Boost from net trade to be offset by weaker domestic demand Despite the trade deficit widening in August, developments earlier in the quarter means that net trade looks set to support GDP growth in the third quarter. With most of that positive …
8th October 2024
Rise in exports suggest stronger GDP growth The trade deficit narrowed to $70.4bn in August, from $78.9bn, as exports grew by 2% m/m and imports declined by 0.9% m/m. Exports, especially in real terms, were stronger than the advance goods data had implied …
This page has been updated with additional analysis since first publication. August recovery but prospects for German industry still bleak The big increase in German industrial production in August isn’t much reason to celebrate as it was only enough to …
Inflation down again September’s drop in inflation in Sweden will reinforce the Riksbank’s inclination to keep cutting interest rates at the next few meetings. Statistics Sweden’s first ever “flash” estimate of inflation revealed that headline CPI …
RBA softens its tightening bias Although the RBA is becoming more attuned to downside risks to its outlook, we still think it will wait until early next year to cut rates. The minutes of the RBA’s September meeting confirmed that the RBA has in fact …
Regular earnings growth will remain close to 3% Base pay rose the most since 1992 in August and we think it will continue to surge in the coming months. According to today’s preliminary estimate, labour cash earnings rose by 3.0 y/y in August. That result …
This page has been updated with additional analysis since first publication. Retail data highlight weakness of consumer spending Euro-zone retail sales edged up in August but were still below their level in May. The big picture is that overall consumption …
7th October 2024
This page has been updated with additional analysis since first publication. Confirmation house prices rebounded in Q3 The third consecutive monthly rise in the Halifax house price index in September provides further evidence that the falls in mortgage …
Labour market strength rules out another 50bp rate cut Looking at the labour market strength evident in September’s Employment Report, the real debate at the Fed should be about whether to loosen monetary policy at all. Any hopes of a 50bp cut are long …
4th October 2024
Easing cycle paused, and cuts in 2025 will be limited The decision by the National Bank of Romania (NBR) to pause its easing cycle today, leaving the policy rate at 6.50%, seems to reflect growing concern about the persistence of underlying inflationary …
Construction activity rebounds to 2½ year high The headline CIPS construction PMI rebounded to a 2½ year high of 57.2 in September as the prospect of lower interest rates, rising capital values and a government committed to boosting home construction …
Service sector on fire; but price pressures could be rebounding The surge in the ISM services index to a 17-month high of 54.9 in September, from 51.5, is a good reminder that the contrasting weakness in manufacturing is not a systemic threat to the …
3rd October 2024
This page has been updated since publication with additional analysis. Sharp drop in inflation will encourage further cuts by SNB The unexpectedly sharp fall in Switzerland’s headline and core inflation in September will cement the SNB’s dovish stance and …
Stronger-than-expected inflation rules out rate cuts this year The smaller-than-expected decline in Turkey’s headline rate to 49.4% y/y in September will be a disappointment to policymakers at the central bank (CBRT), and supports our view that a …
Planned austerity would dampen growth The new French government’s plans to tighten fiscal policy by as much 2% of GDP next year would help to put the public finances on a sounder footing but also risk pushing the economy towards recession. It would also …
2nd October 2024
NBP on hold, monetary easing in 2025 will be limited The decision by the National Bank of Poland (NBP) to leave its policy rate on hold again today, at 5.75%, was never in doubt, and we continue to think that the easing cycle won’t resume until mid-2025. …
Sharp fall in mortgage rates lifts applications The impact of lower mortgage rates was finally evident in mortgage applications in September, with applications for home purchase rebounding to a three-month high. With mortgage rates falling to little more …
Some signs of life in manufacturing The ISM manufacturing index was unchanged in September, although the jump in the production index and rebound in new orders paint a slightly less negative picture heading into the fourth quarter. The unchanged reading …
1st October 2024
Sharp rise in PMI suggests economic recovery is on track South Africa’s manufacturing PMI rebounded in August, finally replicating the improvements we have seen in other survey indicators. A backdrop of interest rate cuts and improving supply conditions …
This page has been updated with additional analysis since first publication. Services inflation remains sticky The drop in euro-zone headline inflation below 2% in September should be sufficient to persuade the ECB to cut rates in October, even though …
PMIs sink in Turkey and Russia The sharp fall in the manufacturing PMIs in Turkey and Russia in September provide further evidence that their economies are slowing. But the continued rise in the prices balances of the survey in Russia will be a concern …
This page has been updated with additional analysis since first publication. Consumer rebound not as strong as it seems The solid pickup in retail sales in August was driven in part by temporary factors, meaning that the underlying momentum behind …
Tankan points to continued recovery This website has been updated with additional analysis since first publication. The slight rise in business conditions across all firm sizes in the latest Tankan suggests that the robust rebound in activity in Q2 will …
Germany and Italy HICP (September) Fall in inflation strengthens case for rate cuts The falls in headline and services inflation in the major euro-zone economies in September, along with evidence that price pressures are softening and activity slowing, …
30th September 2024
Net lending to property sees further increase as investment recovers Net lending to property reached £1.26bn in August, up from £520m the previous month. While lending to standing assets was responsible for the lion’s share of the increase, lending for …
This page has been updated with additional analysis since first publication. Fading drag on credit from higher interest rates is supporting the economy August’s money and lending data provide further evidence that the gradual improvement in credit demand …
German state data point to sticky core inflation CPI inflation data published by the major German states this morning suggest that headline HICP inflation fell sharply in both Germany and the euro-zone in September, as was widely expected. But core and …
This page has been updated with additional analysis since first publication. Softer rebound in activity, but another major downturn unlikely Q2 GDP growth of 0.5% q/q was a bit weaker than the previous estimate of 0.6% q/q, but the ONS also confirmed …
This page has been updated with additional analysis since first publication. House prices rise in Q3 and will rise further next year September’s 0.7% m/m rise in Nationwide house prices suggests that August’s 0.2% m/m fall was just a blip and that the …
This page has been updated with additional analysis since first publication. Stimulus measures will shore up near-term activity While the official PMIs held up okay in September, the Caixin PMIs dropped quite sharply which suggests that the economy lost …
Economic recovery lost some pace in Q3 While the plunge in industrial production in August creates some downside risks to our forecasts, the continued strength in consumer spending is encouraging. According to the preliminary estimate, industrial …
Core price pressures easing; Q3 consumption growth solid As we calculated based on the earlier price data releases, the core PCE deflator increased by a muted 0.13% m/m in August, with the headline deflator up by 0.09% m/m. Admittedly, although the …
27th September 2024
Stronger monthly GDP growth will be short lived Although the rise in GDP in July was stronger than expected, the preliminary estimate of unchanged GDP in August suggests that the momentum was short lived and puts third-quarter growth on track to surprise …
ESIs point to robust growth in Q3 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional economic growth strengthened at the end of Q3. But the rise in selling price expectations in the services …
Services inflation starting to fall September’s inflation data from France and Spain all but confirm that the headline rate in the euro-zone as a whole – released next week – will show a sharp decline to below the 2% target. Headline HICP inflation fell …
Inflation and growth backdrop supports further easing Mexico’s central bank delivered another 25bp interest rate cut at today’s meeting, to 10.50%, and the communications suggest that it will continue to ease policy over the coming months. We expect the …
26th September 2024
GDP revision shows stronger income growth; core orders rally At first glance the annual revision to the national accounts doesn’t appear to have had much of an impact – with second-quarter GDP growth left unchanged at 3.0% and core PCE inflation unchanged …
SNB makes dovish 25bp cut, more to come The SNB’s decision to cut its policy rate by 25bp to 1.0% today shows that it prefers a gradual approach to policy loosening, but the accompanying statement indicates clearly that further cuts are on the way. The …
Leadership hints at further stimulus measures The readout of the Politburo’s quarterly meeting on economic affairs has just been published by state media. It acknowledges that new problems have emerged in the Chinese economy recently and calls for …
Small fall in new home sales not a worry New home sales dropped back slightly in August, which always seemed likely after the 10% surge in transactions the month before, driven by pent-up buyers responding to lower borrowing costs. Still, new home demand …
25th September 2024
Inflation falls, but Copom still on course to deliver further rate hikes The larger-than-expected decline in Brazil’s headline inflation rate, to 4.1% y/y, in the first half of September is unlikely to prevent Copom from raising interest rates further …
Riksbank cuts policy rate and raises prospect of a 50bp cut this year The Riksbank’s decision to cut the policy rate by 25bp today to 3.25% was all but guaranteed, but the accompanying statement was surprisingly dovish and policymakers raised the prospect …
This page has been updated with additional analysis since first publication. Disinflation gathers pace The Reserve Bank of Australia will look past the sharp fall in headline inflation in August, given that the plunge was driven in large part government …
Cardoso’s surprise 50bp hike may not be the last The Central Bank of Nigeria surprised many by raising its policy rate by 50bp to 27.25%, at its meeting today, and Governor Cardoso’s hawkishness about the risks emanating from sticky inflation, energy …
24th September 2024
House prices lose further momentum Another muted 0.2% rise in house prices in July adds to the sense that the housing market is cooling amid weak buyer demand and growing supply. As price growth continues to moderate quickly with no signs of a turnaround …
Fall in inflation paves the way for another rate cut The larger-than-expected fall in Mexican inflation in the first half of September, to 4.7% y/y, supports our view that Banxico will continue its easing cycle with another 25bp cut on Thursday. The …
This page has been updated with additional analysis since first publication Germany back in recession The fall in the German Ifo in September adds to the evidence that the German economy is back in recession. With growth in the rest of the euro-zone also …
RBA will only cut in first half of next year The RBA sounded marginally less hawkish today but we still expect the Bank to only lower interest rates in Q2 2025. As widely anticipated, the Bank kept its policy rate unchanged at 4.35%. The key elements of …
But still falls short of what’s needed In a departure from their previous approach of drip-feeding piecemeal support measures, China’s financial regulators have just announced a coordinated package of stimulus measures. This is a step in the right …
Flash PMI suggests continued rebound in activity The composite PMI remained at healthy level in September which suggests that the strong rebound in activity that started last quarter will continue across the second half of the year. Today’s flash estimate …
