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Cracks growing in the labour market The jump in the unemployment rate in March, together with evidence of easing wage pressures, raises the chance of the Bank of Canada surprising markets with a rate cut next week, although our base case remains that the …
5th April 2024
Blockbuster report another reason for the Fed to take its time The blockbuster 303,000 increase in non-farm payrolls in March supports the Fed’s position that the resilience of the economy means it can take its time with rate cuts, which might now not …
Rebound in mortgage rates causes prices to stall The first decline in the Halifax House price Index in six months confirmed that the slight rise in mortgage rates since the start of the year has caused house prices to stall. The 1.0% m/m fall in the …
Exports and imports both surged A surge in gold exports and the end of earlier weather-related disruptions flattered the figures in February, but the trade data nonetheless point to a strengthening economy and suggest that net trade made a large …
4th April 2024
Exports and imports surge in first quarter The strong gains in exports and imports in February imply that net trade will be a negative for first-quarter GDP growth, but that appears to mostly reflect the support to import demand from strong consumer …
Mortgage rates temporarily drop below 7%, helping demand recover Mortgage rates dipping back below 7% helped mortgage applications for home purchase edge slightly higher in March. But recent increases in the 10-year Treasury yield point to mortgage rates …
3rd April 2024
This page has been updated with additional analysis since first publication. Drag on activity from high interest rates continues to fade February’s money and credit figures show the dip in mortgage rates at the start of the year boosted mortgage approvals …
2nd April 2024
RBA abandons tightening bias but rate cuts still a long way off While the RBA no longer considered raising interest rates at its March meeting, we think it will take until November for the Bank to start easing monetary policy. The Bank noted that …
Above 50.0 for the first time since September 2022 The jump in the ISM manufacturing index in March, leaving it above the theoretical 50.0 no-change level for the first time since September 2022, suggests that the sector has finally turned a corner. While …
1st April 2024
This page has been updated with additional analysis since first publication. Tankan points to sluggish recovery The slight fall in business conditions across all firm sizes in the latest Tankan suggests that a rapid recovery from the likely slump in Q1 …
Core prices moderate again, but real spending strong The slightly weaker than expected gain in core PCE prices in February will, at the margin, provide Fed officials with a little more confidence that the January surge was an anomaly. Nevertheless, the …
29th March 2024
Q1 GDP to drop sharply as industrial output slumps With industrial output falling yet again in February following the plunge in January, GDP will fall sharply in the first quarter. The 0.1% m/m decline in industrial production in February was weaker than …
Strong growth reduces urgency for interest rate cuts The broad-based strength of GDP growth in January and February means the economy almost certainly outperformed the Bank of Canada’s expectations in the first quarter and reduces the immediate risk of …
28th March 2024
This page has been updated with additional analysis since first publication. Mild recession confirmed, but recovery probably already underway The final Q4 2023 GDP release confirmed that the UK economy was in the mildest of mild technical recessions at …
This page has been updated with additional analysis since first publication. Private consumption set to trudge along The modest uptick in retail sales in February was as we had anticipated. The data confirm our view that consumer spending is likely to …
This page has been updated with additional analysis since first publication. EC Survey points to stagnant economy and still-high price pressures The EC business and consumer survey for March reinforces the message that the economy is close to recession …
27th March 2024
This page has been updated with additional analysis since first publication. Inflationary pressures are letting up, but risks linger Headline Inflation in February once again came in below the expectations of both the analyst consensus and the RBA. But …
House price growth reaccelerates in January The fairly large gain in house prices in January points to a rebound in price growth driven by the fall in mortgage rates towards the end of last year. Although its early in the year, today’s data fit with our …
26th March 2024
Earlier weakness in equipment investment fading The solid rebound in durable goods orders in February suggests that the recent decline in corporate borrowing costs is feeding through to a tentative recovery in business equipment investment. The 1.4% m/m …
New home sales disappoint in February February’s tiny drop in new home sales cut short what appeared to be the beginning of a recovery in recent months. Even though the drop was extremely small, it still potentially casts some doubt over our upbeat new …
25th March 2024
Heading for another decent quarter Despite only modest rises in retail sales volumes in January and February, the earlier strength in December means that growth should remain strong this quarter. The 0.3% m/m fall in retail sales was a little smaller than …
22nd March 2024
This page has been updated with additional analysis since first publication. Shoppers largely shrug off wet weather as retail rebound only paused Unchanged retail sales volumes in February (CE forecast 0.0% m/m, consensus -0.4% m/m), as shoppers largely …
Inflation will return to BoJ’s target by year-end The renewed jump in headline inflation in February leaves the door open for another rate hike by the Bank of Japan, but with underlying inflation moderating the case for tighter policy is weakening. The …
21st March 2024
Existing home sales accelerate despite higher mortgage rates Existing home sales rose in February which we think largely reflects the sharp fall in mortgage rates at the end of last year. But borrowing costs have been rising so far in 2024, which in the …
Slight dovish tilt, and fast fall in inflation will make BoE more dovish before too long The Bank of England sprung no surprises, leaving interest rates at 5.25% for the fifth time in a row and, despite no MPC members no longer voting to raise interest …
This page has been updated with additional analysis since first publication. Further signs of the UK economy having moved out of recession We’ll be discussing the outlook for Fed, ECB and Bank of England policy in a 20-minute online briefing at 3pm GMT …
This page has been updated with additional analysis since first publication. Stagnation continues, price pressures still high The flash PMIs for March suggest that the euro-zone economy is still flatlining, in line with our forecast. Meanwhile, the price …
This page has been updated with additional analysis since first publication. Disappointing borrowing figures won’t stop the Chancellor unveiling more tax cuts Note: We’ll be discussing the outlook for Fed, ECB and Bank of England policy in a 20-minute …
This page has been updated with additional analysis since first publication. Labour market still set to loosen in the coming months The sharp drop in unemployment in February was likely a blip, rather than a trend. With job vacancies continuing to fall …
Q1 GDP decline should be followed by vigorous recovery The rise in the composite PMI to a seven-month high suggests that any fall in Q1 GDP should be followed by a strong recovery. According to today’s flash estimate, the composite PMI jumped from 50.6 to …
We are resending this publication because the previous one didn't contain any text. Better news from net trade points to smaller fall in Q1 GDP The trade balance didn’t fall nearly as much as most had anticipated in February and net trade will only …
This page has been updated with additional analysis since first publication. Economic downturn will pave the way for aggressive rate cuts With the New Zealand economy in a double-dip recession, we’re sticking to our guns that the RBNZ will cut rates more …
20th March 2024
Fed officials still see rate cuts, despite higher core inflation projections Despite upward revisions to the median projections for both GDP growth and core PCE inflation, the median forecast for interest rates – released at the end of the Fed’s two-day …
This page has been updated with additional analysis since first publication. UK inflation to fall below 2% in April and the rates in the US and euro-zone We’ll be discussing the outlook for Fed, ECB and Bank of England policy in a 20-minute online …
Housing starts rebound in February The strong rebound in housing starts last month confirmed January’s slump was a weather-related blip. Although we expected starts to bounce back, February’s data were even stronger than we had anticipated. After falling …
19th March 2024
Another good month, but more needed to convince Bank to cut rates The surprise fall in headline inflation to 2.8%, from 2.9%, is further reason to expect the Bank of Canada to cut interest rates soon, although we still think it will wait until June rather …
BoJ won’t embark on tightening cycle as inflation momentum waning The Bank of Japan ended ultra-loose monetary policy today but we don’t think it will raise its policy rate any further. A majority of forecasters polled by Reuters last week were still …
RBA will ease policy in the second half of the year The RBA stuck to its hawkish guns at today’s meeting but we think it will pivot towards policy easing by August this year. The Bank’s decision to keep the cash rate unchanged at 4.35% was correctly …
Consumer confidence edges down The small fall the University of Michigan measure of consumer sentiment in March is further evidence that the buoyant stock market alone will not prevent consumption growth from slowing. As the current conditions index was …
15th March 2024
Unwinding of weather distortion boosts manufacturing In line with the rebound in retail sales, manufacturing output was boosted in February by the unwinding of the hit from the winter snowstorms that weighed on production in January. Even as that boost …
Weakness in control group sales suggests January fall wasn’t all due to weather The 0.6% m/m rebound in retail sales in February appears to reflect the unwinding of the drag on sales from the winter storms in early January, but the details suggest that …
14th March 2024
Temporary rebound in sales volumes Lower prices mean that the muted 0.2% m/m rise in manufacturing sales in January was better than it looked, with sales volumes rising by a much stronger 1.1%. That strength was entirely due to the resumption of …
This page has been updated with additional analysis since first publication. UK economy has probably already exited recession Note: We will be discussing whether the next government will move the dial on the economy in a 20-minute online briefing at 3pm …
13th March 2024
Second hot core CPI print could put June rate cut at risk The second consecutive 0.4% m/m increase in core CPI in February leaves Fed officials some way from attaining the “greater confidence” needed to begin cutting interest rates. The annual rate of …
12th March 2024
Further easing in core inflation sets up Q2 rate cut February’s inflation data from Norway strengthen our conviction that Norges Bank will cut interest rates much sooner than its forecasts suggest. The decline in headline inflation from 5.3% in January to …
11th March 2024
Wobbly output won’t prevent BoJ from ending negative interest rates While the small rise in Q4 GDP should be followed by a renewed contraction this quarter, we doubt this will prevent the BoJ from ending negative interest rates by the of next month. The …
Wage growth heading in the right direction The Bank of Canada will be relieved to see renewed labour market slack putting downward pressure on wage growth. While the Bank will need to see wage growth soften further before it pivots to rate cuts, we …
8th March 2024
Labour market conditions easing despite employment strength The 275,000 rise in non-farm payrolls in February may, at face value, add weight to the Fed’s view that there is no rush to start cutting interest rates, but the downward revisions to previous …
Imports set for stronger gain in first quarter The January trade data point to a potentially larger drag on first-quarter GDP growth than we had assumed, albeit mainly because imports look to have been stronger than previously believed. In nominal terms …
7th March 2024
Improvement in trade balance may not be a good thing Although the economy appears to have received a large boost from net trade at the start of 2024, the plunge in imports does not bode well for domestic demand and raises the risk that an inventory …
