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Sales fall back to January lows The 0.7% m/m fall back in existing home sales in August reflects falling mortgage borrowing and took sales back close to the low levels recorded in January. Our view that mortgage rates will remain above 6% for the rest of …
21st September 2023
The Bank’s job is done The surprise decision by the Bank of England to leave interest rates unchanged at 5.25% today probably means that rates are already at their peak. We think rates will stay at this peak of 5.25% for longer than the Fed, the ECB and …
This page has been updated with additional analysis since first publication. Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In at 3pm BST today. Register here to join. A bit more wiggle room for pre-election …
This page has been updated with additional analysis since first publication. Strong pickup in growth puts rate hikes back on the table The unexpectedly strong rebound in activity last quarter means that the RBNZ may well judge it has more work to do. All …
Fed wants us to believe in “higher for longer” The Fed left its policy rate unchanged at 5.25% to 5.50% and, while the median forecast still shows one more 25bp rate hike this year, the FOMC appears to be more evenly split, with 12 in favour of that hike …
20th September 2023
This page has been updated with additional analysis since first publication. Easing in services inflation may mean BoE halts rate hikes…after tomorrow Note: We’ll be discussing September’s Fed, ECB and Bank of England policy decisions in a Drop-In on …
This page has been updated with additional analysis since first publication. Q3 GDP growth to slow sharply Net exports probably won’t support GDP growth in the third quarter, but export volumes should continue to rise over coming quarters. The 0.8% …
Sharp drop in housing starts suggest turning point Housing starts fell sharply across both the single-family and multifamily sectors in August, suggesting that construction has now reached a turning point. We expect this downward trend to continue for the …
19th September 2023
This page has been updated with additional analysis since first publication. Jump in core inflation puts renewed pressure on the Bank The larger rise in core prices in August is bad news for the Bank of Canada although, with high interest rates now …
RBA’s pause to continue Although the RBA won’t be dropping its guard in the fight against inflation anytime soon, we still believe its tightening cycle is at an end. The minutes of the RBA’s September meeting showed that the Board did once again discuss …
Sharp rise in lending in August likely to be temporary The $29.0bn monthly rise in real estate debt held by US banks in August, now at $5.48trn outstanding, was the largest m/m increase in six months. However, we expect this spike to be short-lived, as …
18th September 2023
Easing inflation expectations an encouraging sign for Fed The small fall in the University of Michigan index suggests that consumers remain downbeat in September. But the bigger news was the fairly sharp drop-back in households’ inflation expectations – …
15th September 2023
Drop back in motor vehicle output not a concern The 0.1% m/m increase in manufacturing output in August was marginally better than we had expected, but doesn’t change the broader picture, which is that, with global manufacturing still struggling, the …
Easing supply shortages continue to support activity The continued strength of manufacturing sales in July suggests that GDP may be stronger than initially expected, as easing supply shortages continue to support the manufacturing sector. While there may …
This page has been updated with additional analysis since first publication. Consumer strength fading The 0.6% m/m rise in retail sales values in August was mostly due to price-related strength in gasoline sales, with the muted 0.1% rise in underlying …
14th September 2023
This page has been updated with additional analysis since first publication Firm rebound in employment won't move the needle for the RBA Although job creation rose at a breakneck pace last month, it was matched by an equally forceful expansion of the …
This page has been updated with additional analysis since first publication. Business investment should still rebound in Q3 “Core” machinery orders fell by 1.1% m/m in July, and the data point to a sizeable fall in spending on machinery and transport …
This page has been updated with additional analysis since first publication. Downward trend in core inflation still firmly intact The Fed will look through the 0.6% m/m jump in headline CPI in August as it was driven by the recent rally in energy prices. …
13th September 2023
This page has been updated with additional analysis since first publication. Recession may have begun The 0.5% m/m fall in real GDP in July (consensus and CE forecasts both -0.2% m/m) could possibly mean that the mild recession we have been expecting has …
This page has been updated with additional analysis since first publication. Strong wage growth suggests the Bank will raise rates further The tightness of the labour market continued to ease in July. But the further rise in wage growth will only add to …
12th September 2023
This page has been updated with additional analysis since first publication. Rebound in hiring should ease recession concerns The rebound in employment and larger increase in hours worked in August suggest the economy bounced back following some of the …
8th September 2023
This page has been updated with additional analysis since first publication. Wage growth should moderate as inflation cools While the sharp slowdown in wage growth in July wasn’t as bad as it looks, it suggests that above-target inflation won’t prompt …
Largest annual fall since 2009 The steep fall in the Halifax House Price Index in August confirmed that the further leg down in house prices we have been forecasting has materialised. If we are right to think that mortgage rates will remain around current …
7th September 2023
Bank maintains hawkish bias, but next move likely to be a cut The Bank of Canada accompanied its decision to leave interest rates unchanged with a pledge to hike again if needed, but we doubt it will need to follow through. With recession risks rising and …
6th September 2023
Modest rise leaves index at subdued level The rise in the ISM services index to a six-month high of 54.5 in August, from 52.7, is a further sign that activity growth is holding up in the third quarter. That said, a weighted average of the two ISM surveys …
Trade deficit widens, as consumer goods imports rebound Net external trade is on track to provide a modest positive contribution to third-quarter GDP growth, despite the widening in the monthly trade deficit to $65.0bn in July, from $63.7bn. Exports …
BC port workers’ strike weighs heavily on imports As the BC port workers’ strike weighed far more heavily on imports than exports, the trade data suggest that there are modest upside risks to the preliminary estimate that GDP was unchanged in July. That …
Mortgage rates continue to weigh on demand Mortgage applications for home purchase continued to slip in August, recording the largest monthly fall since February. This latest drop has kept mortgage applications at their lowest level since 1995. While we …
This page has been updated with additional analysis since first publication. Stronger-than-expected GDP growth won’t prompt RBA to resume rate hikes While GDP growth held up better last quarter than the RBA had anticipated, we doubt this will encourage …
RBA is done tightening and will cut rates earlier than most expect The RBA retained its tightening bias when it kept interest rates unchanged at 4.10%, but we think the Bank’s next move will be a rate cut, perhaps as early as the first quarter of next …
5th September 2023
This page has been updated with additional analysis since first publication. Still consistent with weak output growth and slower inflation The further rise in the ISM manufacturing index to a six-month high of 47.6 in August, from 46.4, is another sign …
1st September 2023
This page has been updated with additional analysis since first publication. Labour market strength fading rapidly The 187,000 gain in non-farm payrolls, jump in the unemployment rate and slowdown in wage growth in August all add to the evidence that …
Consumption boosted by heatwave Real consumption increased by a bigger than expected 0.6% m/m in July, which will result in another round of upward revisions to third-quarter GDP growth. Our own forecast is now up to 2.3%. But the strength in July is …
31st August 2023
This page has been updated with additional analysis since first publication. Resilience of business investment poses upside risks to growth We don’t think the ongoing strength in private fixed investment will last. However, the balance of risks to our …
Note: We’ll be discussing the China growth/stimulus question, the BOJ’s policy outlook, Indian food price inflation and more in our monthly Asia Drop-In on Thursday, 31 st August . Register here to join the online briefing. This page has been updated with …
Seattle sees record decline in information jobs in July Employment growth in July was near the average seen in 2023 thus far, at a seasonally-adjusted 0.5% 3m/3m across the 30 metros we cover. But the disappointing performance of information jobs …
30th August 2023
Big gap between GDP and GDI persists Second-quarter GDP growth was revised down marginally to a still-healthy 2.1% annualised from 2.4%, but the alternative GDI (gross domestic income) measure suggests the economy expanded at a much slower 0.5% annualised …
Renewed surge in mortgage rates begins to take its toll The decline in mortgage approvals to a five-month low in July showed the renewed surge in mortgage rates since April has begun to take its toll. But given the lag between quoted mortgage rates and …
This page has been updated with additional analysis since first publication. Higher interest rates are weighing more heavily on lending The drag on bank lending from higher interest rates grew further in July, particularly in the housing market. We think …
This page has been updated with additional analysis since first publication. Rapid fall in inflation may prompt earlier rate cuts The sharp fall in inflation in July confirms that the RBA is done tightening and raises the chances that the Bank will start …
June saw house prices rise again for the fifth month in a row The limited supply of existing homes for sale helped house prices rise for the fifth consecutive month in June, according to Case-Shiller. Given the sizeable increase in prices in Q2 and that …
29th August 2023
This page has been updated with additional analysis since first publication. RBA will look past upswing in retail sales We don’t believe that the healthy uptick in retail sales in July represents a second wind for the Australian consumer. Accordingly, …
28th August 2023
Solid growth not yet prompting Fed rethink Fed Chair Jerome Powell underscored the FOMC’s commitment to data dependence in his Jackson Hole speech today, but there was no suggestion that signs of economic resilience have already prompted Fed officials to …
25th August 2023
This page has been updated with additional analysis since first publication. Underlying inflation losing momentum While underlying inflation remained at a 40-year high in the August Tokyo CPI, the momentum of price increases has slowed markedly which …
Equipment investment set to stagnate The 5.2% m/m fall in durable goods orders mainly reflected a reversal of the earlier jump in aircraft orders and wasn’t actually as bad as we had expected, with core orders also surprising on the upside. But the …
24th August 2023
Survey consistent with economic stagnation The slump in the S&P Global composite PMI to a six-month low in August casts further doubt on the idea that the economy is accelerating, with the index consistent on past form with GDP growth of close to zero. …
23rd August 2023
Retail sales still struggling as higher interest rates feed through Retail sales volumes broadly stagnated over June and July and would have performed much worse were it not for the improving supply of motor vehicles. While the ongoing wildfires across …
This page has been updated with additional analysis since first publication. Higher interest rates dragging the economy into recession The fall in the activity PMI to below the boom-bust level of 50.0 in August supports our long-held view that the economy …
This page has been updated with additional analysis since first publication. PMIs point to continued strength in economic activity The composite PMI remained high in August which points to continued strength in GDP growth, but a slowdown from the bumper …
