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Rise in prices paid not yet a concern The fall in the ISM services index to 49.4 in April, from 51.4 in March, suggests that services spending could slow from the 4% annualised in the first quarter. The prices paid index rebounded but, for now, it is …
3rd May 2024
Labour market easing puts rate cuts back on the table April’s employment report was weaker across the board; with employment growth slowing back to the pace from last fall, the unemployment rate ticking up to 3.9% and average hourly earnings growth …
Deficit narrows; Productivity growth stalls The trade deficit narrowed slightly in March to $69.4bn, from $69.5bn, with exports down by 2.0% m/m and imports falling by 1.6%. The $5.1bn decline in goods exports included a $1.2bn drop in civilian aircraft …
2nd May 2024
External demand still weak Despite the slump in March, export volumes grew strongly over the first quarter and net trade appears to have been behind about half of the likely 2.5% annualised rise in first-quarter GDP. Nonetheless, the fall in March and the …
Swiss CPI jumps, but will fall in the coming months The jump in Switzerland’s inflation rate in April was largely due to increases in the volatile food and fuel components. While the data increase our confidence that the SNB will not cut interest rates at …
Fed statement acknowledges inflation rebound; announces QT taper The Fed admitted in the statement issued after today’s FOMC meeting that “in recent months, there has been a lack of further progress toward the… 2% inflation objective”. Otherwise, today’s …
1st May 2024
Manufacturing struggling for momentum The fall in the ISM manufacturing index back below the theoretical 50.0 no-change level in April suggests that the nascent recovery in the manufacturing sector may already have gone into reverse. While the further …
Higher mortgage rates continue to hit prices The second consecutive decline in the Nationwide house price index in April confirms that the rise in mortgage rates since the start of the year will prevent further near-term price gains. But as we think Bank …
This page has been updated with additional analysis since first publication. Spare capacity continues to open up in the labour market The labour market loosened more forcefully than we had expected in Q1. With subdued activity weighing on labour demand, …
Momentum in house prices continues The substantial shortage of existing homes for sale fueled a robust 0.4% m/m rise in house prices in February, consistent with our above-consensus call that house price growth will end 2024 at 5% y/y. The increase in the …
30th April 2024
Strong Q1, but growth likely to slow in the second quarter Despite the weaker-than-expected rise in GDP in February, first-quarter growth still looks to be close to 2.5% annualised. The weaker flash estimate for March points to less momentum going into …
Wage growth now looks a little sticky too The persistence of wage growth is another reason for the Fed to take its time on rate cuts. According to the first-quarter employment cost index, civilian wages increased at a 1.1% non-annualised pace and the …
This page has been updated with additional analysis since first publication. Further evidence the drag on activity from high interest rates is fading March’s money and credit figures provide further evidence that the drag from high interest rates is …
This page has been updated with additional analysis since first publication. Softness in retail sales probably won’t prevent a rate hike The weakness in retail sales last month suggests that sales volumes fell across Q1 as a whole. That said, with …
This page has been updated with additional analysis since first publication. GDP set to rebound this quarter Coupled with solid output forecasts for April and May, the strong rebound in industrial production in March suggests that the likely slump in GDP …
This page has been updated with additional analysis since first publication. Survey points to stagnant economy and still-high price pressures The weaker-than-expected EC business and consumer survey for April is a reminder that the euro-zone economy is …
29th April 2024
Disinflationary trend to resume soon; real spending still strong The slightly bigger-than-expected 3.7% annualised first-quarter gain in the core PCE deflator was principally because January’s gain was revised up to 0.50% from 0.45%. Nevertheless, the …
26th April 2024
Bank of Japan will hike rates further in July The Bank of Japan signalled growing confidence in meeting its inflation target at today’s meeting and we’re sticking to our forecast that it will increase its policy rate further to 0.3% in July. As widely …
GDP growth slows, but underlying momentum remains strong First-quarter GDP growth came in weaker-than-expected at 1.6% annualised, the weakest quarterly gain in almost two years, but the strong 3.1% gain in final sales to private domestic purchasers …
25th April 2024
Retail sales growth disappointing The surprise fall in retail sales in February and the apparent stagnation in March means they had a disappointing first quarter. That reinforces our view that the Bank of Canada is likely to cut interest rates at the next …
24th April 2024
First-quarter business equipment declined The rise in durable goods orders in March was mainly due to the volatile transport component, with core and underlying capital goods orders only inching up. While underlying capital goods shipments rose last …
This page has been updated with additional analysis since first publication. Signs of life for the German economy The rise in the German Ifo in April, together with the jump in the Composite PMI in the same month, suggests that the German economy may be …
Upside inflation surprise bodes poorly for rate cuts With price pressures proving inordinately resilient, there is little scope for the Reserve Bank of Australia to start loosening policy in the near future. The 1.0% q/q rise in consumer prices in Q1 was …
Largest increase in new home sales in over a year The large uptick in new home sales in March is consistent with our above-consensus prediction that sales of new homes will climb to 750,000 by year end. The 8.8% rise in new home sales in March took them …
23rd April 2024
This page has been updated with additional analysis since first publication. Easing services prices may encourage BoE to cut rates in the coming months Although the unexpected rise in the composite activity PMI in April suggests the economy grew faster at …
This page has been updated with additional analysis since first publication. Limited scope for tax cuts March’s public finances figures show that public borrowing in 2023/24 came in £6.6bn higher than the OBR predicted only a month ago, casting further …
This page has been updated with additional analysis since first publication. A strong rebound in Q2 GDP is likely The composite PMI continued to rise strongly to a eight-month high in April, suggesting that a strong rebound is on the cards for Q2 GDP …
This page has been updated with additional analysis since first publication . Retail outlook still bright despite sales stalling in March Although retail sales volumes remaining unchanged in March was worse than expected (consensus forecast +0.3% m/m, CE …
19th April 2024
Inflation should receive a boost in mid-year Inflation moderated slightly in March, in line with the consensus and our forecasts. If inflation continues to move in line with the BoJ’s projections, further rate hikes may be on the cards this year. Headline …
Existing home sales drop back due to higher mortgage rates The fall in existing home sales in March was triggered by mortgage rates climbing back above 7% the month before. Even so, transactions remain above the trough at the end of last year, consistent …
18th April 2024
This page has been updated with additional analysis since first publication. Still-tight labour market gives RBA reason to be cautious The modest rise in unemployment last month doesn’t change the bigger picture that Australia’s labour market is firing on …
This page has been updated with additional analysis since first publication. Upside surprise, but big drop to below 2% still coming in April The smaller-than-expected fall in CPI inflation from 3.4% in February to 3.2% in March (BoE and consensus 3.1%, CE …
17th April 2024
This page has been updated with additional analysis since first publication. Net exports will be a drag on Q1 GDP While the trade deficit increased in March, net goods trade should contribute positively to Q1 GDP figures. But net services should have …
This page has been updated with additional analysis since first publication. Upside inflation surprise raises “higher for longer” risks Although the Q1 CPI print was a touch stronger than we had predicted, we still expect inflation to return to the RBNZ’s …
Manufacturing rallies, but hi-tech boom revised down The 0.4% m/m increase in industrial production in March was principally due to a 0.5% m/m increase in manufacturing output, which was a lot better than we had expected given the already-reported decline …
16th April 2024
Largest decline in housing starts since April 2020 Housing starts weren’t able to build on the strong performance of the previous month in March, falling by the largest monthly amount since April 2020 in the early days of the pandemic. Although some of …
On track for a June interest rate cut The March CPI data showed the third consecutive month of muted gains in the Bank of Canada’s preferred core inflation measures, suggesting that there is a growing chance of the Bank cutting interest rates at its next …
This page has been updated with additional analysis since first publication. Weaker labour market points to weaker wage growth The sharp fall in employment and the jump in the unemployment rate in February suggest that wage growth will continue to slow …
Downside risks to flash GDP estimate for February The unchanged level of wholesale sales and signs that manufacturing GDP contracted suggest that there are downside risks to the flash estimate that GDP rose by 0.4% m/m in February. The 0.7% m/m rise in …
15th April 2024
Consumption growth still rock solid The strong rise in retail sales in March and upward revision to February’s data will further support the Fed’s stance that there is no rush to start lowering interest rates. The 0.7% m/m rise in headline sales was …
This page has been updated with additional analysis since first publication. Rise in output doesn’t improve poor outlook for industry Euro-zone industrial production rose in January, but the level of output is still weak and the outlook is poor. The 0.8% …
Consumers taking their cue from gasoline prices The small decline in the University of Michigan measure of sentiment in April lends some support to our forecast that consumer spending growth will be weaker in the first half of this year. Higher gasoline …
12th April 2024
This page has been updated with additional analysis since first publication. Recovery well underway, but inflation will continue to fall The 0.1% m/m rise in GDP in February (consensus and CE +0.1%) and the upward revision to the gain in January from 0.2% …
Muted PPI suggests core PCE inflation still on downward trend The March PPI data show the folly of relying too much on the CPI data. Our calculations suggest that, based on the combined inputs from PPI and CPI, core PCE prices increased by a more muted …
Fed looking to slow QT by half from June According to the minutes of the Fed’s mid-March policy meeting “almost all participants judged that it would be appropriate to move policy to a less restrictive stance at some point this year if the economy evolved …
10th April 2024
Bank leaves the door open for a June interest rate cut The acknowledgment by the Bank of Canada today that “the data since January have increased our confidence that inflation will continue to come down” leaves the door open to an interest rate cut at the …
Third consecutive 0.4% m/m gain in core CPI kills June rate cut hopes Alongside the pick-up in monthly payroll employment gains, the third consecutive 0.4% m/m rise in core CPI in March pretty much kills off hopes of a June rate cut from the Fed. The …
RBNZ remains on the sidelines The RBNZ didn’t drop any hints as to when it might pivot to looser policy at its meeting today, but we still think that it will start cutting rates by August. The RBNZ’s decision to leave rates on hold at 5.50% was correctly …
Some signs of life from German industry, but outlook still poor The second consecutive large monthly rise in German industrial production in February confirms the sector has started the year on a better note. But we still expect it to struggle over the …
8th April 2024
This page has been updated with additional analysis since first publication. Virtuous cycle will continue to gain momentum in Q2 Regular wage growth spiked in February, which suggests that the virtuous cycle between prices and wages is in full swing. And …
