This page has been updated with additional analysis since first publication. Retail sales likely to rise gradually Retail sales edged up by 0.1% in July, and we expect them to rise further in the coming months, though at only a fairly modest pace. The …
5th September 2024
Construction activity continues to expand The headline CIPS construction PMI edged back in August, but at 53.6 it remained in expansionary territory for the sixth consecutive month. Moreover, the decline was driven by the volatile civil engineering …
On hold, BNM to leave rates unchanged this year and next Bank Negara Malaysia (BNM) left its overnight policy rate (OPR) on hold (at 3.00%) today, and is likely to be one of the few countries in Asia to leave interest rates unchanged throughout the rest …
Regular earnings growth will approach 3% While weaker growth in bonus payments weighed on overall wage growth, base pay rose by the most since 1992 in July and we think it will continue to surge in the coming months. The preliminary estimate released …
Another 25bp cut, but little sign the Bank considered a larger move Following its third consecutive 25bp interest rate cut today, the communications from the Bank of Canada reiterated that further interest rate cuts are likely. The tone of the …
4th September 2024
NBP likely to remain on pause as inflation rebounds The decision by the National Bank of Poland (NBP) to leave its policy rate on hold today, at 5.75%, was widely expected by analysts, and the incoming data are supporting our view that there won’t be …
Net trade set to weigh on GDP again this quarter The July trade data suggest that net trade will weigh on third-quarter GDP growth, but that is hardly cause for concern when it reflects the continued strength of imports, painting a better picture of …
Trade balance improves, but for the wrong reasons The improvement in the goods trade balance in July was for the wrong reasons, with a fall in imports outpacing a decline in exports. The weakness was due to sharp declines in motor vehicle trade, which …
Recovery delayed The drop in home purchase mortgage applications in August is surprising given the sharp fall in mortgage rates the month before. Some would-be buyers may be delaying their purchases due to increased concerns about the economic outlook, …
Australian economy will soon turn a corner Although activity likely bottomed out last quarter, the ongoing weakness in private demand raises the risk that the RBA will cut rates sooner rather than later. The 0.2% q/q rise in real GDP last quarter was a …
Manufacturing stuck in a rut The ISM manufacturing index was essentially unchanged in August, leaving it consistent with manufacturing output and GDP growth losing momentum in the third quarter, and a sharp drop in the new orders index reduces the …
3rd September 2024
Bumper growth in Q2 tilts odds towards rate hike The much stronger-than-expected Brazilian GDP figure for Q2, of 1.4% q/q, means that the economy now appears to be on course to expand by 3% over the year as a whole. The flip side is that it will heighten …
Weaker-than-expected rebound strengthens case for rate cuts South Africa’s economy recorded weaker-than-expected growth of 0.4% q/q in Q2 which, coming alongside the easing of inflation pressures, further strengthens the case for an interest rate cut at …
Slowly but surely, Egypt’s economy is recovering This PMI response has been updated with additional analysis of the UAE's survey published on 4th September. August’s batch of PMIs showed a more positive outturn for the Gulf’s private non-oil sectors, but …
This page has been updated with additional analysis. Headline inflation falls, risks skewed to the downside Switzerland’s headline inflation rate fell in August to one of its lowest levels in the last three years. This will be welcome news for the SNB, …
Disinflation process has some way to go The fall in Turkish inflation, to 52.0% y/y, in August is likely to be followed by continued disinflation over the coming months. But there are signs in the breakdown that underlying inflation pressures remain …
PMI plunges but reasons to not be too downbeat The sharp fall in South Africa’s manufacturing PMI in August was disappointing but the survey has been extremely volatile recently and the big picture is that respondents remained optimistic about the …
2nd September 2024
Traffic-light coalition to stay on but state elections point to challenges ahead The big rise in populist parties in elections in two East German states at the weekend doesn’t threaten the survival of the governing coalition but it points to some …
PMIs increase, but still consistent with weak industrial activity The manufacturing PMIs increased across most of the region in August, although they generally remain at weak levels and suggest that industry has continued to struggle in Q3. In Poland and …
Rebalancing still a bumpy process The Turkish GDP figures for Q2, which showed a better-than-expected 0.1% q/q expansion in output, suggest that the rebalancing process still has some way to go. The data argue in favour of the central bank keeping …
GDP figures for Q2 show a sharper-than-expected slowdown in India’s economy. Looking ahead, we expect economic activity to moderate a bit further over the coming quarters. But the big picture is that the economy remains on track to grow by a world-beating …
30th August 2024
Price pressures well behaved despite strength of real economy The July income and spending report shows price pressures remaining muted despite the strength of real consumption. The latter suggests that third-quarter consumption growth will be 3.7%. Even …
Despite Q2 upside surprise, data raise chance of a 50bp cut next week Although second-quarter GDP growth surprised to the upside, the downgrade to GDP in June and preliminary estimate that GDP was unchanged again in July imply that third-quarter growth …
This page has been updated with additional analysis since first publication. Services inflation remains sticky We doubt that August’s unexpected increase in services inflation will stop the ECB from cutting interest rates at its next meeting in September …
Net lending continues to recover gradually Net lending to commercial property was positive for the fourth consecutive month in July, albeit by a smaller £520mn. With development lending still negative, this was driven entirely by a rise in lending …
This page has been updated with additional analysis since first publication. Steady improvement in credit is supporting the economy July’s money and lending data provide further evidence that a steady improvement in the flow and demand of credit is …
This page has been updated with additional analysis since first publication. Lower mortgage rates may soon help house prices regain momentum Despite the recent declines in mortgage rates, the small fall in the Nationwide house price index in August …
This page has been updated with additional analysis since first publication. Consumption rebound likely to be gradual The softness in retail sales last month suggests that household consumption growth will remain muted this quarter. Insofar as spending …
Economic recovery lost some steam in Q3 The July activity data suggest that the economic recovery continued in Q3 but shifted down at least one gear. The 2.8% m/m rise in industrial production in July was a touch weaker than the analyst consensus of 3.3% …
This page has been updated with additional analysis since first publication. Underlying inflation seems to settle around 2% The jump in the unemployment rate in July should reverse before long as economic activity rebounds. Meanwhile, the renewed pick-up …
Road cleared for ECB cut in September Inflation figures for Germany and Spain suggest that euro-zone headline inflation may have fallen to the ECB’s 2% target in August and that the core rate edged down. That paves the way for a September rate cut, but …
29th August 2024
The PBOC has just revealed that it purchased RMB400bn of government bonds from primary dealers today. This might seem like an odd move given that the central bank has spent recent months trying to prevent yields from falling. But most signs suggest that …
Modest increase in sentiment The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally edged higher in August, which suggests that the regional economic recovery has continued, albeit at a moderate pace, this …
This page has been updated with additional analysis since first publication. EC Survey suggests economy stagnant The increase in the EC’s economic sentiment indicator for August was largely due to a jump in the measure for France. It still suggests that …
Growth steadies at the start of Q3 The latest Russian industrial production and retail sales figures for July were a mixed bag and suggest that the economy maintained a steady pace of growth at the start of this quarter. But we still think GDP growth will …
28th August 2024
Rates on hold while geopolitical uncertainty remains The decision by the Bank of Israel (BoI) to leave its policy rate on hold again today (at 4.50%) rather than resume the easing cycle, reflects policymakers’ concerns with supply-side constraints in the …
This page has been updated with additional analysis since first publication. Disinflation has further to run Inflationary pressures are easing gradually, but the details of today’s CPI release won’t bring the RBA any closer to dropping its hawkish bias. …
Softer house price gains reflect looser market The muted 0.2% rise in the national Case-Shiller house price index in June was no shock considering that buyer demand collapsed that month, while supply kept growing. With the spring selling season now over …
27th August 2024
The small fall in Brazil’s headline inflation rate, to 4.35% y/y in the first half of August, alongside the prospects of a Fed rate cut next month, means that Copom is most likely to leave rates unchanged (rather than hike) at its meeting next month. The …
Durable goods boosted by aircraft rebound The bigger than expected 9.9% m/m rebound in durable goods orders in July was entirely due to a massive rebound in aircraft orders. Excluding transport, core orders fell by 0.2% m/m in July, while June’s gain was …
26th August 2024
Drop in mortgage rates drives surge in new home sales The surge in new home sales in July was driven by pent-up buyers taking advantage of the sharp drop in borrowing costs last month, after having been sidelined earlier this year by high mortgage rates. …
23rd August 2024
Dovish Powell hints at potential for 50 bp cut Fed Chair Jerome Powell’s dovish tone at Jackson Hole today and pledge to do “everything we can to support a strong labour market” implies that a 50 bp cut could be on the table at the September meeting, …
Heading for a better third quarter Despite the 0.1% m/m gain in June, retail sales volumes contracted last quarter, suggesting that household consumption growth also slowed. Prospects for the third quarter look better, with the preliminary estimate …
Underlying inflation will fall below 2% With underlying inflation falling below 2% for the first time since 2022 and set to decline further, the case for further monetary tightening is starting to diminish. Headline inflation held steady at 2.8% in July, …
Lower rates set the stage for a recovery in activity The small rebound in existing home sales in July seems underwhelming after last month’s large drop in mortgage rates, but the data are based on completed transactions and so it will take at least …
22nd August 2024
The fall in Mexican inflation in the first half of August, to 5.2% y/y, alongside clear signals from the Fed that it will start loosening monetary policy next month, supports our view that Banxico will continue its easing cycle with another 25bp cut in …
This page has been updated with additional analysis since first publication. Fading price pressures support the case for more rate cuts this year August’s composite PMI provides further evidence that some of the recent strength of activity in the first …
This page has been updated with additional analysis since first publication. August PMIs still consistent with economic slowdown The rise in the flash PMIs for August is not as good as it looks as it was largely due to a boost from the Paris Olympics and …
A soft start to Q3 The weaker-than-expected batch of Polish activity figures for July is more likely to be a blip than the start of a soft patch. We remain comfortable with our view that Poland’s economy will expand by around 3% over the year as a whole, …
Rate cuts likely in October The decision by the Bank of Korea to leave interest rates unchanged (at 3.5%) today came as no surprise, but of more interest will be the tone of Governor Rhee’s press conference and the central bank’s statement later in the …
