Industrial output set to fall yet again The strong rebound in industrial production in May suggests that Japan’s economy turned a turner this quarter, but if output falls as much as firms are expecting this month, that strength won’t last. The 2.8% m/m …
28th June 2024
This website has been updated with additional analysis since first publication. Rebound in underlying inflation allows BoJ to hike rates further The continued fall in the job-to-applicant ratio isn’t translating into a higher labour market and the bulk of …
Rates on hold again, but a dovish tilt Mexico’s central bank left rates unchanged at 11.00% today, but there was a surprising dovish shift in the Board’s communications – despite the post-election fall in the peso. A small reduction in the policy rate …
27th June 2024
Durable Goods & Advance Economic Indicators (May 2024) The small fall in core orders and larger fall in underlying capital goods shipments leaves prospects for second quarter business equipment investment weaker than we had expected. The 0.1% m/m rise in …
Rates on hold, CBRT sticks to hawkish message The decision by the Turkish central bank (CBRT) to leave its main policy rate on hold again today, at 50.00%, was widely expected, and the continued hawkish communications support our view that interest rate …
A strong end to Q2 The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) suggest that regional growth strengthened at the end of Q2, with our regional-weighted measure of sentiment rising to a two-year high in June. …
This page has been updated with additional analysis since first publication. EC Survey points to economic growth stagnating The EC business and consumer survey for June is consistent with weak growth in euro-zone GDP and suggests that price pressures …
This page has been updated with additional analysis since first publication. Riksbank pauses but will probably cut again in August The Riksbank’s decision to leave rates unchanged was as expected and does not suggest that policymakers are regretting their …
Dovish BSP hints at first rate cut in Q3 The central bank in the Philippines (BSP) today left its main policy rate unchanged (at 6.50%), but dropped clear hints that rate cuts were coming soon. We are sticking with our view that the central bank will cut …
We are resending this publication because the previous version had the wrong headline. Retail sales point to strong consumption rebound Retail sales rose sharply in May which suggests that consumption may have rebounded even more strongly this quarter …
New home sales fall to six-month low The 11.3% m/m decline in new home sales in May will steal all the headlines, but it largely reflected a significant upward revision to the April sales number, leaving us somewhat confused at the overall health of the …
26th June 2024
Slightly softer inflation print won’t ease Copom’s concerns The slightly lower-than-expected Brazilian inflation figure, of 4.1% y/y, for the first half of June won’t change the picture that the central bank’s easing cycle is over – for this year at …
RBA will take upside surprise in inflation in its stride The jump in inflation in May means that the Reserve Bank of Australia will be debating interest rate hikes for a while yet, but with the economy doing worse than it has been anticipating, we still …
Bank Al-Maghrib joins the EM rate cutters Morocco’s central bank, Bank Al-Maghrib (BAM) announced this afternoon that it has cut its key policy interest rate by 25bp, to 2.75%. We expect that the Bank will continue to tread cautiously, as the governor has …
25th June 2024
Price inflation slows for first time in almost a year The second consecutive moderate 0.3% m/m rise in house prices in April could be a sign that the increase in home listings this year has cooled the market. We think rising supply will eventually be …
July cut on shaky ground The stronger monthly gains in the Bank of Canada’s preferred core price measures in May will give the Bank some cause for concern after starting its loosening cycle in June. However, with some of that strength due to factors that …
Strong services inflation and fall in peso to keep Banxico in hawkish mood The continued strength in core services inflation in Mexico in the first half of June, combined with the post-election slump in the peso and heightened political uncertainty, means …
24th June 2024
Domestic demand driving the recovery The Polish activity data for May were a mixed bag with retail sales bouncing back, while industry suffered a renewed contraction. With domestic demand likely to stay strong over the coming months, we maintain our …
This page has been updated with additional analysis since first publication. Business sentiment still poor June’s decline in the Ifo business climate indicator (BCI) to a very low level highlights that even after Germany’s economy grew in Q1, it is far …
Sales barely budge in May Existing home sales were essentially flat in May which is somewhat puzzling given that pending home sales and home purchase mortgage applications, which lead transactions by a month, both fell meaningfully in April. Either way, …
21st June 2024
Strong population growth supporting retail sales Retail sales volumes performed a little better than we expected in April, but that seems to be largely due to strong population growth, with the interest rate-sensitive sectors performing poorly. Stats Can …
This page has been updated with additional analysis since first publication. Sticky price pressures may mean rate cuts are slower and smaller June’s composite PMI suggests the economic recovery lost a bit of momentum towards the end of the second quarter. …
This page has been updated with additional analysis since first publication. Back to stagflation? The sharp drop in the euro-zone Composite PMI in June suggests a solid recovery in the euro-zone economy is not a done deal, with activity having apparently …
Rebound suggests lower inflation is beginning to support consumption The larger-than-expected increase in retail sales in May more than reversed the rain-driven weakness in April. And with inflation falling back to target, Bank Rate likely to be reduced …
This page has been updated with additional analysis since first publication. Better news doesn’t mask fiscal challenge awaiting next government May’s public finances figures delivered some better news on the fiscal position after the recent run of …
This page has been updated with additional analysis since first publication. Underlying inflation will fall below 2% in second half The jump in headline inflation in May mostly reflected electricity price hikes that have further to run. By contrast, …
Housing starts fall to lowest level since June 2020 The drop in housing starts in May is consistent with the recent slowdown in permit issuance, pointing to construction continuing to falter this year. The 5.5% m/m decline in housing starts was driven by …
20th June 2024
BoE leaves the door open to an August rate cut The Bank of England predictably left interest rates unchanged at 5.25% today but continued to give the impression that the pieces of the puzzle are almost in place for it to cut rates. As a result, we still …
BI hints at rate cuts, timing dependent on currency Bank Indonesia today left interest rates unchanged (at 6.25%), but hinted at possible rate cuts later in the year, provided that the rupiah stabilises against the US dollar. The central bank’s dovish …
This page has been updated with additional analysis since first publication. Norges Bank to be one of last DM central banks to start cutting Norges Bank’s verbal guidance and updated interest rate projections reinforce the message that it won’t start …
SNB cuts rates again, but no further cuts likely this year Today’s decision by the SNB to reduce its policy rate from 1.5% to 1.25% was correctly anticipated by two thirds of economists surveyed by Reuters. (We were in the minority anticipating a hold.) …
This page has been updated with additional analysis since first publication. Economy struggles to gain momentum The modest rebound in GDP last quarter doesn’t change the bigger picture that the New Zealand economy is worse for wear. In fact, timely survey …
No room for rate cuts this year The Brazilian central bank kept the Selic rate unchanged at 10.50% and with the headline inflation rate set to rise further in the coming months, we see no room for a resumption of the easing cycle this year. The decision …
19th June 2024
Inflation unchanged, GNU means rate cuts later this year more likely South Africa’s headline inflation rate was unchanged at 5.2% y/y in May and, while still some way off the 4.5% mid-point of the SARB’s target range, the formation of a government of …
This page has been updated with additional analysis since first publication. Stubborn services inflation still a point of concern for BoE We’ll be discussing the outlook for Bank of England, ECB and Fed policy in a 20-minute online briefing at 3pm BST on …
Drag from net trade will hold back Q2 GDP rebound Trade volumes were little changed in May which suggests that net trade provided a small drag on GDP growth this quarter. The 13.5% annual rise in export values was a touch stronger than the analyst …
Strong rise in manufacturing output unlikely to be repeated The strong rebound in manufacturing output in May was better than we expected but, given the softness of the earlier retail sales release, it does not change the big picture that second-quarter …
18th June 2024
Soft sales add to signs that consumers are beginning to struggle The soft May retail sales data support our view that, after a disappointing first quarter, GDP growth remains a little lacklustre in the second quarter too. Our forecast now stands at 1.9%. …
RBA’s next move will be a cut but only next year The RBA probably debated another rate hike at today’s meeting and we only expect the Bank to start easing policy next year. The Bank’s decision to keep interest rates unchanged today was correctly …
Demand picks up while supply-side falters May’s activity data were a mixed bag with an uptick in retail sales and slowdown in industrial production partially reversing the recent trend of strength on the supply side and weaker demand. Consumer spending …
17th June 2024
Inflation rises further, another rate hike likely in July The further rise in Russian in inflation to 8.3% y/y in May was stronger than expected, and means that an interest rate hike at the central bank’s next meeting in July now looks all but certain. …
14th June 2024
Plummeting sentiment suggests consumers are suffering The further decline in the University of Michigan consumer sentiment index to a seven-month low of 65.6 in June, from 69.1, suggests that households are now struggling more under the weight of higher …
Strong start to the second quarter unlikely to be sustained The increases in manufacturing and wholesale sales in April were marginally lower than first estimated, but not by enough to make us doubt the preliminary estimate that GDP rose by a solid 0.3% …
Credit growth bottoming out thanks to fiscal support Bank loan growth in China was the slowest on record in May, but accelerated government bond issuance helped broader credit growth edge up. Fiscal loosening should support further gains in the near term. …
This page has been updated since publication with additional analysis. Rise in core inflation likely to be temporary The Riksbank’s target measure of inflation, CPIF, remained at 2.3% in May, but the core measure (CPIF excluding energy) rose slightly for …
Bank will deliver a final rate hike in July The Bank of Japan announced today that it will present a detailed plan for reducing its bond purchases at the upcoming meeting in July and we think it will also deliver a final policy rate hike then. Around …
Soft PPI adds to the better inflation news With the May producer price data also coming in weaker than expected, we now estimate that the core PCE deflator increased by only 0.11% m/m last month, which would take the annual core PCE inflation rate down to …
13th June 2024
Taiwan’s central bank (CBC) left its main policy rate unchanged today (at 2.0%), and with growth set to remain strong we expect rates to remain on hold throughout 2024 and 2025. In contrast, the consensus is expecting rate cuts next year. The decision to …
This page has been updated with additional analysis since first publication. Output fell and outlook for industry is poor The 0.1% m/m decrease in euro-zone industrial production in April was slightly weaker than the published consensus forecast of 0.2% …
This page has been updated with additional analysis since first publication. Although the unemployment rate fell anew in May, leading indicators continued to point to a marked rise in the months ahead. All told, the data suggest that the RBA will remain …
