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Contraction in October sets scene for stagnation in 2024 Note: We’ll be discussing the Fed, ECB and Bank of England December decisions and the policy outlook for 2024 in an online briefing on Thursday, 14 th December . Click here to register for the …
13th December 2023
This page has been updated with additional analysis since first publication. Strong Tankan suggests Japan won’t slip into recession The continued improvement in the Tankan suggests that the drop in Q3 GDP was just a blip, but we still expect GDP growth …
This page has been updated with additional analysis since first publication. Stronger rise in core prices buys Fed a little more time The slightly stronger 0.28% m/m rise in core consumer prices in November suggests the Fed may be able to hang onto its …
12th December 2023
This page has been updated with additional analysis since first publication. Sharp fall in wage growth will further fuel market rate cut expectations The sharp fall in wage growth in October will probably further fuel investors’ expectations that interest …
Inflation concerns easing The plunge in the University of Michigan’s consumer inflation expectations measures in December will give reassurance to the Fed ahead of its meeting next week that there are few signs of inflationary pressures reigniting. …
8th December 2023
Payrolls boosted by returning strikers The 199,000 increase in November payroll employment included 47,000 workers returning from strikes (30,000 UAW members and 17,000 SAG Aftra members). Stripping out that one-off boost, the 152,000 gain was roughly the …
This page has been updated with additional analysis since first publication. Wage growth will stay strong Regular wage growth accelerated in October and we expect it to stay strong in the coming months as the virtuous cycle between prices and wages …
7th December 2023
Halifax confirms that prices are on the rise again The second consecutive monthly rise in the Halifax house price index in November mirrored the increase in the Nationwide index, confirming that house prices have not only stabilised, but are rising. …
Net trade could remain a drag on growth in Q4 Notwithstanding the slight expansion in the goods trade surplus in October, net trade could subtract from growth this quarter. The rise in the goods trade surplus from a downwards-revised $6.2bn in September …
Bank maintains tightening bias, but next move likely to be a cut The policy statement from the Bank of Canada was a bit more hawkish than we expected, with the Bank reiterating that it is still concerned about the outlook for inflation and “remains …
6th December 2023
Imports and exports set for further growth in Q4 Despite the widening in the trade deficit in October, net trade looks set to be only a modest drag on fourth-quarter GDP growth. But the survey evidence suggests renewed weakness in exports may still lie …
Slump in imports only partly due to UAW strike The slump in import volumes in October was partly due to the knock-on effects of the UAW strike in the US, but it also suggests that firms are now drawing down their inventories as demand weakens. That raises …
Falling rates allow mortgage demand to recover Falling mortgage rates sparked a modest uptick in mortgage applications for home purchase in November. Recent falls in Treasury yields mean further falls in mortgage rates are imminent, so the trough in …
GDP growth will continue to disappoint GDP growth was softer than most expected in Q3 and with that weakness set to continue, we think that the RBA is done tightening policy. The 0.2% q/q rise in output fell short of the analyst consensus of 0.4% as well …
Muted ISM services consistent with GDP stagnation; job openings drop back The modest rebound in the ISM services index to 52.7 in November, from 51.8, left our weighted composite index at a level consistent with an outright stagnation in GDP. Admittedly, …
5th December 2023
RBA is done hiking rates Although the RBA won’t tighten policy any further, there is a good chance that the Bank will hold the cash rate at its current peak for longer than we anticipate. The RBA’s decision to leave rates unchanged at its meeting today …
This page has been updated with additional analysis since first publication. Inflation won’t reach BoJ’s target until end-2024 While inflation excluding fresh food in Tokyo wasn’t far above the Bank of Japan’s 2% target in November, we think it will take …
4th December 2023
This page had been updated with additional analysis since the first publication. Manufacturing activity continues to struggle The unchanged reading of 46.7 for the ISM manufacturing index in November suggests that manufacturing activity continued to …
1st December 2023
Labour market conditions loosening The labour market is weaker than the 24,900 rise in employment might suggest, with the unemployment rate rising again and hours worked slumping by 0.7% m/m last month. The fall in hours worked means that the preliminary …
Rising prices continue to confound forecasters The further small increase in the Nationwide house price index in November was unexpected and came on the heels of an even larger rise in October. It means house prices are on track to fall by just 2% y/y in …
This page has been updated with additional analysis since first publication. Labour market not out of the woods yet The renewed tightening of the labour market in October probably reflects the lagged effects from the surge in output across the first half …
30th November 2023
This page has been updated with additional analysis since first publication. A bumpy landing so far, but recession risks remain On the face of it, the upward revision to second-quarter GDP growth combined with the preliminary estimate of a strong monthly …
Falling PCE inflation suggests rate cut speculation likely to grow The muted rise in real consumption and further decline in core PCE inflation in October will reinforce the growing belief in markets that interest rate cuts are on the horizon. Real …
Office-based jobs contracted for the first time in over three years Total employment grew by 0.3% 3m/3m once seasonally-adjusted in October across our 30 metros, which is weak both by this year’s standards and of the previous decade. Meanwhile, …
This page has been updated with additional analysis since first publication. Slowdown in private capex has further to run Private investment growth softened in Q3 and firms’ forecasts for 2023/24 suggest that this slowdown has further to run. The 0.6% …
This page has been updated with additional analysis since first publication. Weakness in consumption raises risk of recession While industrial production kept rising in October, firms’ output forecasts for the coming months are weak and the slump in …
This page has been updated with additional analysis since first publication. Higher interest rates will continue to percolate through the economy October’s money and credit data suggest that higher interest rates are continuing to percolate through the …
29th November 2023
Trough in mortgage approvals behind us With mortgage rates easing, the rise in mortgage approvals in October confirms that the trough in mortgage approvals is behind us. But with mortgage rates unlikely to fall much below 5% until the second half of 2024, …
This page has been updated with additional analysis since first publication. RBNZ will cut rates in the second half of next year While the RBNZ signaled that it could hike rates further, we still think that the tightening cycle is now over and that the …
This page has been updated with additional analysis since first publication. Trimmed mean inflation set to fall in earnest before long With trimmed mean inflation only moderating slowly, the RBA may well decide to hike interest rates further next year, …
House prices continue to defy gravity Another large monthly gain in house prices in September suggests that the extremely limited supply of existing homes for sale continued to outstrip the drag on demand from high mortgage rates. This was a stronger …
28th November 2023
Black Friday may result in further rise in sales volumes in Q4 While retail sales values fell in October, a renewed boost from Black Friday in November may yet result in a second consecutive rise in sales volumes across Q4. The 0.2% m/m fall in sales …
Temporary pause in strength of new home sales New home sales reversed most of their rise in the previous month as mortgage rates spiked to 8%. However, we don’t think this marks an end to the strength in new homes sales. That’s because the supply of …
27th November 2023
Retail sales perk up after weak Q3 The renewed rise in retail sales volumes in September was not enough to prevent a large contraction in sales volumes over the third quarter. The balance of risks is probably now skewed to the downside surrounding our …
24th November 2023
This page has been updated with additional analysis since first publication Decreases all across the board suggests another weak quarter The further slowdown in the composite PMI in November suggests that GDP growth remained sluggish this quarter. The …
This page has been updated with additional analysis since first publication. Inflation will only reach 2% by the end of next year The jump in headline inflation in October isn’t as bad as it looks as underlying inflation kept falling. Nonetheless, it …
23rd November 2023
This page has been updated with additional analysis since first publication. Something for everyone, but bigger point is labour supply is too low The net migration figures for the year to June 2023 give some ammunition to both sides of the political …
This page has been updated with additional analysis since first publication. Sticky price pressures will add to the Bank of England’s unease The rise in the flash composite activity PMI, from 48.7 in October to 50.1 in November, is still consistent with a …
For more detailed analysis of the Autumn Statement, see our UK Economics Focus here . Chancellor chips away at fiscal tightening ahead of an election The net new giveaway the Chancellor announced today of £14.3bn in 2024/25 (0.5% of GDP) is a bit bigger …
22nd November 2023
Equipment investment continues to struggle Aside from the plunge in the volatile transport component, the October durable goods orders data suggest that business equipment investment continues to struggle in the fourth quarter. The 5.4% m/m plunge in …
Fed offers something for everyone There is something for everyone in the minutes of the Fed’s early November policy meeting. The FOMC still just about maintained a tightening bias, but the overwhelming impression is that officials thought rates had …
21st November 2023
Spike in rates takes sales to fresh 13-year low Existing home sales fell sharply to a fresh 13-year low in October as the 8% peak in mortgage rates in the same month caused buyers and sellers to withdraw from the market. Mortgage applications for home …
This page has been updated with additional analysis since first publication. Core inflation pressures muted There was good news all round in the October CPI report, with the overall CPI falling in month-on-month seasonally adjusted terms for the first …
Note: We’ll be discussing the UK macro and market consequences of the Chancellor’s Autumn statement at 10:00 EST/15:00 GMT on 22nd November. Register here for this 20-minute online briefing. This page has been updated with additional analysis since first …
Starts continue to bounce back With homebuilders encouraged by the recent surge in buyers entering the new homes market due to a lack of existing inventory, housing starts and permits edged slightly higher in October. Total housing starts rose 1.9% m/m …
17th November 2023
This page has been updated with additional analysis since first publication. Retail woes continued at the start of Q4, and further weakness to come The 0.3% m/m fall in retail sales volumes in October means that after contracting by 1.0% q/q (which was …
Output temporarily depressed by UAW strike The 0.7% m/m decline in manufacturing output in October was entirely due to the now-resolved UAW strike, which translated into a temporary 10.0% m/m fall in motor vehicle output. With the UAW securing lucrative …
16th November 2023
This page has been updated with additional analysis since first publication. The rise in unemployment has further to run Although jobs growth gained momentum in October, a renewed uptick in the unemployment rate should ensure that the RBA doesn’t feel the …
Manufacturing and wholesale trade GDP broadly unchanged in September The slightly better-than-expected gains in manufacturing and wholesale sales in September do not change the big picture that GDP in each sector was probably largely unchanged, supporting …
15th November 2023
Despite the indefatigable consumer, price pressures fading fast Retail sales values fell by 0.1% m/m in October, but the decline was principally due to a price-related drop back in gasoline station sales and a modest 1.0% m/m decline in motor vehicle …
