This page has been updated with additional analysis since first publication. NBR to stand pat until early 2024 The National Bank of Romania (NBR) left its main policy rate on hold again today, at 7.00%, and we think that it will continue to leave rates …
7th August 2023
Halifax prices edged lower in July With mortgage rates rising to around 6% in July, it was no surprise that the slide in the Halifax house price index continued. Although there might be a modest fall in mortgage rates in the near term, we think they will …
Slump in June and more weakness to come German industrial output fell in June and we expect it to decline further in the rest of this year as high interest rates and weakening demand take a toll on production. The 1.5% m/m fall in industrial production …
This page has been updated with additional analysis since first publication. Official figures show Indonesia’s economy grew by 5.2% y/y in the second quarter of the year, slightly higher than the 5.0% growth rate recorded in Q1. In contrast, our own …
This page has been updated with additional analysis since first publication. Labour market continues to loosen The small fall in employment and rise in the unemployment rate in July show that the labour market continues to loosen, suggesting that the …
4th August 2023
Labour market conditions easing Non-farm payroll employment increased by 187,000 in July and, while that represented a trivial improvement on the downwardly revised 185,000 gain the month before, those are otherwise the two weakest monthly gains in …
The headline CIPS construction PMI resumed its upward trend in July, with the rise to 51.7 more than reversing the drop into contractionary territory in June. All sectors saw an increase in their respective balances, with commercial rising to 54.4, its …
Renewed drop and more weakness ahead Euro-zone retail sales fell in June and we expect them to continue to trend down over the rest of this year as high interest rates take an increasing toll on consumers. The 0.3% m/m drop in retail sales in June was …
Surveys point to muted activity growth and lower core inflation The fall in the ISM services index in July illustrates that even though the risks of a recession may be easing, that doesn’t mean the economy is set to enjoy a strong performance over the …
3rd August 2023
This page has been updated with additional analysis since the post-meeting statement and press conference. CNB on the edge of a policy shift The Czech National Bank (CNB) left its main policy rate on hold at 7.00% today, but the post-meeting …
Closing in on the summit, but BoE suggests rates will stay at the top for a long time Today’s 25bps rise in interest rates, from 5.00% to 5.25% (CE 5.25%, 2/3 of consensus 5.25%, 1/3 of consensus 5.50%), may be followed by another hike in September to our …
Recession likely in H2 The final euro-zone PMIs confirmed that economic conditions deteriorated in July, with the Composite index consistent with GDP declining slightly. We continue to expect the euro-zone economy to fall into recession in the second half …
Lira depreciation feeding through more strongly The jump in Turkish inflation in July to 47.8% y/y is likely to be followed by further rises in the coming months as the recent sharp fall in the lira and hikes to VAT continue to feed through. The central …
This page has been updated with charts since first publication. Inflation declines further below 2% Easing core inflation drove headline inflation lower in July, but we don’t expect it to fall much further this year. Despite inflation now sitting within …
Net trade buoyed GDP growth in Q2 The rise in the trade surplus to $11.3bn in June, from $10.5bn in May, was broadly in line with what most had expected (Refinitiv Consensus: $11bn, CE: $11.5bn). Although exports of goods and services fell by 1.7% in …
BCB kicks off Brazil’s easing cycle The Brazilian central bank (BCB) started its easing cycle today with a larger-than-expected 50bp cut in the Selic rate, to 13.25%, and the relatively dovish tone of the accompanying statement suggests that policymakers’ …
2nd August 2023
Strong Q2, but signs of softening industrial activity Russia’s economy is likely to have had a very strong second quarter as industrial production and retail sales rose sharply in Q2 (both by more than 3.0% q/q). But the activity data for June suggest …
Office-based jobs suffering in western tech-led markets Seasonally-adjusted total employment growth rose by 0.6% 3m/3m on average across the 30 metros we track for the third consecutive month. But there has been clear weakness in the information sector in …
Applications dipped back down toward 30-year lows June’s rebound in mortgage applications for home purchase was short-lived as total applications fell by 1.7% in July. This pushed applications back down toward 30-year lows and was probably prompted by …
Fitch downgrade to have little impact The news that Fitch Ratings is downgrading its US sovereign credit rating one notch from AAA to AA+ has predictably had little to no immediate impact on the Treasury market – yields are up on the day, but down since …
This page has been updated with additional analysis since first publication . Labour market will slacken in earnest before long Although New Zealand’s unemployment rate rose slightly last quarter, the labour market remains very tight by historical …
This page has been updated with additional analysis since first publication. Subdued manufacturing activity keeping inflationary pressures muted The modest improvement in the ISM manufacturing index to 46.4 in July, from 46.0, suggests the manufacturing …
1st August 2023
This page has b een updated with additional analysis since first publication . Economy showed signs of resilience in Q2 The slightly better-than-expected 0.1% m/m increase in Brazilian industrial production in June indicates that the sector grew a little …
PMI makes for grim reading South Africa’s manufacturing PMI fell even further in July as power cuts intensified again and the outlook remains bleak – we remain comfortable with our forecast for the economy as a whole to stagnate this year. Price pressures …
This page has been updated with additional analysis since first publication. Tight labour market will only loosen gradually The euro-zone labour market remains extremely tight, with the unemployment rate steady at a record low in June. We expect weakness …
CEE industry continues to struggle, price pressures diverge The manufacturing PMIs for July suggest that industrial sectors generally struggled across the region at the start of Q3, and support our view that economic recoveries in CEE are not about to …
Mortgage rate surge starts to take its toll The slight fall in house prices in July is the first sign of the surge in mortgage rates since mid-May taking its toll. As we expect mortgage rates to remain around their current level for the next 12 months, we …
This page has been updated with additional analysis since first publication. Manufacturing PMI shows further signs of cooling activity India’s manufacturing PMI edged down in July to a three-month low, and we expect higher rates and subdued global demand …
RBA stands pat The RBA’s decision to leave its cash rate unchanged at 4.10% means that its almost certain that our forecast for a terminal rate of 4.60% won’t come to fruition. Ahead of today’s meeting, 20 out of 36 analysts polled by Reuters, including …
Labour market may hold up better than we expect The fall in the job-to-applicant ratio to its lowest in a year suggests that labour market conditions are continuing to loosen despite a fall in the unemployment rate in June. The labour force increased by …
Hold does not mark the end of the tightening cycle Pakistan’s central bank (SBP) today left its main policy rate unchanged (at 22.0%), but we doubt this marks the end of the tightening cycle. With inflation likely to remain above target for some …
31st July 2023
Strength seen in H2 unlikely to continue The 0.9% q/q rise in Mexican GDP last quarter followed a strong Q1 and showed that Mexico’s economy was more resilient in the first half of the year than we’d expected. That said, we think that weaker growth in the …
This page has been updated with additional analysis and charts since first publication. Economic recovery takes a step backwards Hong Kong’s GDP contracted in q/q terms in Q2, underperforming most expectations. A sharp fall in government spending and …
Net lending to commercial property was once again positive in June at £589m. As was the case in May, lending to standing property drove the total, as development net lending recorded a small drop of £11m. The continued growth in lending to property …
This page has been updated with charts since first publication. Services inflation rises again, recession still likely July’s inflation data will have been a disappointment for policymakers as, although headline inflation fell in line with expectations, …
Surge in mortgage rates yet to take its toll Given the recent surge in mortgage rates, the increase in mortgage approvals to their highest level since October 2022 in June was a little bit of a surprise. But that reflects the lag between quoted mortgage …
This page has been updated with additional analysis since first publication. Note: We’ll be discussing the implications of the Bank’s decision for the economy, the housing market and financial markets in a 20-minute online Drop-In at 3pm on Thursday 3 rd …
Disinflation continues, October rate cut now in play The larger-than-expected fall in Polish inflation, from 11.5% y/y in June to 10.8% y/y in July, is likely to fuel calls at the central bank for the start of an easing cycle very soon. It still looks …
Italy from leader to laggard The drop in GDP in Italy in Q2 means euro-zone output probably rose by 0.3% q/q in Q2, and just 0.1% if Ireland is excluded. Italy is no longer outperforming its peers and we think it will experience a sharper drop in output …
Recession over, but recovery likely to be weak The 0.1% q/q expansion in Czech GDP in Q2 took the economy out of technical recession last quarter, but we expect the recovery over the coming quarters to be weak. With inflation likely to continue falling …
This article has been updated with additional charts and analysis since it was first published. Firms downbeat about output in Q3 June’s activity data were broadly positive for Q2, with both the industrial production and capital goods shipments data …
This page has been updated with additional analysis since first publication. Sharp slowdown in second quarter growth Despite the rebound in GDP in May, growth in the second quarter looks set to be weaker than expected. With some of the factors supporting …
28th July 2023
Slowdown in wage & price inflation despite resilience in activity The slowdown in both the employment cost index of wage growth and core PCE inflation to their lowest levels in nearly two years suggests that resilient activity growth won’t be enough to …
This page has been updated with additional analysis since first publication. Business surveys point to stagnation The small fall in the EC Economic Sentiment Indicator (ESI) in July leaves it consistent on past form with output stagnating and suggests …
Sentiment improves, but is still depressed The European Commission's Economic Sentiment Indicators for Central and Eastern Europe (CEE) generally ticked up in July, but our regional measure still points to weak GDP growth at the start of Q3. Economic …
Germany still the weak link National data released so far suggest that the euro-zone economy held up better than we had anticipated in Q2, with Germany still the laggard among major economies. We continue to think that monetary tightening will take an …
This article has been updated with additional analysis and charts since it was first published. Taiwan GDP (Q2) Taiwan’s economy rebounded strongly in the second quarter of the year, driven by a jump in exports and strong consumer spending. However, we …
Strong economic growth in France and Spain The big increases in Q2 GDP in Spain and particularly France suggest that the euro-zone has so far coped with policy tightening much better than feared. However, the France data were flattered by temporary …
The Bank of Japan announced today that it will allow 10-year yields to rise to 1.0% instead of the current ceiling of 0.5%. We still think that a slowdown in inflation will convince the Bank to keep its short-term policy rate unchanged over the coming …
This page has been updated with additional analysis since first publication. Retail sales soften anew The sharp decline in retail sales in June suggests that sales volumes fell for a third consecutive quarter in Q2. With the RBA sounding increasingly …
