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This page has been updated with additional analysis since first publication. Wage growth will cool in earnest The RBA probably won’t read too much into the fact that annual wage growth stalled last quarter. A gradual loosening of the labour market should …
13th August 2024
Not as bad as it looks The second consecutive small fall in employment might seem to suggest that the labour market has taken a further turn for the worse, but it mainly reflected soft part-time employment among younger and older people. The jump in …
9th August 2024
Sharp fall in mortgages rates should soon support activity July was a disappointing month for mortgage activity overall, with earlier high borrowing costs causing home purchase applications to slide by 5.4% m/m. All the attention, however, will be on the …
7th August 2024
This page has been updated with additional analysis since first publication. Falling mortgage rates boost house prices After three months of stagnation, the bigger-than-expected rise in the Halifax house price index in July provides further evidence that …
This page has been updated with additional analysis since first publication. RBNZ will welcome continued loosening of the labour market Although employment growth in Q2 was stronger than most had anticipated, it didn’t keep the unemployment rate from …
Domestic demand remains intact There was little sign of weakening domestic demand in the international trade data for June, with imports rising. Exports rose even more sharply, causing the trade deficit to narrow, although the forward-looking indicators …
6th August 2024
Jump in exports an upside risk to GDP growth The strength of oil exports in June suggests that GDP in the second quarter will come in stronger than the 2.1% annualised gain that the flash estimate implied. Coupled with stronger consumer goods imports, …
With RBA retaining its tightening bias, rate cuts will have to wait Although the RBA continued to strike a cautious tone when it left rates on hold today, we still believe that the Bank’s next move will be down. That said, contrary to market pricing, we …
Rise in ISM services index should soothe recession fears The rebound in the ISM services index to 51.4 isn’t much to get excited about given it remains weak, but the corresponding increase in the employment index should soothe concerns that the labour …
5th August 2024
Soft landing in doubt as labour market cracks The sharp slowdown in payrolls in July and sharper rise in the unemployment rate makes a September interest rate cut inevitable and will increase speculation that the Fed will kick off its loosening cycle with …
2nd August 2024
Manufacturing struggling for momentum The further decline in the ISM manufacturing index in July raises the risk that GDP growth will lose momentum in the third quarter, and the plunge in the employment index will add to concerns that the Fed has left it …
1st August 2024
Rates cut to 5.00%, but BoE in no rush to cut again The Bank of England kick-started a loosening cycle today, cutting interest rates from 5.25% to 5.00%, but the accompanying guidance and forecasts suggest it will proceed cautiously. Accordingly, we now …
Fed lays groundwork for September rate cut There was no surprise rate cut from the Fed today, with the fed funds target range left unchanged at between 5.25% and 5.50%, but the changes in the accompanying statement – which included a shift from a …
31st July 2024
Slowdown in wage growth another reason for Fed to cut rates The further slowdown in wage growth evident in the second-quarter employment cost index data won’t be enough to prompt a surprise rate cut from the Fed later today, but it does strengthen the …
Second-quarter growth looks a bit better than expected The larger-than-expected rise in GDP in May suggests that the economy performed a little better than we anticipated last quarter, although the preliminary estimate of only a small rise in June is …
Bank will hike rates once more in October The Bank of Japan hiked its policy rate by 20bp today and we think it will follow up with another 20bp hike at its October meeting. Only one-third of analysts polled by Reuters, ourselves included, had expected …
With underlying inflation edging lower, RBA will refrain from tightening Although underlying inflation is running too high for the RBA’s liking, it is at least heading in the right direction. Therefore, although the Board will probably reiterate the need …
Growth should hold up in Q3 June’s strong activity data suggest that GDP may have rebounded even more strongly last quarter than we’re anticipating. The 3.6% m/m fall in industrial production merely reversed a similar-sized gain in May and wasn’t as …
Rising supply weighing on house price inflation Another moderate 0.3% m/m rise in house prices in May adds to the evidence that sellers are losing their grip on the market due to increasing supply. Do not write our forecast for a 5% gain in house prices …
30th July 2024
Labour market shrugging off fall in job openings The conundrum of low unemployment despite falling job openings continued in June and we expect the labour market to keep treading water over coming months. Data released today showed that the …
This page has been updated with additional analysis since first publication. More evidence the drag on activity from higher interest rates is starting to fade June’s money and lending data provided a bit more evidence that the drag from higher activity is …
29th July 2024
Economy contracted sharply in Q2, but will return to growth over coming quarters Preliminary data released this morning show that the Swedish economy contracted by 0.8% q/q in Q2, more than offsetting the 0.7% increase in Q1. The data were significantly …
Core PCE inflation data strengthen case for September rate cut Core PCE prices increased by 0.18% m/m in June, largely as expected and, although May's increase was revised up slightly to 0.13%, from 0.08%, that still means inflation has been running at a …
26th July 2024
This website has been updated with additional analysis since first publication. Underlying inflation may moderate faster than we expect The sharp slowdown in inflation excluding fresh food and energy in Tokyo this month reduces the likelihood that the …
Stronger-than-expected growth unlikely to prevent September rate cut The sharper-than-expected pick-up in second-quarter GDP growth to 2.8% annualised should make the Fed a bit more comfortable about keeping policy unchanged next week, but the recent …
25th July 2024
New home sales remain weak New home sales were essentially unchanged in June after their 15% slump the month before, not helped by mortgage rates which remained stubbornly high at around 7%. So far in July, borrowing costs have declined and currently sit …
24th July 2024
Gradual loosening cycle continues and another cut in September looks likely Following its interest rate cut today, the Bank of Canada reiterated that further cuts are likely if inflation continues to ease in line with its expectations. Our forecast for …
GDP growth appears to be slowing at the start of Q3 July’s composite PMI suggests some of the recent rebound in activity this year may have been due to catch-up growth following the weakness of activity last year and GDP growth is easing towards a more …
Recovery will retain momentum across second half of 2024 The strong rebound in the composite PMI in July suggests that the recovery of Japan’s economy will continue across the second half of the year. According to the flash estimate released today, the …
Spike in rates takes sales to 13-year low The sharp rise in mortgage rates in April was the catalyst for existing home sales falling to a 13-year low in June. However, borrowing costs have since receded and timelier indicators of activity such as mortgage …
23rd July 2024
After his disastrous debate performance, President Joe Biden has dropped out of the race to be re-elected in this November’s election. His withdrawal letter acknowledges Vice President Kamala Harris as “an extraordinary partner in all this” and, in a …
21st July 2024
Cracks in consumption getting larger After a brief rebound in April, the renewed fall in retail sales volumes in May suggests that consumption growth is weakening again. We estimate that sales volumes fell by around 1% annualised in the second quarter, …
19th July 2024
This page has been updated with additional analysis since first publication. Limited wiggle room for the new Chancellor June’s disappointing public finances figures suggest that public borrowing is on track to come in a little higher than the OBR’s …
This website has been updated with additional analysis since first publication. Inflation will remain above target until early-2025 While the Bank of Japan will still see the July Tokyo CPI before its meeting later this month, the June nationwide figures …
This page has been updated with additional analysis since first publication. Encouraging, but interest rates may not be cut in August While the easing in wage growth in May was broadly in line with what the consensus and the Bank of England expected, it …
18th July 2024
This page has been updated with additional analysis since first publication. A loosening labour market should forestall further rate hikes Although job growth remained healthy last month, it didn’t prevent the unemployment rate from rising anew. And we …
Drag from net trade will moderate Q2 GDP rebound While the widening of the trade deficit in June points to a sizeable drag from net exports on Q2 GDP growth, activity should still have rebounded last quarter. The 5.4% y/y rise in export values was weaker …
Manufacturing sector bucking negative tone of the surveys The rise in manufacturing output in June was better than we expected based on the small fall in hours worked, but it owed a lot to a rebound in motor vehicle production, which seems unlikely to be …
17th July 2024
Multi-family driven increase in housing starts The rise in housing starts and building permits in June is not as good as it seems at first glance, as it was driven by gains in the volatile multi-family sector, which we think will prove temporary. …
This page has been updated with additional analysis since first publication. We’re holding a 20-minute online briefing at 9.30am BST on Thursday 18 th July to discuss how today’s CPI and tomorrow’s labour market releases influence the chances of a rate …
This page has been updated with additional analysis since first publication. With inflation falling rapidly, the RBNZ’s August meeting is now “live” Today’s CPI release confirms that inflation is all but certain to return to the RBNZ’s 1-3% target by Q3. …
Odds still favour a July rate cut The Bank of Canada’s preferred CPI-trim and CPI-median measures of core prices rose at an above-target monthly pace for the second month running in June. Nonetheless, with the Bank’s Business Outlook Survey , released …
16th July 2024
Strong control group sales ease fears of consumer slump Although retail sales were unchanged in June, the strong 0.9% m/m rise in control group sales should ease concerns about the plight of the consumer in the wake of the renewed slump in sentiment. …
Stronger momentum in manufacturing The continued rise in manufacturing sales and new orders suggests that the sector gained some momentum in the second quarter. However, we expect that strength to fade this quarter. The 0.4% m/m rise in manufacturing …
15th July 2024
More evidence of consumers struggling The further decline in the University of Michigan consumer sentiment index in July adds to the evidence that consumers are increasingly struggling with high interest rates. Although the link between confidence and …
12th July 2024
PPI a lot better than it looks Ignore the fact that core PPI increased by a slightly bigger-than-expected 0.4% m/m in June and that May was revised to a 0.3% rise from unchanged. The PPI components that feed into the Fed’s preferred PCE deflator inflation …
CPI qualifies as ‘more good data’ The muted 0.1% m/m increase in core CPI in June strengthens the case for a September rate cut although, while a lot still depends on the PPI data due tomorrow, our initial estimate is that the core PCE deflator increased …
11th July 2024
This page has been updated with additional analysis since first publication. Economic recovery continues to strengthen The stronger-than-expected 0.4% m/m rise in GDP in May (consensus forecast 0.2%, CE forecast 0.3%) will be welcomed by the new …
RBNZ strikes some dovish notes Although it left the Official Cash Rate unchanged at 5.50%, the RBNZ sounded rather dovish in its commentary. The Committee’s messaging gives us greater confidence that the Bank will commence its easing cycle in November. …
10th July 2024
Powell leaves all options open Fed Chair Jerome Powell’s opening statement for his congressional testimony today offers few clues about the potential timing of interest rate cuts, with the key line that the Fed is still looking for “more good data” to …
9th July 2024
