While the risks of a more severe downturn in industry have increased in advanced economies, we still expect manufacturing output to slow rather than crash in the coming months. Even if output were to fall sharply, it wouldn’t necessarily have big …
4th September 2024
Although job openings fell sharply in July, the totality of the JOLTS data points to a labour market that continues to normalise, rather than one rapidly deteriorating. That leaves it up to the August Employment Report to determine whether the Fed kicks …
The latest drop in oil prices, coupled with our expectation for global demand to remain weak, will make it practically impossible for OPEC+ to increase output while keeping Brent crude prices above $80pb. Recent reports indicate the group is undecided on …
Following its third consecutive 25bp interest rate cut today, the communications from the Bank of Canada reiterated that further cuts are likely. We expect 25 bp cuts at the final two meetings this year. While Governor Tiff Macklem left the door open to a …
The dynamism of the industrial sector means that market-level outperformance is often only achievable for short periods, because either relative value deteriorates or new supply quickly completes. Houston could be the latest example of that, with recent …
Markets may be gripped by concerns about China’s economic health, but new data from Capital Economics suggests fiscal support is starting to provide a long-awaited boost that could help growth into 2025 as well. However, the country’s longer-term economic …
Another 25bp cut, but little sign the Bank considered a larger move Following its third consecutive 25bp interest rate cut today, the communications from the Bank of Canada reiterated that further interest rate cuts are likely. The tone of the …
Attention at the Forum on China-Africa Cooperation that started today in Beijing will be on the extent to which China can stave off competition from the US to strengthen ties with the region. Relations with China are, for the most part, likely to remain …
Net trade set to weigh on GDP again this quarter The July trade data suggest that net trade will weigh on third-quarter GDP growth, but that is hardly cause for concern when it reflects the continued strength of imports, painting a better picture of …
Trade balance improves, but for the wrong reasons The improvement in the goods trade balance in July was for the wrong reasons, with a fall in imports outpacing a decline in exports. The weakness was due to sharp declines in motor vehicle trade, which …
Investors' concerns about the health of the US economy have intensified again, contributing to a selloff in global equity markets. The US stock market rode out an earnings recession last year thanks in large part to enthusiasm around AI, but we think it …
Recovery delayed The drop in home purchase mortgage applications in August is surprising given the sharp fall in mortgage rates the month before. Some would-be buyers may be delaying their purchases due to increased concerns about the economic outlook, …
NBP likely to remain on pause as inflation rebounds The decision by the National Bank of Poland (NBP) to leave its policy rate on hold today, at 5.75%, was widely expected by analysts, and the incoming data are supporting our view that there won’t be …
Australian economy will soon turn a corner Although activity likely bottomed out last quarter, the ongoing weakness in private demand raises the risk that the RBA will cut rates sooner rather than later. The 0.2% q/q rise in real GDP last quarter was a …
The gold price is off the record high hit over August as speculation continues to swirl about what has driven this year’s extraordinary rally, and as the start of the Fed’s easing cycle approaches. Economists from our Commodities team discussed what comes …
3rd September 2024
While the headline-hitting surge in immigration last year was mainly driven by a spike in unauthorized movement, legal immigration has picked up from its pandemic lows, which is good news for many multifamily markets across the US. With top destinations …
The latest PMIs suggest that the outlook for global industry remains bleak, particularly in advanced economies. And although price pressures seem to have increased, we doubt that this marks the beginning of a sharp rebound in DM goods inflation, meaning …
After a large fall in July, the EM manufacturing PMI only edged up slightly last month, suggesting that the sector fared worse in Q3 than in the first half of the year. The PMIs did at least provide encouraging signs that price pressures eased. The …
A disappointingly small rebound in the headline index of the US ISM manufacturing survey for August appears to have put some relative pressure on cyclical sectors of the S&P 500 today, which is down more than 1% the time of writing. The bigger picture, …
Manufacturing stuck in a rut The ISM manufacturing index was essentially unchanged in August, leaving it consistent with manufacturing output and GDP growth losing momentum in the third quarter, and a sharp drop in the new orders index reduces the …
Our migration dashboard highlights key trends in the US at both the state and metropolitan area level. If you have subscriber access to the data underlying this new dashboard, you can download it via the menu options in the top right of each chart or …
Bumper growth in Q2 tilts odds towards rate hike The much stronger-than-expected Brazilian GDP figure for Q2, of 1.4% q/q, means that the economy now appears to be on course to expand by 3% over the year as a whole. The flip side is that it will heighten …
Attention in Egypt is turning to the timing of the first interest rate cut. The lessons from the start of the last easing cycle in 2018 suggest that this is likely to begin in Q1, which is a little later than most expect. But the more important point is …
The intense focus on this week’s US August employment report is hardly surprising. The July report, showing a smaller-than-expected 114,000 increase in jobs and a bigger rise in the unemployment rate, intensified recession fears and fuelled the global …
Several advanced economies have raised tariffs on imports of green technologies and semiconductors from China to address their growing trade deficits in these goods and tackle a perceived strategic weakness. As long as the process is gradual, this …
Weaker-than-expected rebound strengthens case for rate cuts South Africa’s economy recorded weaker-than-expected growth of 0.4% q/q in Q2 which, coming alongside the easing of inflation pressures, further strengthens the case for an interest rate cut at …
Regular earnings growth will approach 3% While weaker growth in bonus payments weighed on overall wage growth, base pay rose by the most since 1992 in July and we think it will continue to surge in the coming months. The preliminary estimate released …
Slowly but surely, Egypt’s economy is recovering This PMI response has been updated with additional analysis of the UAE's survey published on 4th September. August’s batch of PMIs showed a more positive outturn for the Gulf’s private non-oil sectors, but …
Recent estimates add to the evidence that online retail shares are growing more slowly across Europe. There has also been little sign of convergence in online shares, supporting our long-held view that online competition will be less of a drag on southern …
This page has been updated with additional analysis. Headline inflation falls, risks skewed to the downside Switzerland’s headline inflation rate fell in August to one of its lowest levels in the last three years. This will be welcome news for the SNB, …
Disinflation process has some way to go The fall in Turkish inflation, to 52.0% y/y, in August is likely to be followed by continued disinflation over the coming months. But there are signs in the breakdown that underlying inflation pressures remain …
Inflation in Korea fell back sharply last month, supporting our view that the central bank will cut interest rates at its next meeting in October. Inflation data published today showed that the headline rate fell from 2.6% y/y in July to 2.0% in August. …
September is expected to mark the start of Fed easing, but how quickly will it unwind the tightening of recent years? What’s the outlook for ECB policy if services inflation remains sticky? And do hawkish signals from the Bank of England imply a more …
2nd September 2024
Chinese equities tumbled on Monday, and while we see scope for them to recover a bit in the coming months, we are quite pessimistic about their medium-to-long term prospects. Chinese stocks had a bad start to the month. US equities rose on Friday, which …
Explore our forecasts to end-2026 for GDP growth, inflation, policy rates and commodity prices. To explore our policy rate forecasts in more detail, please visit our Central Bank Hub dashboard. If you have subscriber access to the data underlying this …
PMI plunges but reasons to not be too downbeat The sharp fall in South Africa’s manufacturing PMI in August was disappointing but the survey has been extremely volatile recently and the big picture is that respondents remained optimistic about the …
Traffic-light coalition to stay on but state elections point to challenges ahead The big rise in populist parties in elections in two East German states at the weekend doesn’t threaten the survival of the governing coalition but it points to some …
PMIs increase, but still consistent with weak industrial activity The manufacturing PMIs increased across most of the region in August, although they generally remain at weak levels and suggest that industry has continued to struggle in Q3. In Poland and …
Rebalancing still a bumpy process The Turkish GDP figures for Q2, which showed a better-than-expected 0.1% q/q expansion in output, suggest that the rebalancing process still has some way to go. The data argue in favour of the central bank keeping …
Stretched affordability to sap momentum from house price rally With transaction volumes moderating and inventory rising, we expect the Australian housing market to cool in months ahead. In seasonally-adjusted terms, house prices across Australia’s eight …
This report was first published on 2nd September covering the official PMIs and the Caixin manufacturing PMI. We added commentary on the Caixin services and composite PMIs on 4th September. Growth has stabilised thanks to policy support The PMIs for …
August’s US employment report release on Friday will be the coming week’s must-watch market event. On the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing talks about what we’re expecting and how the …
31st August 2024
US and euro-zone inflation data released today did little to change our view that both the Fed and the ECB will cut interest rates by 25bp in September, as investors seem to expect. But we think both central banks will ultimately cut rates by a bit less …
30th August 2024
The dollar has rebounded a little this week ahead of next week’s crucial US non-farm payrolls report. The incoming data this week has generally supported our view that the US is on track for a soft landing, and if we are right in thinking that payrolls …
Harris supports dramatic increase in taxes After unveiling plans to boost spending and cut taxes for the middle-class in a big speech a couple of weeks ago, Vice President Kamala Harris has quietly acknowledged since then that she intends to pay for those …
Second-quarter GDP growth surprised to the upside of the Bank of Canada’s forecast, but the evidence that growth slowed sharply over the quarter suggests that third-quarter growth will be much weaker than the Bank is anticipating. That raises the chance …
Asia Chart Pack (August 2024) …
Canada joins tariff hiking club On Monday, Canada announced a 100% tariff on imports of Chinese electric vehicles and 25% tariffs on aluminium and steel. The tariffs themselves won’t have much of a macro impact – the affected goods make up less than 0.1% …
The Prime Minister’s statement this week that “there is a budget coming in October, and it’s going to be painful…those with the broader shoulders should bear the heavier burden” has prompted yet more speculation about how much tax revenues will rise and …
