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Still struggling for momentum ahead of potential tariff hit The larger-than-expected decline in GDP in November and flash estimate of only a moderate rebound in December suggest that growth was 1.6% annualised last quarter, a little lower than we and the …
31st January 2025
This page has been updated with additional analysis since first publication. Higher mortgage rates starting to weigh on prices, but it won’t last Although the muted 0.1% m/m rise in Nationwide house prices in January was slightly worse than expected …
Conditions for further tightening remain in place The end-month data rush vindicates the Bank’s decision to lift its policy rate last week and suggests that further tightening over the coming months is likely. Taking the activity data first, the 0.3% m/m …
Underlying economic growth remains solid The 2.3% annualised gain in fourth-quarter GDP was a little weaker than the consensus estimate at 2.6%, but expectations would have come down a little after the December advance economic indicators showed a big …
30th January 2025
This page has been updated with additional analysis since first publication. Downbeat outlook isn’t heavily weighing on households’ financial decisions December’s money and lending figures suggest the downbeat economic outlook isn’t weighing on households …
Fed moves to the sidelines The Fed left its key policy rate unchanged at between 4.25% and 4.50% and the accompanying statement suggests the FOMC is happy to remain on the sidelines, as it awaits more clarity on the potentially stagflationary mix of …
29th January 2025
Bank cuts by 25bp as 25% tariff threat hangs over the economy With the economy doing better recently, the Bank of Canada’s decision to cut by 25bp today might have been a much closer call were it not for the looming threat of US tariffs. Any tariffs could …
Soft CPI data paves the way for RBA to cut in February With underlying inflation on track to enter the RBA’s 2-3% target band this quarter, we now expect the Bank to begin its easing cycle at its next meeting in February. The 0.2% q/q rise in consumer …
Fourth-quarter business equipment investment set to decline The fall in durable goods orders in December was due to the volatile transport component, whereas core and underlying capital goods orders both rose. While real underlying capital goods shipments …
28th January 2025
Newbuild demand remains a bright spot in otherwise frozen market The 3.6% increase in new home sales in December wraps up a solid year for newbuild demand in an otherwise stagnant housing market, with sales up nearly 3% over 2024 as a whole. We expect new …
27th January 2025
Small rise in sales does not mark beginning of the recovery The small rise in existing home sales in December reflects deals that came together in September and October, when mortgage rates hit a nadir of 6.2%, getting across the line. Given the recent …
24th January 2025
This page has been updated with additional analysis since first publication. Stagflation concerns remain at the start of 2025 Despite the small rise in the composite activity PMI from 50.4 in December last year to 50.9 in January, at face value it is …
Bank of Japan will lift policy rate to 1.25% next year The Bank of Japan hiked its policy rate to 0.5% today and we think it will lift it to an above-consensus 1.25% by the middle of next year. The Bank’s decision to resume its tightening cycle with a …
Flash PMI points to pick-up in activity this quarter The continued rise in the composite PMI to its highest point since Q3 last year supports our view that activity will pick up again this quarter. Today’s flash estimate showed that the manufacturing PMI …
Strength in underlying inflation points to further tightening The acceleration in headline inflation and strength in underlying inflation in December should add to the Bank’s confidence that it can resume rate hikes today and over the coming months. In …
23rd January 2025
Heading for another strong quarter On the surface, the 0.4% decline in retail sales volumes in November looks worrying, but that fall partly reflects households delaying purchases ahead of the December GST holiday. Encouragingly, November’s drop appears …
This page has been updated with additional analysis since first publication. Figures not as bad as they appear but challenges remain Against a backdrop of slowing GDP growth and high interest rates, December’s overshoot in borrowing is further …
22nd January 2025
This page has been updated with additional analysis since first publication. With price pressures continuing to abate, the RBNZ should have no qualms about cutting rates by another 50bp at its meeting next month. The 0.5% q/q rise in consumer prices last …
21st January 2025
Concerning signs despite GST-related fall in headline inflation The small fall in headline inflation to 1.8% in December is not as encouraging as it looks, with the details suggesting that a higher proportion of the GST holiday was captured by the price …
This page has been updated with additional analysis since first publication. UK wage growth rebounds further, but there are signs of cooling further ahead While the further rise in regular private sector pay growth in November will cause the Bank of …
Manufacturing output rebounds The strong rise in industrial production in December is consistent with the recent improvement in the survey evidence. However, we do not think this marks the beginning of a sustained recovery in the manufacturing sector. The …
17th January 2025
Jump in starts consistent with growing optimism among builders The large rebound in housing starts and continued resilience of building permits in December provides some support to our forecast that starts will remain solid in the first half of the year. …
This page has been updated with additional analysis since first publication. Disappointing Q4 not a sign of things to come December’s 0.3% m/m fall in retail sales volumes was worse than expected (consensus forecast +0.4% m/m, CE 0.0% m/m) and rounded off …
Strong control group bodes well for Q4 GDP The 0.4% m/m increase in retail sales in December was a little weaker than expected, with the consensus forecast as high as 0.6%, but this was actually a strong report that boosts our fourth-quarter GDP growth …
16th January 2025
This page has been updated with additional analysis since first publication. Tight labour market bolsters case for RBA to stay put Although we expect the labour market to cool in earnest over the course of this year, risks to our forecast that the …
Core CPI consistent with soft gain in core PCE The 0.23% m/m increase in core CPI in December appears consistent with a below-target 0.14% m/m increase in the Fed’s preferred core PCE deflator measure. Although that would leave core PCE inflation …
15th January 2025
Manufacturing recovery stalls The rise in manufacturing sales in November was entirely due to higher prices, with sales volumes unchanged. While the recovery in activity took a breather, the 1.8% m/m rise in new orders and increase in the S&P Global …
This page has been updated with additional analysis since first publication. Soft surprise boosts February rate cut odds While a lot of the surprisingly large fall in services inflation from 5.0% in November to 4.4% in December (CE forecast 4.8%, BoE …
Jump in airfare prices bad news for core PCE On the surface, the weaker than expected 0.2% m/m increase in final demand PPI and unchanged level of core final demand PPI in December seems encouraging, but they mask some price jumps in a few of the key …
14th January 2025
Even Republicans growing concerned about Trump’s policy plans The drop in the expectations index of the University of Michigan Consumer Sentiment Survey in January and the accompanying jump in inflation expectations suggest that consumers are becoming …
10th January 2025
Strong across the board The larger-than-expected 256,000 gain in non-farm payrolls in December and drop back in the unemployment rate to 4.1% supports the Fed’s decision to slow the pace of rate cuts and has heightened speculation that the loosening cycle …
This page has been updated with additional analysis since first publication. Jump in employment raises chance of Bank pause The huge gain in employment in December supports our view that labour market conditions are strengthening, despite the recent …
This page has been updated with additional analysis since first publication. Consumer spending showing tentative signs of life Although the boost from November Black Friday sales disappointed expectations a bit, consumer spending does appear to have been …
9th January 2025
Regular earnings growth will hold strong at just under 3% this year Growth in base pay rose to its highest figure since 1992 in November, and we think that it will continue to hold strong through to this year. According to today’s preliminary estimate, …
8th January 2025
Fed worried by potential impact of Trump policy agenda After Chair Jerome Powell made a big fuss about claiming in last November’s press conference that the Fed wouldn’t speculate about what policies the incoming Trump administration will adopt, the …
Weak mortgage demand supports our gloomy home sales forecast The small decline in purchase mortgage applications in December is worse than it looks, as it masks a collapse in demand in the final few weeks of the month, driven by mortgage rates climbing …
This page has been updated with additional analysis since first publication. Disinflation gathering momentum The RBA is unlikely to pay much heed to the slight pickup in headline inflation in November. In fact, with underlying price pressures showing …
ISM services index rebounds, but surge in prices paid a worry The rebound in the ISM services index in December will soothe concerns that the services sector is starting to run out of steam. Less positively, the surge in the prices paid index to a nearly …
7th January 2025
Export volumes continue to recover The third consecutive rise in export volumes in November provides further evidence that the economy was gaining momentum at the end of last year. US tariffs could cause the recovery to go into reverse this year, but that …
Exports and imports rebound after port strike disruption The US trade deficit widened again to $78.2bn in November, from $73.6bn, as imports rebounded by 3.4%, outpacing a 2.7% recovery in exports, with shipments in both directions recovering after the …
This page has been updated with additional analysis since first publication. House prices may be losing a bit of momentum going into 2025 The small fall in the Halifax house price index in December is at odds with the chunky rise in the Nationwide measure …
Manufacturing outlook looking less gloomy Building on the November rebound, the further small rise in the ISM manufacturing index in December suggests the sector is starting the year in better shape after a tough 2024. The 0.9-point rise in the headline …
3rd January 2025
This page has been updated with additional analysis since first publication. Downbeat sentiment continues to weigh on households’ financial decisions November’s money and lending data suggests that households’ caution with their borrowing and saving ahead …
This page has been updated with additional analysis since first publication. Strong end to 2024 and outlook for 2025 better than most expect December’s better-than-expected 0.7% m/m increase in Nationwide house prices means that prices continued to gather …
2nd January 2025
Bank unlikely to cut rates before May The minutes of the RBA’s December meeting struck a slightly dovish tone. However, with the labour market still firing on all cylinders, we doubt the Board will risk loosening policy prematurely. Accordingly, we still …
24th December 2024
Green shoots emerging The stronger-than-expected increase in GDP in October and upward revisions to the prior two months leaves fourth-quarter growth on track to accelerate to 2% annualised, raising the chance of the Bank of Canada pausing at its next …
23rd December 2024
This page has been updated with additional analysis since first publication. Economy is going nowhere, although households in a decent position The downward revision to Q3 GDP from +0.1% q/q to 0.0% (consensus and CE 0.1%) isn’t quite as bad as it looks …
Real economy still strong; as price pressures ease again The 0.11% m/m increase in core PCE prices in November was the smallest gain in six months, although it follows on the heels of two above-target ~0.25% gains in the preceding two months. That …
20th December 2024
Consumption losing momentum again Retail sales volumes were unchanged in October, bringing a run of strong consecutive monthly gains to an end. Moreover, the preliminary estimate that sales values were unchanged in November too suggests this may be the …
This page has been updated with additional analysis since first publication. Little festive cheer for retailers The 0.2% m/m rebound in retail sales volumes in November was slightly worse than expected (consensus +0.5% m/m) and leaves sales on course to …
