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This page has been updated with additional analysis since first publication. Slower progress ahead after big plunge The fall in CPI inflation from 6.7% in September to 4.6% in October was a bit bigger than expected (consensus and BoE forecasts 4.8%, CE …
15th November 2023
This page has been updated with additional analysis since first publication . Wage growth has likely peaked Notwithstanding the acceleration in wage growth last quarter, we doubt that the Reserve Bank of Australia will tighten policy any further. The 1.3% …
GDP (Q3 2023, Preliminary) Tepid Q3 GDP outturn sets the tone for 2024 GDP growth weakened sharply in the third quarter and we expect it to remain soft next year. The 0.5% q/q contraction in Q3 GDP (-2.1% annualised) was much weaker than the analyst …
This page has been updated with additional analysis since first publication. Downward pressure on core inflation resumes The softer 0.2% m/m rise in core consumer prices in October makes it even less likely that the Fed will raise rates any further, and …
14th November 2023
This page has been updated with additional analysis since first publication. Wage growth continues to ease, but only slowly With wage growth continuing to ease and signs that a further loosening in the labour market lies ahead, higher interest rates …
Second month of declining loan balances and plenty more to come The second consecutive monthly decline in outstanding commercial real estate loan balances held by US banks in October means the data are starting to reflect the pullback in real estate …
13th November 2023
Renewed inflation concerns The continued rise in consumers’ inflation expectations in November showed that October’s jump was not a one-off and will be of some concern to the Fed. However, the headwind from persistently weak confidence is likely to weigh …
10th November 2023
This page has been updated with additional analysis since first publication. Recession or not, economy not weak enough to quash price pressures The Q3 GDP data will spark a big debate about whether or not a recession has just begun (the published growth …
Mortgage applications bottom out After their weakest month in 28 years, there were signs that mortgage applications for home purchase bottomed out at the end of October. Mortgage applications for home purchase dropped 9.1% m/m across October as a whole, …
8th November 2023
Surplus boosted by temporary surge in oil prices The September trade data look encouraging at first glance, with the merchandise trade surplus widening to $2.0bn, from $1.0bn, but the 2.7% m/m increase in export values was mostly due to higher oil prices. …
7th November 2023
Support from rebounding exports unlikely to last The modest increase in the trade deficit to $61.5bn in September, from $58.7bn, reflected strong gains in imports and exports, capping off solid quarterly rebounds in both. But with the global economy …
RBA’s next move will be down With today’s widely anticipated rate rise now behind us, we believe the RBA’s tightening cycle is at an end. The RBA’s decision to lift its cash rate by 25bp at today’s meeting came as a surprise to few. Indeed, 35 out of 39 …
This page has been updated with additional analysis since first publication. Wage growth will continue to accelerate Regular wage growth accelerated in September and we think it will continue to climb to around 2% next year. According to the preliminary …
Slowdown spreads to services sector The ISM services index fell to a five-month low of 51.8 in October, from 53.6, adding to the evidence that economic growth is slowing after a blockbuster third quarter. Unlike the renewed slump in the manufacturing …
3rd November 2023
Looser labour market driving softer wage pressures This page has been updated with additional analysis since first publication. The more modest rise in employment and essentially unchanged hours worked in October suggest that labour demand is easing …
This page has been updated with additional analysis since first publication. Third-quarter strength fading rapidly The muted 150,000 gain in non-farm payrolls in October is another sign that the economy’s strength in the third quarter is likely to unwind …
Productivity acceleration bearing down on unit labour costs Data today confirmed that the surge in GDP in the third quarter was driven by a 4.7% annualised jump in productivity, the biggest gain since 2020. While it remains to be seen whether this is the …
2nd November 2023
Bank doubles-down on rates staying high for long The Bank’s decision to leave interest rates at 5.25% for the second time in a row and the doubling down on the message that rates cuts are a long way away supports our view that Bank Rate will stay at 5.25% …
This page has been updated with additional analysis since first publication. Drag from net trade will be offset by boost from stockbuilding The slump in the trade balance in September increases the risk that the Australian economy entered a recession in …
Fed’s tightening bias likely to be dropped soon By leaving rates unchanged while continuing to flag the possibility of further tightening to come, the Fed indicated today that it remains in ‘wait and see’ mode. But we suspect the data over the coming …
1st November 2023
Office-based jobs at a stand-still for first time in three years September’s employment growth was below the average for 2023 thus far, recording 0.4% 3m/3m across our 30 covered metros once seasonally-adjusted. Meanwhile, office-based jobs remained …
This page has been updated with additional analysis since first publication. Manufacturing recovery fizzling out The surprise slump in the ISM manufacturing index to 46.7 in October, from 49.0, suggests the recent recovery in factory-sector activity is …
House prices confound expectations The large increase in house prices in October was a massive surprise given higher mortgage rates should be severely restricting the number of people able to buy and the amount they can spend. But at present, stretched …
This page has been updated with additional analysis since first publication. RBNZ to hold the line as labour market continues to slacken With the balance of demand and supply in the labour market showing further improvement, we’re more convinced than ever …
31st October 2023
Surge in house prices continues Another large gain in house prices in August suggests that the extremely limited supply of existing homes for sale continued to outweigh high mortgage rates. We think monthly gains in house prices will soften over the …
Sharper slowdown in wage growth still lies ahead The slightly stronger 1.1% increase in the employment cost index in the third quarter is another sign that the earlier rapid easing in labour market conditions may be fading, but the forward-looking …
This page has been updated with additional analysis since first publication. The surprise stagnation in August and preliminary estimate that GDP was unchanged again in September imply that third-quarter GDP probably edged down by 0.1% annualised, marking …
We are resending this publication because it was incorrectly sent as a Japan Economics Update. Note: We'll be discussing h ow much of a threat are surging bond yields to Asia’s economies in our Asia Drop-in today, 31st October. Register here to join the …
Note: We'll be discussing h ow much of a threat are surging bond yields to Asia’s economies in our Asia Drop-in today, 31st October. Register here to join the online briefing. Bank of Japan will tighten policy further next year The Bank of Japan today de …
Note: We'll be discussing h ow much of a threat are surging bond yields to Asia’s economies in our Asia Drop-in today, 31st October. Register here to join the online briefing. This page has been updated with additional analysis since first publication. …
Approvals bottom out, but will remain low The drop in mortgage approvals in September left them a third below their usual level in the years leading up to the pandemic as high mortgage rates put homeowners off moving and priced many first-time buyers out …
30th October 2023
Note: We’ll be discussing the latest Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm GMT on Thursday 2 nd November . (Register here .) This page has been updated with additional analysis since first publication. Drag on lending and …
This page has been updated with additional analysis since first publication. Surge in retail sales bolsters case for policy tightening With Australia’s retail recession likely having ended last quarter, it’s all but certain that the Reserve Bank of …
Stronger rise in core prices likely to be a blip The stronger gains in real consumption and the core PCE price index in September are a potential concern for Fed officials, but won’t be enough to convince them to resume raising interest rates next week, …
27th October 2023
This page has been updated with additional analysis since first publication. Underlying inflation set to decline further While the jump in inflation in Tokyo to a seven-month high wasn’t nearly as bad as it looks, it is consistent with our view that …
US households still the world’s spenders of last resort On its own, the stunningly-strong 4.9% annualised gain in third-quarter GDP suggests that the Fed needs to do even more to slow demand, but just as notable was the slowdown in core PCE inflation to …
26th October 2023
Bank maintains tightening bias but next move likely to be a cut Although the Bank of Canada maintained its tightening bias today, the rest of the policy statement suggests that the Bank is growing more confident that its job is done. We continue to expect …
25th October 2023
New home sales resume upward trend Extraordinarily limited supply in the existing homes market continued to drive buyers to new homes in September. The 12.4% m/m rise in new home sales in September took them to 759,000 annualised (consensus 680,000), …
This page has been updated with additional analysis since first publication. German economy still contracting The small rise in the Ifo Business Climate Index (BCI) in October still left the index in contractionary territory, echoing the downbeat message …
This page has been updated with additional analysis since first publication. RBA to hike again as inflation surprises on the upside With price pressures being slower to abate than the RBA had anticipated, we think the Bank will deliver one final 25bp …
This page has been updated with additional analysis since first publication. Signs that recession may be underway, but services price inflation still sticky The composite activity PMI inched up from 48.5 in September to 48.6 in October after five months …
24th October 2023
This page has been updated with additional analysis since first publication. Faint signs the labour market hasn’t loosened as much The labour market appeared not to loosen as much as we thought in August based on the Office for National Statistics’ (ONS) …
Weakness in sales volumes adds to recession fears The weakness of retail sales volumes in August and September suggest that consumption is stagnating at best, and that “excess demand” has faded faster than the Bank of Canada initially expected. That is …
20th October 2023
This page has been updated with additional analysis since first publication. The start of another retail recession The 0.9% m/m fall in retail sales volumes in September meant sales volumes fell 0.8% q/q in Q3 and suggests that after the 18-month-long …
This page has been updated with additional analysis since first publication. Buoyant economy to date increases scope for pre-election giveaways September's public finances figures continued the recent run of better-than-expected news on the fiscal …
This page has been updated with additional analysis since first publication. Inflation will only fall below 2% by end-2024 While inflation weakened in September, we think inflation will only fall below the BoJ’s 2% target by the end of next year. The …
Market grinds to a halt Existing home sales fell to their lowest level since October 2010 in September as the increase in mortgage rates to a fresh 23-year high caused buyers and sellers to withdraw from the market. A decline in mortgage applications for …
19th October 2023
This page has been updated with additional analysis since first publication Fall in joblessness complicates picture for the RBA The September data suggest that the labour market could take longer to cool than the RBA currently expects. Accordingly, we …
Drag from net trade unlikely to persist Net trade probably was a large drag on GDP growth in Q3, but we suspect it will become less of a drag this quarter. The 4.3% annual rise in export values in September was stronger than the analyst consensus of 3.1% …
Starts rebound, but headwinds remain Single-family starts edged higher in September to 963,000 annualised from 933,000 in August and building permits also rose to a 15-month high. However, we don’t think this means single-family construction activity has …
18th October 2023
