Opposing messages from Ifo and PMIs Contradictory messages from the Ifo – which was very weak in May – and the Composite PMI mean the performance of the German economy in Q2 is uncertain. But regardless of how well the economy held up this quarter, we …
24th May 2023
In contrast to the rest of Europe, CEE yields not only rose, but increased more sharply in Q1 than the previous quarter. (See Chart 1.) Strong rental growth cushioned the blow to all-property capital values, but that did not prevent a partial reversal …
This webpage has been updated with a table and chart of key data. Growth slows on back of demonetisation Nigeria’s economic growth slowed to just 2.3% y/y in Q1 as the damaging effects of a botched demonetisation process more than offset an easing of …
Monetary policy to be kept tight despite falls in inflation Mexico’s headline inflation rate fell to a 20-month low of 6.0%y/y in the first half of May and is set to drop further over the coming months. That said, strong wage growth will keep inflation …
Perhaps the most remarkable feature of this year’s rally in US equities is just how narrow it has been. We think history suggests that this bodes poorly for the S&P 500’s prospects over the rest of this year. While the S&P 500 has returned ~9% in the year …
BoE will need to work harder to conquer inflation Note: We’ll be discussing the UK April CPI report in a briefing at 10:00 BST/17:00 SGT on 24 th May. Register here. The Bank of England won’t be able to ignore the smaller-than-expected fall in CPI …
This webpage has been updated with a table and chart of key data. Rising core inflation to keep policymakers in hawkish mood South Africa’s headline inflation rate dropped back to 6.8% y/y in April but the further strengthening of core inflation will …
Opposing messages from Ifo and PMIs Contradictory messages from the Ifo – which was very weak in May – and the Composite PMI mean the performance of the German economy in Q2 is very uncertain . But regardless of how well the economy held up this quarter, …
Resurgence in core inflation means BoE to keep its foot on the interest rate brake Note: We’ll be discussing the UK April CPI report in a briefing at 10:00 BST/17:00 SGT on 24 th May. Register here. The smaller-than-expected fall in CPI inflation from …
The decision by the Reserve Bank of New Zealand to lift its official cash rate by 25bp, to 5.50%, was in line with what most had anticipated. However, with the Bank sounding more dovish than it has in the recent past, we think its hiking cycle is now …
RBNZ signals tightening cycle is at an end The RBNZ slowed the pace of tightening this month, while signalling that its tightening cycle was at a close. The Bank’s decision to hike its official cash rate by 25bp, to 5.50%, was correctly predicted by 20 …
We expect the RBNZ to hike interest rates by 25bp, to 5.50% (03.00 BST) We think UK inflation fell from 10.1% in March to 8.0% in April… (07.00 BST) …and clients can sign up here for tomorrow’s Drop-In on UK inflation (10.00 BST) The “higher for longer” …
23rd May 2023
Buyers pushed to new build sector New home sales recovered to close to pre-pandemic levels in April as a lack of existing homes for sale pushed buyers to the new build sector. But still-stretched affordability and a weakening economy will prevent new home …
The resilience of the April activity data and apparent stabilisation in housing have raised hopes that a recession may yet be avoided this year. That said, forward-looking indicators suggest that the huge rise in interest rates and tightening of bank …
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 …
The latest activity figures suggest that most Latin American economies held up better than we’d thought in the first few months of 2023. Mexico and Colombia made surprisingly strong starts to the year while Chile ’s economy appeared to be gathering some …
Hungary’s central bank (MNB) cut the interest rate on its one-day deposit tender at today’s meeting, from 18% to 17%, and this is likely to be followed by further cuts in the coming months, with the central bank’s key policy rates returning to single …
Lower steel production in April a sign of things to come Steel mills reduced output in April in y/y terms, meaning that global production is down year-to-date. We think that producers will continue to limit output for a few more months due to tepid …
MNB inching closer to an easing cycle Hungary’s central bank (MNB) left its base rate on hold at 13% as expected today and the post-meeting communications are likely to provide guidance on when the overnight daily deposit rate of 18% will be cut, which …
Note: We’ll be discussing the UK April CPI report in a briefing at 10:00 BST/17:00 SGT on 24 th May. Register here. Stronger activity supporting domestic price pressures May’s PMIs suggest that economic growth is being supported by the services sector …
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 …
In a fracturing global economy, India stands out as a prime location for the “friend-shoring” of manufacturing supply chains out of China. The manufacturing powerhouses of Gujarat and Tamil Nadu are best-placed to benefit from this shift. But a handful of …
The euro-zone Composite PMI fell slightly in May but is still consistent at face value with the economy expanding at a rapid pace in Q2. The survey also suggests that price pressures and the labour market both remain very strong, supporting the case for …
Activity continues to struggle Industrial production and retail sales data for April for Poland were generally on the weak side and suggest that the economy lacked momentum at the start of Q2. We think activity will soon bottom out, but the prospect of a …
Resilient services sector keeping growth and price pressures strong The fall in the euro-zone flash Composite PMI from 54.1 in April to 53.3 in May left it close to the consensus and our own forecast (both 53.5) and suggests at face value that the economy …
UK Drop-In (24th May): Join our UK team for a 20-minute online briefing on the implications of April’s CPI inflation release at 10:00 BST on Wednesday, 24th May. Register Now . Shaky start to the new fiscal year won’t prevent pre-election splurge April’s …
Stronger activity supporting price pressures May’s PMIs suggest that the economy is being supported by the services sector while manufacturing activity continues to struggle. The strength in services activity may be feeding into more persistent domestic …
Shaky start to the new fiscal year April’s public finances figures got the new fiscal year off to a shaky start. But we doubt this will prevent the Chancellor from embarking on a fiscal splurge ahead of the next election, due to take place before January …
As in other advanced economies, Australia’s neutral rate of interest rate will probably edge up a bit over the coming decades. That will result in higher borrowing costs, but Australia’s low public debt levels mean that the government will be able to …
PMIs suggest economy strengthened further in May May’s flash PMI readings were the strongest they’d been in a while and point to gains in both industrial production and services spending, supporting our assessment that the economy continued to grow in Q2. …
We think the May euro-zone PMI will suggest growth there slowed a bit… (09.00 BST) …while we think the UK PMI changed little from the previous month (09.30 BST) We expect Hungary’s central bank to leave policy unchanged (13.00 BST) Key Market Themes The …
22nd May 2023
The past month has brought some encouraging news on the inflation front. Consumer price inflation dropped sharply in April to an 18-month low, keeping the headline rate comfortably within the RBI’s 2-6% target range. Both energy and food price inflation …
The Bank of Israel (BoI) delivered another 25bp interest rate hike, to 4.75%, at today’s meeting and did not offer any guidance as to whether this would be the last in the cycle. On balance, we think the central bank will deliver one more 25bp hike, to …
April’s CPI inflation did show a big fall in headline inflation – but less than the market had been expecting. Even worse, core inflation actually rose. Our UK Economics team hosted an online briefing shortly after the data release to talk through the …
National GDP data released so far suggest that euro-zone exports rose in Q1. However we suspect they will be more subdued in the coming quarters as a result of weak global growth. We have recently investigated the reasons behind the strength of euro-zone …
More convincing evidence of a loosening in the labour market and an easing in labour costs growth has started to emerge. It may not prevent the Bank of England from raising interest rate above 4.50%. But it does tentatively support our view that the peak …
Last week’s disappointing China economic releases were greeted by the usual calls for more stimulus to boost near-term growth. These are part of a long-standing tradition for when data undershoot expectations, reflecting the often short-term focus on …
Most of the recent acceleration in services inflation reflects pass-through of higher goods prices. While firms have become more willing to pass on higher input costs, we still think that sluggish wage growth and the recent slump in import prices means …
Business investment in for a tough H2 We already know that business investment rose despite a plunge in capital goods shipments last quarter . As such, we wouldn’t read too much into the fall in machinery orders in March. The bigger picture is that as …
Business investment likely off to a slow start this quarter We already know that business investment rose last quarter. As such, we wouldn’t read too much into the fall in machinery orders in March. Machine tool orders data point to a slight fall in …
The cover story of The Economist magazine this past week has been largely based on our long-held view that China’s economic growth would slow to just 2% by the end of this decade, and wouldn’t surpass the US as the world’s biggest economy. The Capital …
21st May 2023
Emerging market equities have typically outperformed their developed market counterparts after US recessions. While we don’t foresee them replicating the sort of outperformance seen after the early-1990s or early-2000s recessions, we do think the MSCI …
19th May 2023
The economy has been relatively resilient so far, but with the banking turmoil set to weigh on activity, we continue to expect a recession this year. Slower growth has already translated to softer occupier demand across all property sectors. This will …
We think China’s Loan Prime Rate will be left unchanged (Mon.) We expect the Reserve Bank of New Zealand to raise its policy rate by 25bp, to 5.50% (Wed.) Real consumption in the US probably rebounded a bit in April (Fri.) Key Market Themes We suspect a …
The Bank of Canada’s latest Financial System Review reiterated the risks to households from higher interest rates, but concluded that most are coping well. Following the rapid turnaround in the housing market and upside surprise to CPI inflation in April, …
Dealmaking was a major driver of commodity prices this week. The 11 th hour extension of the Black Sea Grain Initiative alleviated fears of Ukraine’s grain exports being cut off from world markets, pushing corn and wheat prices down. And in the US, …
Ecuador: Political risks in the spotlight Ecuador’s political crisis escalated this week after President Guillermo Lasso invoked the “mutual death” clause, dissolving the National Assembly to dodge an imminent impeachment vote. This move triggers fresh …
Erdogan in pole position for the presidency Sunday’s presidential election result in Turkey was all about Erdogan. He gained more than 49% of the vote share after some of the more reliable polls last week had opposition candidate Kemel Kilicdaroglu at …
