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 …
24th September 2024
This page has been updated with additional analysis since first publication. Growth slowing, not collapsing The fall in September’s composite flash PMI is probably not a sign that the economy is on the cusp of another downturn, but instead is further …
23rd September 2024
Growth softening The weaker-than-expected set of Polish activity data for August suggest that GDP growth softened over Q3. That said, we still maintain our forecast for relatively strong growth of 3.0% for this year as a whole, and this batch of data is …
This page has been updated with additional analysis since first publication. Flash PMIs point to sharp slowdown The big decline in the euro-zone Composite PMI suggests that the economy is slowing sharply, that Germany is in recession and th at France’s …
Stronger third quarter consumption The rebound in retail sales volumes in July will be welcome news to the Bank of Canada, which has been concerned about the downside risks to the economy. With the outlook for sales positive, there is a better chance …
20th September 2024
Retail sector on track to support consumer spending in Q3 The unexpected large rise in retail sales volumes in August came on the back of a 0.7% m/m increase in July (revised up from 0.5% m/m) and lends some support to our view that the recent stagnation …
This page has been updated with additional analysis since first publication. Borrowing disappoints but backdrop not as dire as Chancellor suggests August’s public finances figures continued the recent run of bad news on the fiscal position, with public …
The Bank of Japan kept policy unchanged today as widely anticipated and we’re sticking to our forecast that it will deliver another 25bp rate hike at its October meeting. As correctly anticipated by all analysts polled by Reuters, including ourselves, the …
The PBOC fails to deliver cuts The lack of any reduction to policy rates today, despite the clear economic case for doing so, underscores the extent to which the PBOC remains constrained by concerns about bank profitability and declining long-term bond …
Underlying inflation will hover around 2% until early-2025 Underlying inflation rebounded in August and will remain close to the BoJ’s 2% target until early-2025, triggering another rate hike by the Bank at its October meeting. The 2.8% annual rise in …
Sales slump, but signs of life emerging The slump in existing home sales in August shows that the sharp fall in mortgage rates since late-July is yet to stimulate the market, although the signs of life in last week’s purchase mortgage applications data …
19th September 2024
SARB cautiously cuts by 25bp The South African Reserve Bank finally joined other EM economies in starting its monetary policy easing cycle, lowering its repo rate by 25bp to 8.00%. While the decision to cut was unanimous, the MPC did consider both holding …
CBRT still waiting for further disinflation The communications accompanying the decision by the Turkish central bank (CBRT) to leave its policy rate on hold today, at 50.00%, were slightly more dovish than last month, but there are no clear signs to us …
For our more detailed analysis of the Bank's September policy announcement, see here . BoE underlines that interest rates will be reduced gradually By leaving interest rates at 5.00% the Bank of England showed it is more like the ECB than the Fed and is …
CBC in no rush to join regional easing cycle Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%), and with growth set to accelerate we expect rates to remain on hold throughout 2024 and 2025. In contrast, the consensus is …
Norges Bank stays hawkish In contrast to the uncertainty surrounding yesterday’s Fed decision, the Norges Bank’s announcement that it is leaving its policy rate unchanged at 4.5% was correctly anticipated by all the analysts polled by Reuters, so the main …
Unemployment rate will approach 5% next year The labour market and population data released today are consistent with our view that the Reserve Bank of Australia will only lower interest rates in Q2 2025. For a start, the 47,500 rise in employment in …
This page has been updated with additional analysis since first publication. RBNZ still on course to loosen policy aggressively Economic activity in New Zealand last quarter wasn’t quite as weak as most had anticipated. However, we still think there’s a …
Copom hikes, leaves door open to more Just four months after last lowering interest rates and hours after the US Federal Reserve started its easing cycle with a bang, Brazil’s central bank delivered a 25bp hike to the Selic rate, to 10.75%, as officials …
18th September 2024
A hawkish 50 The Fed did cut its policy rate by a bigger 50bp, to between 4.75% and 5.00%, but the vote was not unanimous and the new rate projections only shows an additional 50bp of cuts between now and the end of this year. Accordingly, today’s …
Rebound in housing starts The large rise in housing starts in August was due to a rebound in starts in the south, confirming that the July slump was a temporary disruption caused by Hurricane Beryl. The increase in permits, particularly in the …
Drop in inflation sets the stage for rate cut tomorrow The dip in South Africa’s headline inflation rate, to 4.4% y/y, in August and the further decline in core inflation all but seals the deal on the SARB start an easing cycle tomorrow. We have pencilled …
Bank Indonesia today kicked off its easing cycle with a 25bps cut, taking its main policy rate to 6.00%. With inflation under control and the rupiah rebounding against the US dollar, further cuts are likely. While the decision was unexpected (it was …
This page has been updated with additional analysis since first publication. Rise in services inflation makes September rate cut even less likely CPI inflation stayed at 2.2% in August (consensus & CE 2.2%, BoE 2.4%), but the rise in services inflation …
Drag from net trade will moderate Q3 GDP growth Even though the trade balance held up much better than most had anticipated in August, net trade will still provide a large drag on Q3 GDP growth. The 5.6% y/y rise in export values was much weaker than the …
Manufacturing output rebounds, but challenges remain Manufacturing output rebounded strongly in August as the temporary disruptions to production from the previous month were reversed. Together with last month’s solid gain in control group retail sales, …
17th September 2024
Consumers remain resilient The stronger-than-expected retail sales data for August suggest that, boosted by rapid wealth gains and falling energy prices, consumers continue to spend freely despite the labour market slowdown. With control group sales …
Mission almost accomplished The return of headline inflation to the 2.0% target in August was mainly due to favourable base effects and is likely to be short-lived, with inflation rebounding to as high as 2.5% by the turn of the year. Nonetheless, the …
A brief respite for the manufacturing sector The 0.9% m/m rise in manufacturing sales volumes in July implies there are upside risks to the flash estimate that total GDP was unchanged at the start of the third quarter, although the negative tone of the …
16th September 2024
Disinflation continues, CBN in place to cut rates yet Nigeria’s headline inflation rate dipped to 32.2% y/y in August, confirming the disinflation trend is firmly on course as the pass through from previous sharp falls in the naira continues to fade. This …
Consumer mood improves, but remains sour Despite the small rise in the University of Michigan consumer sentiment index in September, consumer confidence remains in a slump. At face value, weak sentiment points to softer consumer spending, but confidence …
13th September 2024
Renewed slowdown in credit Both broad credit and bank loan growth slowed in August, coming in below expectations. (See Chart 1.) While stronger government spending should give the economy a boost over the coming months, that doesn’t seem likely to be …
CBR delivers surprise hike The decision by the Russian central bank (CBR) to hike its policy rate today by 100bp, to 19.00%, suggests that policymakers are even more concerned about the inflation outlook than we’d previously thought. While our forecast is …
PPI also points to another muted gain in core PCE The August PPI data provide more encouragement for the Fed that inflation has been tamed. Together the CPI and PPI data point to a muted 0.14% m/m increase in the core PCE deflator last month, with the …
12th September 2024
Slight rise in headline rate tips balance in favour of October rate hold The slight rise in India’s headline CPI inflation in August reinforces our view that the Reserve Bank will proceed with a bit of caution and keep rates unchanged in its next meeting …
ECB likely to ease policy only gradually There was never any doubt that the ECB would cut its deposit rate by 25bp today, to 3.5%. Otherwise, the policy statement is largely as expected and does not change our view that the ECB will probably leave rates …
Inflation stabilises, rates to be left on hold Russia’s headline inflation rate held steady at 9.1% y/y in August which, while slightly stronger than expected, won’t tip the balance towards another interest rate hike at the central bank’s meeting on …
11th September 2024
Inflation tamed rather than vanquished The 0.28% m/m increase in core CPI in August appears to be consistent with a slightly below-target 0.15% m/m increase in the Fed’s preferred core PCE deflator measure. But we doubt that modest undershoot would be …
This page has been updated with additional analysis since first publication. July’s stagnation unlikely to mark the start of a renewed downturn GDP stagnated in July (consensus and CE forecast 0.2%), but that doesn’t mean the UK is on the cusp of another …
Further rise in services inflation seals the deal on a rate hike Brazil’s headline inflation dropped back to 4.2% y/y in August, but there was yet another increase in underlying services inflation which sets the stage for an interest rate hike at next …
10th September 2024
Inflation picks up, CBE will wait until 2025 before cutting rates Egypt’s headline inflation strengthened from 25.7% y/y in July to 26.2% y/y in August, breaking a five month streak of decelerating inflation, after electricity and fuel price hikes. We …
This page has been updated with additional analysis since first publication. Encouraging, but not enough for interest rates to be cut again in September The further easing in wage growth will be welcomed by the Bank of England as a sign that labour market …
Exports set to remain a near-term bright spot Export values grew y/y at the fastest pace in 17 months, with export volumes hitting record highs. We expect exports to remain robust in the near term, supported by the decline in China’s real effective …
The larger-than-expected fall in Mexico’s headline inflation rate, to 5.0% y/y in August, alongside the likelihood of a Fed rate cut next week, mean that Banxico is on track to lower its policy rate by another 25bp at its meeting later this month. The …
9th September 2024
This page has been updated with additional analysis since first publication. Overcapacity continues to weigh on prices Despite a weather-related surge in vegetable prices, a fall in energy prices and core inflation meant CPI only rose a touch. Meanwhile, …
Labour market experiencing slowdown rather than collapse The 142,000 gain in non-farm payroll employment in August was probably just enough to tip the Fed in favour of a measured 25bp rate cut this month, rather than a more dramatic move, but the labour …
6th September 2024
Unemployment rate heading toward 7% The rebound in employment in August should soothe fears that the economy is taking a turn for the worse, although the 0.2%-point jump in the unemployment rate to 6.6% presents clear upside risks to our forecast that it …
This page has been updated with additional analysis since first publication. No respite for German industry The big drop in German industrial production in July adds to the sense that the sector is facing a deep crisis and that, having contracted in Q2, …
This page has been updated with additional analysis since first publication. Modest housing market recovery continues The second consecutive monthly rise in the Halifax house price index in August supports our view that the fall in the Nationwide house …
ISM services survey adds little to the 25bp vs 50bp debate Although the ISM services index was essentially unchanged in August, that is still something of a relief following the weak ISM manufacturing report earlier this week and the gloomy tone of the …
5th September 2024
