Weakness underlying headline strength There was the usual seasonal surge in net credit in China in January that took new bank lending to a record high. The underlying story is less positive, with loan demand little changed and broader credit growth slower …
9th February 2024
This page has been updated with additional analysis since first publication. Further easing in core inflation sets up Q2 rate cut January’s continued fall in core inflation in Norway, and renewed fall in the headline rate, support our view that price …
Households will pinch pennies for a while yet Consumer spending is likely to remain subdued in the near term, helping to ease demand-side pressures on inflation. Experimental data published by the ABS show that household spending rose by 2.4% y/y in …
Rates on hold, Banxico to stay cautious even once easing cycle begins Mexico’s central bank left interest rates unchanged at 11.25% again today but the accompanying statement further opened the door to the start of an easing cycle, probably at the next …
8th February 2024
Mexican inflation drops, but Banxico to hold firm later today The jump in Mexico’s headline inflation rate to 4.9% in January means Banxico won’t feel comfortable enough yet to start an easing cycle at the Board meeting later today. Elsewhere, the further …
Inflation continues to slow, but looming devaluation will keep it high Egypt’s headline inflation rate slowed for a fourth consecutive month, easing from 33.6% y/y in December to 29.9% y/y in January. We think inflation will continue to slow this year, …
Governor Karahan committed to tight policy, rate cuts some way off The communications from new Turkish central bank governor Karahan at today’s Inflation Report briefing will have helped to reassure investors that the change at the helm of the central …
RBI not ready to pivot yet The RBI kept the repo rate on hold at 6.50% today as expected and continued to strike a hawkish tone. With the economy holding up well and inflation to remain above the 4% target for a few more months yet, we doubt the central …
This page has been updated with additional analysis since first publication . Inflation set to rebound gradually but remain low CPI fell deeper into deflationary territory last month. But this was largely due to the usual volatility in food and tourism …
Economy rebounds strongly following war and sanctions shock Russia’s economy expanded by 3.6% over 2023 as a whole, marking a sharp rebound from a contraction of just 1.2% in 2022 (revised from 2.1%). The activity data for December suggest that the …
7th February 2024
Trade balance back in deficit Net trade appears to have contributed to the likely rebound in GDP last quarter but, with exports falling in December and the survey indicators of external demand still weak, that boost will probably go into reverse this …
Support to growth from surging exports set to fade A sharp rebound in real exports in December helps explain why net external trade supported GDP growth in the fourth quarter but, with the surveys indicating that external demand is weakening fairly …
Rates on hold, March rate cut is in the balance The National Bank of Poland (NBP) left interest rates on hold again today, at 5.75%, and we think that an interest rate cut at the next meeting in March looks finely balanced. Our current assumption is that …
Mortgage demand continues to recover The average mortgage rate in January was unchanged from the month before, but that didn’t prevent mortgage applications for home purchase rising for a third consecutive month. And with interest rates set to resume …
Large monthly increase confirms bumper start to 2024 The large 1.3% m/m gain in Halifax’s measure of house prices in January was the largest since June 2022, and suggests we are already almost halfway towards our forecast that house prices will rise by 3% …
On hold, cuts likely around mid-2024 The Bank of Thailand (BoT) today resisted pressure from the government to cut interest rates to support the struggling economy. But with growth set to remain weak and inflationary pressures very subdued, we think the …
This page has been updated with additional analysis since first publication. Industrial recession continues The seventh consecutive monthly fall in German industrial output in December confirms that industry remains a significant drag on growth. We expect …
This page has been updated with additional analysis since first publication. Rise in unemployment has further to run Although the unemployment rate last quarter came in below the RBNZ’s expectations, leading indicators continue to point to a rapid …
6th February 2024
Surprise hike, tightening cycle may not be finished yet The Central Bank of Kenya delivered a surprise 50bp interest rate hike today, to 13.0%, suggesting that the MPC’s inflation fears are outweighing signs that exchange rate pressures are easing. With …
Western metros again at risk from announced layoffs Although December’s average job growth rate of 0.3% 3m/3m across our 30 metros signalled a tepid end to 2023, it brings to a close a surprisingly solid year for total employment. The same can’t be said …
This page has been updated with additional analysis since first publication. Construction PMIs start 2024 in contractionary territory The rise in the headline CIPS construction PMI from 46.8 in December to 48.8 in January was driven by improvements in …
RBA pours cold water on the prospect of early rate cuts Although we're sticking with our view that the RBA is done tightening policy, rate cuts may not be in play until the second half of this year. The RBA’s decision to leave its cash rate on hold at …
This page has been updated with additional analysis since first publication. Further regular wage increases incoming While winter bonus payments increments disappointed in December, regular wage growth accelerated substantially. Looking ahead, we think …
5th February 2024
Services activity apparently gaining momentum Following on the heels of the strong labour market data, the rebound in the ISM services index to a four-month high of 53.4 in January, from 50.5, is another signal that the US economy remains impervious to …
Headline inflation picks up, all eyes on new governor Headline inflation edged up slightly in Turkey to 64.9% y/y in January, and the m/m figure – a 6.7% increase on the back of a large minimum wage hike – looked even worse. The figures highlight the …
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 likely to remain weak in the coming quarters, and concerns about …
Surging employment may explain Fed’s hawkishness The 353,000 surge in non-farm payrolls in January illustrates why the Fed is apparently in no rush to start cutting interest rates and kills off any remaining chance of a cut as soon as March. Even if that …
2nd February 2024
Manufacturing sector turning a corner The rebound in the ISM manufacturing index to 49.1 in January, from 47.1, indicates that the downturn in the sector is fading and appears to justify the Fed’s view that it can wait a little longer before cutting …
1st February 2024
Cuts may come earlier than the BoE implies While leaving interest rates at 5.25% for the fourth meeting in a row today, the Bank of England sent some soft signals that the next move will be a cut, but it pushed back more strongly against the idea that …
This page has been updated with additional analysis since first publication. Inflation falling but services disinflation stalls January’s euro-zone inflation data were a little stronger than we had expected after the data for Germany and France were …
South Africa makes a poor start to 2024 South Africa’s manufacturing PMI recorded a sharp drop in January as logistics problems and weak demand weighed on activity. We still expect growth to pick up over the course of this year, but this latest data …
CEE industry still struggling, input prices diverge in Turkey and Russia The manufacturing PMIs out of Central and Eastern Europe (CEE) for January remained soft and haven’t changed the broad picture that the region’s industrial sectors continue to …
Riksbank on track for May rate cut The Rikbsank signalled in today’s policy statement that interest rates may be cut sooner than they previously anticipated, supporting our view that the first cut is likley to be in May. The decision to leave the key …
This page has been updated with additional analysis since first publication. Manufacturing activity likely to remain robust The final manufacturing PMI reading for January suggests that activity got off to a strong start this year. Looking ahead, while …
Fed drops its tightening bias The Fed left its key policy rate unchanged at 5.25% to 5.50% today, but dropped its tightening bias, keeping open the possibility of a rate cut at the next FOMC meeting in mid-March. Admittedly, the new policy statement warns …
31st January 2024
Slower wage growth reinforcing disinflationary trend The further slowdown in wage growth evident in the fourth-quarter employment cost index illustrates that easing labour market conditions are helping to push inflation down. With the moderation in job …
GDP growth set to remain well below potential The monthly GDP data imply that the economy returned to growth in the fourth quarter and the strong handover from December reduces the risk of the economy contracting this quarter, despite the weakness of the …
This page has been updated with additional analysis since first publication. Fall in inflation brings rate cuts nearer National data published so far suggest that headline and core inflation in the euro-zone came down a little more than we had expected in …
This page has been updated with additional analysis and charts since first publication. City’s recovery continues to disappoint Hong Kong’s growth picked up only marginally in Q4, underperforming most expectations. And although we foresee some further …
Soft annual figure suggests weak end to 2023 The weaker-than-expected 0.2% expansion in Polish GDP over 2023 as a whole suggests that the economy struggled at the end of the year. We think this weakness will prove temporary and that activity should …
GDP growth in Taiwan accelerated further in Q4 and we expect growth to remain strong over the coming quarters, with robust growth in exports of artificial intelligence related goods to more than offset the drag from slower private consumption. According …
2023 a poor year for the Kingdom’s economy, but the recession is over The flash estimate of Saudi Arabia’s GDP for Q4 of last year showed that the economy expanded by 0.4% q/q, the first positive outturn since the period a year before. We expect the …
Larger-than-expected increase supports our above-consensus forecast The larger than expected +0.7% m/m gain in house prices in January (consensus: +0.1%, Capital Economics: +0.4%) reflected improving public sentiment about the economy and the housing …
GDP growth remained well above trend in Q4 but we don’t expect this strength to last as the deceleration in credit growth feeds through to domestic demand while the external sector continues to struggle. According to the data published today, GDP rose by …
This report was first published on Wednesday 31st January covering the official PMIs. We added commentary on the Caixin manufacturing PMI on Thursday 1st February and the Caixin services and composite PMIs on Monday 5th February. Surveys starting to …
This page has been updated with additional analysis since first publication. With disinflation gathering pace, rate cuts are now in sight The weaker-than-expected Q4 inflation reading paves the way for the RBA to cut interest rates sooner than most are …
This page has been updated with additional analysis since first publication. GDP growth will be positive in Q4 Though retail sales was very weak in December, strong industrial production data to close out the quarter reinforces our view that Q4 GDP growth …
Surprise slowdown in house prices in November The marked slowdown in house price growth in November was the first sign of a response in prices to the spike in mortgage rates a month earlier. The 0.2% m/m rise in the seasonally adjusted national …
30th January 2024
Sharp slowdown increases chances of Banxico cut next week The sharper-than-expected slowdown in Mexico’s GDP growth, to just 0.1% q/q in Q4, is likely to be followed by continued sluggish growth over the coming quarters. At the margin, the data increase …
This page has been updated with additional analysis since first publication. Regional recovery continues The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) were a mixed bag in January, but our regional measure …
