Regular earnings growth hits 30-year high At first glance, the jump in regular earnings growth to a 30-year high of 2.3% in April is a clear sign that the strong pay hikes agreed in this year’s spring wage negotiations (Shunto) are filtering through. …
7th June 2024
This page has been updated with additional analysis since first publication. Exports set to remain robust in the near-term Export values rose y/y at the fastest pace since April 2023, with export volumes also picking up. We think exports will remain …
GDP growth set to undershoot RBA’s forecasts Australia last quarter recorded the weakest annual GDP growth since the early-1990s recession, leaving aside the pandemic. If the measly 0.1% q/q rise in output last quarter was repeated this quarter, annual …
Our senior economists held this online briefing shortly after the BoE announcement on the latest policy rate decisions. During the session, the team reviewed recent growth and inflation data, talked through our forecasts for policy through this year and …
6th June 2024
While euro-zone inflation data has recently surprised to the upside, which was reflected in the hawkish tone of today’s ECB meeting , we still think the 10-year Bund yield will fall faster than the 10-year Treasury yield by end-2024. Although today’s 25bp …
Container shipping costs have rebounded in the past month amid a pick-up in demand for goods from China and a possible front-loading of festive orders due to concerns about future shipping disruptions. And shipping costs could yet rise further. Our …
Investors appear to have shifted their bets away from stocks expected to benefit from using AI and doubled down on those expected to benefit from enabling the AI revolution. But the bigger picture is that AI hype has been continuing to support the US …
The ECB began its easing cycle today, as expected, but the accompanying guidance and forecasts suggest that it will proceed cautiously. We now think the Bank will cut interest rates by only a further 50bp before the end of the year, with the next cut …
Indications that take-up stabilised across many markets in Q1 were encouraging. However, looking ahead we think the prospects for occupier demand are better in southern European markets. As we recently highlighted , there were tentative signs that Europe …
A return of La Niña could provide some respite for those commodity producers who have been hit hardest by El Niño. But it could also pose problems for others – not least in South America – and so assessing any potential impacts on commodity prices is …
Overview – Activity strengthened across Emerging Europe in Q1 and we expect this to be sustained over the coming quarters, with GDP growth in most economies exceeding consensus expectations in 2024. This is likely to be accompanied by renewed inflation …
UAE emerges as clear winner from OPEC+ decision The decision by OPEC+ to keep oil production lower this year means that GDP growth across the Gulf will be a little weaker than we had previously expected. However, the UAE came away from the meeting the …
Just as fixed mortgage rates have shielded homeowners from rising interest rates, they will prevent households’ interest costs from falling rapidly when interest rates are cut. While borrowers on tracker and two-year fixed rate deals will soon see their …
Improvement in trade balance may not point to economic strength Stronger commodity exports boosted the trade figures in April, with the goods deficit narrowing to $1.0bn, from a downwardly revised $2.0bn in March. However, weaker import volumes suggest …
ECB cuts but future easing uncertain Any celebrations about today’s 25bp rate cut by the ECB are likely to be muted at best, given that the decision was fully discounted by financial markets and the most recent inflation and wage data have dampened …
Net trade set to weigh on GDP again this quarter The April trade data suggest that net trade is on track to weigh on GDP growth again this quarter, but that is primarily due to continued strength in imports, which paints a better picture of domestic …
Aggregate EM GDP growth remained strong in Q1, though we still expect a slowdown later this year. At a regional level, Emerging Asia will lead the pack, however there are tentative signs that recoveries in parts of Central and Eastern Europe and Latin …
OPEC+’s decision to roll over its production cuts into Q3 will keep supply constrained in the near term. But the unwinding of some of these cuts from October will mean that the oil market is better supplied over 2025 and oil prices should fall. Ample gas …
This page has been updated with additional analysis since first publication. Euro-zone sales ticked down but past the worst Retail sales ticked down in April we expect them to rise gradually from here. The 0.5% m/m decline in retail sales in April was a …
Construction activity picks up in both housing and commercial sectors The headline CIPS construction PMI rose to a two-year high of 54.7 in May. Both the commercial and housing balances improved, with the latter rising above 50 for the first time since …
India’s election result isn’t, in our view, reason to turn downbeat on the country’s equity market, its wobbles earlier this week notwithstanding. But with a very positive story seemingly still priced in to India’s equities, both on the political and …
Bank may reduce its bond purchases next week, though we think it will wait until July. Next rate hike should happen in July as BoJ increasingly worried about weaker yen. However, sharp slowdown in underlying inflation will forestall a series of rate …
Although the gap between 10-year Treasur y and Canadian Government Bond (CGBs) yields has reached the highest level in at least three decades today, we think it will widen even further in the next couple of years . The 10-year CGB yield has fallen ~15bp …
5th June 2024
Activity softens slightly, but still running hot Russia’s economy appears to have had a slightly softer start to Q2, with industrial production and retail sales growth both slowing in April. Still, the latest indicators for May have remained strong and …
Today’s interest rate cut from the Bank of Canada will be the first of many, and the dovish tone of the accompanying communications suggests another rate cut in July is nailed on. As Governor Tiff Macklem shrugged off any potential concerns about exchange …
ISM services index rebounds, but still consistent with lower inflation The rise in the ISM services index to 53.8 in May, from 49.4, meant that the weighted ISM index rebounded last month, despite a decline in the manufacturing index. That still leaves it …
Our 2020 analysis of the impact of changed working patterns on office demand correctly estimated the share of fully remote work, but underpredicted the extent of hybrid work. Yet with office job growth set to stay strong for the rest of the decade, the …
One down, many more to come Today’s interest rate cut from the Bank of Canada will be the first of many, and the dovish tone of the accompanying communications suggests that another rate cut in July is already nailed on. For now, our forecast is that …
Disinflationary trend gradually reasserting itself Economy and labour market losing momentum New projections should still show one or two rate cuts this year With no prospect of the Fed adjusting policy next week, the focus of the FOMC meeting will be the …
Whoever wins the general election on 4 th July will have three main choices when it comes to spending and taxes. First, the new government could change the fiscal rules to give itself more fiscal space. Second, it could keep the current fiscal rules and …
Rates on hold until 2025 Poland’s central bank (NBP) left its policy rate on hold at 5.75% today and policymakers are likely to maintain fairly hawkish communications as inflation rebounds in the second half of the year. We don’t expect the easing cycle …
The agreement by OPEC+ to rollover voluntary production cuts into Q3 will keep global oil supply constrained and should support oil prices over the rest of this year. Meanwhile, natural gas prices have continued to rally on the back of risks to Europe’s …
Mortgage applications fall to three-month low The decline in mortgage rates in May was not enough to stop home purchase mortgage applications from falling to a three-month low. The chances of a quick turnaround in June currently look slim, as the increase …
GDP growth will accelerate over the second half of the year While GDP growth slowed to a crawl in Q1, a rebound in real household incomes should contribute to a pick-up in activity over the second half of the year. The 0.1% q/q rise in Q1 GDP was a …
This page has been updated with additional analysis since first publication. Wage growth will climb above 2.5% this year Base pay rose the most since 1994 in April and we think it will accelerate a bit further as the strong pay hikes agreed in the spring …
The April JOLTS data provided further evidence of normalisation, with job openings falling further, layoffs still at historically low levels and the leading indicators all pointing to wage growth cooling. The job openings rate fell to 4.8% in April, from …
4th June 2024
The US stock market has been pulled in different directions by economic data since last week. But we suspect that the general trend in the next year or so will be up, as equities benefit from at least moderate economic growth, looser monetary policy, and, …
The global economy has been marked by the outperformance of the US economy and its financial markets. But past performance is no guarantee of future results. Will the structural, financial and political forces which have driven the success of the US …
Inflation has been stickier than we had expected and we have therefore pushed back when we think the Bank will start cutting interest rates. That may put a little upward pressure on property yields over the next couple of months. But we still think …
Narendra Modi will begin his third term as India’s Prime Minister with a weakened mandate and that will make the passage of contentious economic reforms more difficult. But he will still be able to work as the head of a stable coalition, and the broader …
The rally in industrial metals prices over the last few months has begun to unwind and, because it seemed based on excessive optimism, we think prices will fall further over the coming months. After all, while industrial metals demand will recover this …
Q1 pick-up likely to be followed by weaker Q2 The sharp pick-up in Brazil’s GDP growth to 0.8% q/q in Q1 is a temporary rebound from a weak patch in the second half of last year and doesn’t mark the start of a strong recovery. Still, the pace of economic …
At long last, OPEC+ outlined a plan on Sunday for when and how members would unwind the large production curbs currently in place. We assume that this plan is followed th rough and that output gradually increases from October, pushing the crude market …
This response has been updated with additional analysis of the UAE's May release. Gulf continues to lead the way as Egypt shows positive signs May’s batch of PMIs showed that private non-oil sectors have remained a point of strength in the Gulf economies …
Modest contraction in Q1, shows 2024 growth likely to be muted at best South Africa’s economy contracted by 0.1% q/q in the first quarter of the year and the latest evidence suggests that fragility has continued into Q2. A less acute drag from …
Global demand is giving a bigger boost to China’s economy than we had anticipated this year and foreign tariffs will make little difference to aggregate export performance in the near term. We now think that China’s economy will expand 5.5% this year as a …
The recent weakness of wage growth in Korea seems at odds with the country’s low unemployment rate. But a closer look at the data suggests that the unemployment rate is overstating the health of the labour market and, on top of that, compositional changes …
This webpage has been updated with additional analysis. Headline inflation unchanged in May, doubts about future rate cuts Switzerland’s inflation rate remained at 1.4% in May as an increase in rents was offset by a further fall in core goods prices. …
Overview – A rebound in real household incomes should ensure that the recent slump in output should turn into above-trend GDP growth of 1% over the next couple of years. Regardless, inflation will continue to slow as the influence of the previous import …
