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Tepid lending in December closes a sluggish year for activity Net lending on commercial real estate (CRE) by banks was positive again in December, rising by $4.2bn in the month. (See Table 1.) That said, the monthly change was broadly in line with the …
16th January 2024
This page has been updated with additional analysis since first publication. Wage growth fading fairly fast Another big drop in wage growth in November supports our view that domestic inflationary pressures are fading fairly fast. But the ongoing …
Temporary rebound in sales volumes The rebound in manufacturing sales in November was broad-based but, with new orders dropping back and the manufacturing surveys weakening in December, that strength is unlikely to be sustained. The 1.2% m/m rise in …
15th January 2024
This page has been updated with additional analysis since first publication. Stagnation in Q4, but recovery in sight The 0.3% m/m rebound in real GDP in November (consensus and CE forecast 0.2%) increases the chances that the economy escaped a recession …
12th January 2024
Consumer spending continued to tumble in Q4 The continued slowdown in household spending in November further cements our view that the RBA won’t lift rates any higher. The ABS’ monthly indicator suggests that household spending rose by 3.1% y/y in …
Core prices boosted by used vehicles & shelter The slightly bigger 0.3% m/m increases in both headline and core CPI would seem to justify the stance of Fed officials that the road back to target could be a little bumpy, but we’re not convinced. The annual …
11th January 2024
This page has been updated with additional analysis since first publication. Disinflation will pave the way for policy loosening before long With price pressures cooling in earnest, we’re growing increasingly confident in our call that the RBA will start …
10th January 2024
This page has been updated with additional analysis since first publication. Virtuous cycle will get renewed boost this year Wage growth slowed sharply in November, driven by a plunge in bonus payments. While we expect the labour market to soften in the …
Tougher times ahead for exporters Export volumes were little changed in November but the surveys suggest that tougher times lie ahead, with export orders seemingly falling fast in December. The trade surplus halved to $1.6bn in November as exports …
9th January 2024
Falling imports and exports suggests demand softening at home and abroad The weakness of both exports and imports in November suggests that weaker growth overseas is now being matched by a softening in domestic demand too. The trade deficit shrank …
This page has been updated with additional analysis since first publication. RBA will look past Black Friday spending spree Although retail sales bounced back with a vengeance in November, that result largely reflected a one-off boost from Black Friday …
This page has been updated with additional analysis since first publication. Inflation will jump again before long Inflation excluding fresh food came close to the Bank of Japan’s 2% target in December, but it will jump to nearly 3% from February and …
8th January 2024
Weak ISMs should probably be taken with a pinch of salt The plunge in the ISM services index to a 7-month low in December suggests, at face value, that the economy is sliding into recession. But the poor relationship between the surveys and the hard …
5th January 2024
Employment gains still dominated by non-cyclical growth The slightly bigger-than-expected 216,000 gain in non-farm payrolls (consensus estimate was 170,000) in December coupled with a second consecutive 0.4% m/m gain in average hourly earnings means that …
This page has been updated with additional analysis since first publication. Jump in wage growth a concern for the Bank The unchanged level of employment in December is consistent with the message from the business surveys that labour demand has weakened …
This page has been updated with additional analysis since first publication. Construction PMIs still subdued in December The rise in the headline CIPS construction PMI from 45.5 in November to 46.8 in December was driven by the increase in the housing …
Lower mortgage rates see house prices jump in December The big 1.1% m/m increase in the Halifax house price index confirms that falls in mortgage rates are translating into renewed increases in house prices. Given further recent falls in mortgage rates, …
Office-based jobs contractions focused in Midwest and West Coast Total employment growth in November across our 30 metros was weak compared with the rest of 2023, growing by 0.3% 3m/3m once seasonally-adjusted. On average, office-based jobs contracted for …
4th January 2024
This page has been updated with additional analysis since first publication. Lower mortgage rates will ease the squeeze, but still some pain to come November’s money and credit data suggest that the recent falls in mortgage rates will stimulate new …
Strong November lending, but subdued investment volumes Net lending to commercial property increased for the ninth consecutive month in November, but that wasn’t reflected in investment volumes which dropped further. But throughout H1 2024 we expect …
Rise in mortgage approvals set to continue The rise in mortgage approvals in November was little surprise given the sharp drop back in mortgage rates since July. Given recent further falls in swap rates, mortgage rates are likely to continue to fall from …
Minutes more nuanced than expected, given post-FOMC hawkish chatter The minutes of the mid-December FOMC meeting were slightly more dovish that we were expecting – more in line with the message delivered by Fed Chair Jerome Powell in his press conference …
3rd January 2024
This page has been updated with additional analysis since first publication. Modest rebound to end a dismal year Despite the modest rise in the ISM manufacturing index to 47.4 in December, from 46.7, the survey indicates that conditions in the factory …
Mortgage rates below 7% spur further recovery in mortgage demand Mortgage rates dropping below 7% were the catalyst for a marked uptick in mortgage applications for home purchase in December. The 7.1% m/m rise in mortgage applications for home purchase …
Flat prices in December confirm 2023 resilience Unchanged house prices in December ensured that over the course of 2023 they fell by much less than forecasters had expected. With mortgage rates falling, it is increasingly likely that house prices avoid …
29th December 2023
This page has been updated with additional analysis since first publication. GDP will rebound this quarter While the November activity data were a mixed bag, they strongly suggest that the economy dodged a recession. Taking industrial production first, …
28th December 2023
This page has been updated with additional analysis since first publication Labour market should tread water from next year The unemployment rate stayed unchanged in November, following consecutive falls in the previous two months. We think it should …
26th December 2023
This page has been updated with additional analysis since first publication. Rate cuts approaching The weaker-than-expected monthly GDP figures raise the risk that the economy contracted again this quarter and are another reason to think that the Bank of …
22nd December 2023
This page has been updated with additional analysis since first publication. Post-pandemic inflation is over; Fed rate cuts coming soon The confirmation that core PCE prices rose by just 0.06% m/m in November means that, over the past six months, core …
This page has been updated with additional analysis since first publication. Dose of festive cheer for retailers, but unlikely to last into new year The 1.3% m/m rebound in retail sales volumes in November may have paused the recent retail woes as Black …
This page has been updated with additional analysis since first publication. Mildest of mild recessions may have begun in Q3 The final Q3 2023 GDP data release shows that the mildest of mild recessions may have started in Q3. But whether or not there is a …
This page has been updated with additional analysis since first publication. Inflation will only return to 2% by end-2024 The plunge in inflation in November was broad-based, but with the large drag from energy prices turning into a boost as energy …
21st December 2023
Consumption growth better than feared The strong rise in retail sales volumes in October suggests that consumption growth will accelerate this quarter. That presents an upside risk to our forecast that GDP will edge down again, although we remain …
This page has been updated with additional analysis since first publication. Still scope for pre-election splash in Spring Budget We doubt November’s public finances figures will prevent the Chancellor from unveiling a further pre-election fiscal splash …
Trough in existing home sales behind us: Existing home sales recovered somewhat in November from the 13-year low reached in October, as falling mortgage rates brought more buyers and sellers into the market. That chimes with the pickup in mortgage …
20th December 2023
This page has been updated with additional analysis since first publication. Collapsing domestic inflationary pressures may mean BoE cuts rates earlier For the second month in a row, the falls in CPI inflation from 4.6% in October to 3.9% in November …
This page has been updated with additional analysis since first publication. Net trade will make a positive contribution to Q4 growth Even though the trade deficit narrowed in November, goods trade will probably be a drag on GDP growth this quarter. …
Single-family starts jump to 19-month high The extreme lack of existing inventory on the market continued to support newbuild demand and construction activity in November, as single-family starts jumped to an 19-month high. The rise is at odds with the …
19th December 2023
This page has been updated with additional analysis since first publication. A temporary step backward The renewed acceleration in core inflation pressures in November was largely due to a jump in travel tour prices, which is likely to be quickly …
The Bank of Japan left policy settings unchanged today as widely anticipated. And while Governor Ueda is sounding more confident that 2% inflation will be sustained, we now expect the Bank of Japan to end negative interest rates in March rather than in …
Bank of Japan will end negative rates next month The Bank of Japan left policy settings unchanged today as widely anticipated but we still expect policymakers to end negative rates in January and to phase out Yield Curve Control later in 2024. The Bank’s …
RBA will soon turn dovish The minutes of the RBA’s December meeting reinforce our view that the Bank will be shifting to rate cuts before long. As it has done at virtually every meeting this year, the Board discussed the option of a 25bp rate hike …
November’s slight resurgence in lending likely temporary Net lending on commercial real estate by banks resurged in November, despite signs from other data that lenders would continue to pull back from real estate lending. That said, the $4.4bn of net …
18th December 2023
Manufacturing boosted by end of UAW strike The 0.3% m/m rebound in manufacturing output in November was, in reality, a disappointment, since it included a 7.1% m/m rebound in motor vehicle output, after the UAW union ended its strike at the Big Three …
15th December 2023
This page has been updated with additional analysis since first publication. Resilient activity to encourage BoE to double down on high for longer The rise in the flash composite activity PMI, from 50.7 in November to 51.7 in December, increased the …
This page has been updated with additional analysis since first publication. Recession unlikely The composite PMI rebounded in December, which means we think there will unlikely be an incoming recession. The manufacturing PMI edged down further but the …
A third consecutive decline in sales volumes The slump in manufacturing sales volumes in October suggests that there are downside risks to the flash estimate that GDP rose by 0.2% m/m at the start of the fourth quarter. The 2.8% m/m decline in …
14th December 2023
This page has been updated with additional analysis since first publication. Solid consumption growth supports soft landing The rebound in retail sales in November provides further illustration that the continued rapid decline in inflation is not coming …
Few signs Bank of England is starting to contemplate rate cuts The Bank of England sprung no surprises, leaving interest rates at 5.25% for the third time in a row and pushing back against the prospect of near-term interest rate cuts. While the recent …
This page has been updated with additional analysis since first publication Labour market will continue to loosen Even though employment growth remains strong, job creation isn’t fast enough to absorb the surge in the labour force. Accordingly, we expect …
