn immediately, with the remainder to be paid over the three years of the deal. Pakistan was close …
Core price pressures easing; Q3 consumption growth solid As we calculated based on the earlier price data releases, the core PCE deflator increased by a muted 0.13% m/m in August, with the headline deflator up by 0.09% m/m. Admittedly, although the …
China’s leadership finally took action this week to staunch the economy’s bleeding with a flurry of stimulus announcements and pledges to do more. But will it be enough? Group Chief Economist Neil Shearing talks to David Wilder about whether the outlook …
Stimulus implementation gets underway A flurry of policy announcements propelled the largest weekly gains in Chinese equities since 2008 this week (CSI 300 up 15.7%; Hang Seng 13.0%). The catalyst was Tuesday’s stimulus announcement , which included …
Flagship policy falling short of aims This week marked the 10 year anniversary of PM Modi’s flagship “Make in India” policy initiative. Its aim was to encourage both foreign and local companies to develop, manufacture and assemble products in India and …
ESIs point to robust growth in Q3 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional economic growth strengthened at the end of Q3. But the rise in selling price expectations in the services …
Services inflation starting to fall September’s inflation data from France and Spain all but confirm that the headline rate in the euro-zone as a whole – released next week – will show a sharp decline to below the 2% target. Headline HICP inflation fell …
BoJ set to press ahead with "stupid" rate hikes Japan won’t have its first female Prime Minister after all as former defense minister Shigeru Ishiba won the runoff in the LDP leadership election against economic security minister Sanae Takaichi. In …
Cuts still won't come as soon as markets expect As expected, the RBA left rates unchanged at its meeting this Tuesday. Reading between the lines, however, the Bank does appear to have toned down its hawkish bias somewhat. Indeed, it’s worth noting that …
Inflation and growth backdrop supports further easing Mexico’s central bank delivered another 25bp interest rate cut at today’s meeting, to 10.50%, and the communications suggest that it will continue to ease policy over the coming months. We expect the …
26th September 2024
Most EM equities have fared well over the past week or so amid encouraging signs from China, the first Fed rate cut and broadening EM easing cycles. We think these equities will continue to fare well over the coming year, albeit not as well as US ones. …
China’s finance ministry appears to be lining up a fiscal support package to deliver on the Politburo’s pledge of additional support for the economy. If a report by Reuters is correct, the package could lift GDP by around 0.4% over the course of the next …
Capital inflows into EMs have rebounded over recent weeks amid the start of the Fed’s easing cycle. Looking ahead, we expect EM inflows to hold up well as global monetary conditions ease further. In general, EMs are not especially dependant on foreign …
We think labour market conditions continued to ease in September, with a 100,000 rise in non-farm payrolls and the unemployment rate edging up to 4.3%. Payroll gain to ease further The 142,000 rise in non-farm payrolls in August was stronger than the July …
Tight supply conditions have boosted German prime logistics rents despite weak occupier demand. This looks set to continue over the next year or two given completions pipelines for the German markets are among the tightest in Europe. However, weak …
