Easing cycle continues, but space for further cuts is narrow Romania’s central bank (NBR) delivered another 25bp cut to its policy rate today, to 6.50%, but in spite of the slightly more dovish accompanying statement, we think that the space for further …
7th 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 …
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 …
Exports to stay robust, helped by NEER depreciation Growth in export values slowed last month, but this was mainly due to lower export prices. Export volumes remained near record highs. We expect outbound shipments to stay strong for a while, not least …
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 …
25bp cut likely to be followed by more easing The Central Bank of Kenya delivered a 25bp cut to its policy rate, to 12.75%, at its meeting today as it embarked on long-trailed easing cycle and, with inflation set to fall further from here, additional cuts …
6th August 2024
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 …
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, …
Retail sector to pick up over the coming months Retail sales fell in June but we think they will gradually rise over the remainder of the year on the back of strong real household income growth and falling interest rates. The 0.3% m/m decline in retail …
Construction activity rebounds, helped by housing The headline CIPS construction PMI rebounded in July, more than reversing the small fall in June to reach 55.3, the highest reading since May 2022. That rise was driven by the housing component, with the …
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 …
Strong wage growth adds to case for further BoJ tightening The enormous rise in labour cash earnings in June was mostly driven by a jump in summer bonus that won’t be sustained, but the figures clearly point to another BoJ rate hike later this year if the …
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
Non-oil sectors in the Gulf continue to cool This response has been updated with additional analysis, including of Qatar's PMI. July’s batch of PMIs were softer across the board, adding to signs that activity in private non-hydrocarbon sectors in the Gulf …
Disinflation process underway, but it will take time The large fall in headline inflation in Turkey in July will provide some comfort to the central bank that the disinflation process remains on track, although it will take time for policymakers to be …
The national accounts data released today suggest that economic growth remained broadly stable last quarter, but we don’t have much faith in the official data. With economic activity set to weaken in the coming quarters, and concerns about inflation …
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
This publication has been updated with additional analysis. Headline inflation steady and to remain around current level for the rest of the year. Switzerland’s inflation rate was unchanged in July at 1.3%, keeping it below the SNB’s Q3 forecast of 1.5%. …
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 …
Strong PMI suggests economy is finally picking up South Africa’s manufacturing PMI jumped in July, suggesting that improving electricity supply conditions and reduced political uncertainty are starting to support activity. While the economy may finally be …
PMIs point to softer demand in Russia and Turkey The manufacturing PMIs for July suggest that industrial sectors lost a bit of momentum in Turkey and Russia at the start of Q3, although demand conditions still appear very strong in Russia. In both …
Mortgage rate reductions could help prices gain more momentum The third consecutive small monthly rise in house prices in July was a bit stronger than we had anticipated and suggests house prices are shrugging off the slight rise in mortgage rates in the …
The July PMIs from Emerging Asia nudged down slightly from the previous month but remained close to their two-year highs. However, the PMI data have been a poor guide to the hard activity data over the past year and we continue to expect manufacturing …
Copom on hold, rate cuts off the cards for the rest of 2024 Rising inflation, a worsening fiscal position and a slump in the real prompted Brazil’s central bank to leave the Selic rate at 10.50% today and strike a more hawkish tone in the accompanying …
31st July 2024
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 …
Activity softens a touch at the end of Q2 Russia’s economy lost a bit of steam in June, but it still looks like GDP growth over Q2 as a whole was very strong, with growth tracking at 4.5-5.0% y/y. Industrial production growth slowed from 5.3% y/y in May …
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 …
This page has been updated with additional analysis since first publication. Services inflation easing, but still too high for comfort The small fall in services inflation in July is probably just enough for a September rate cut to remain the base case. …
External demand no longer driving growth Hong Kong’s GDP growth slowed significantly in Q2, with activity expanding by just 0.4% q/q, down from a strong 2.3% q/q expansion in Q1, although this was slightly stronger than both we and the consensus expected …
Economy stalls, but growth to accelerate in H2 Taiwan’s economy almost stalled in the second quarter, with growth coming in well below our expectations. While we think GDP growth will pick up in the second half of the year, we are cutting our full-year …
Strong non-oil growth underpins solid Q2 Saudi Arabia’s flash estimate of GDP showed that that the economy grew by a solid 1.4% q/q in Q2 and, while non-oil activity is likely to slow over the second half of this year, it will be more than offset by …
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
This page has been updated with additional analysis since first publication. Services inflation still sticky The increase in German HICP inflation from 2.5% in June to 2.6% in July left it a little higher than expected and means that the aggregate …
Weak Q2 makes August rate cut likely The weaker-than-expected 0.2% q/q expansion in Mexico’s economy in Q2 means that Banxico is likely to resume its easing cycle at next week’s Board meeting with a 25bp cut to 10.75%. The outturn was a little weaker …
Further signs of recovery losing momentum The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally fell in July, and our regional-weighted measure hit a five-month low, providing additional evidence that the …
This page has been updated with additional analysis since first publication. Recovery continued in Q2 but surveys weakening at start of Q3 The euro-zone’s recovery continued at a moderate pace in Q2 and it should get a small boost from the Paris Olympics …
Recovery slowing National-level data released so far suggests that euro-zone GDP growth slowed to 0.2% q/q in Q2 and the weakening of the surveys in July suggests GDP growth may have eased further this quarter. GDP figures for the euro-zone’s largest …
Recoveries stutter in Q2 The weaker-than-expected Q2 GDP data out of Czechia and Hungary show that weak external demand is still acting as a constraint on the speed of recoveries in Central Europe. While we expect growth to strengthen over the second half …
Leadership flags increased policy support but offers few new ideas The readout of the Politburo’s latest triannual meeting on economic affairs has just been published by state media. It was dovish in tone and adds to recent evidence that the leadership …
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 …
The State Bank of Pakistan (SBP) lowered its policy rate by 100bps today, and further easing is likely later in the year. Today’s cut marks the second consecutive meeting where the central bank has reduced interest rates. Prior to that, the policy rate …
29th July 2024
Net lending to property picks up as outlook stabilises Net lending to property increased for the third month in a row in June, and the rise of £1.31bn was the largest since the end of 2021. In line with last month the gain was entirely due to a rise in …
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 …
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
