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 …
2nd August 2023
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 …
This article has been updated with additional charts and analysis since it was first published. Upside risks to our services inflation forecasts Headline inflation was unchanged in Tokyo this month, but a jump in services inflation helped power a renewed …
Economy shrugs off impact of higher rates The 2.4% annualised gain in second-quarter real GDP growth, which means the economy expanded at close to its potential pace over the first half of the year, suggests that higher interest rates are having …
27th July 2023
ECB hikes and leaves options open As was universally expected, the ECB raised interest rates by a further 25bp today and indicated that further hikes are possible but not certain. At the press conference we expect the main message to be that policy will …
Surveyors become more pessimistic about commercial outlook Following a slight improvement in Q1, surveyors reported that occupier demand fell back in Q2. All sectors saw a retrenchment, with offices seeing the largest decline to a net balance of -21%. …
Policy rate now at peak, as disinflation will persuade Fed to stand pat in September As everyone expected, the Fed increased its policy rate by an additional 25bp today, taking the fed funds target range to between 5.25% and 5.50% but, while officials are …
26th July 2023
Surge in new home sales begins to ease New home sales fell by 2.5% m/m in June to 697,000 annualised, although this still left them almost 25% above their June 2022 level. (See Chart 1.) Having risen since March, this levelling off in sales is in line …
This page has been updated with additional analysis since first publication. RBA will deliver at least one more rate hike The faster-than-expected slowdown in inflation in Q2 may convince the RBA that it has done enough to rein in price pressures. …
New CBN governor stumbles at the first hurdle The Central Bank of Nigeria’s decision to raise its policy rate by just 25bp, to 18.75%, was underwhelming and suggests that officials are trying to balance tackling inflation against the president’s wishes …
25th July 2023
House prices rose again in May House prices rose for the fourth consecutive month in May according to Case-Shiller. The resurgence in prices has coincided with an uptick in home sales from February to May, in turn driven by a moderation in mortgage rates. …
This page has been updated with additional analysis since first publication . Soft inflation print brings 50bp rate cut into play The Brazilian July mid-month inflation reading of 3.2% y/y suggests that price pressures are weaker than we and most others …
This page has been updated with additional analysis since first publication. MNB may pause or slow its easing cycle after September Hungary’s central bank (MNB) announced another 100bp cut to its one-day quick deposit rate (the key policy rate at the …
This page has been updated with additional analysis since first publication. Germany still in recession at start of Q3 The bigger-than-expected fall in the German Ifo, together with the drop in the PMIs published yesterday, suggest that the German economy …
Inflation back to target, rate cuts likely later this year Bank Indonesia (BI) today left interest rates unchanged at 5.75%, but with the economy struggling and inflation falling back, we think the central bank will cut interest rates before the end of …
Headline GDP number masks underlying weakness in demand GDP growth in Korea picked up slightly in Q2 but the underlying data suggest that elevated interest rates and weak external demand are taking their toll on the economy. We expect the economy to …
This page has been updated with additional analysis since first publication . Fresh rise in services inflation likely to raise concerns at Banxico Mexico’s headline inflation rate eased further in the first half of July but the fresh rise in services …
24th July 2023
More support signalled but follow-through remains in question The readout of the Politburo’s quarterly meeting on economic affairs has just been published by state media. It struck a dovish tone but fell short of delivering any major new announcements. …
This page has been updated with additional analysis since first publication. Note: Join our special online briefing after the Fed and ECB’s July decisions, and previewing the BoE’s August meeting, at 10:00 EDT/15:00 BST on Thursday 27 th July . Register …
Another election likely after inconclusive poll The People’s Party (PP) won the most seats at yesterday’s general election but, even together with the far-right VOX, they achieved only 169 seats which leaves them seven short of a majority. And given that …
This page has been updated with additional analysis since first publication. Economy still in recession July’s euro-zone PMIs are consistent with our non-consensus view that the currency union’s economy will remain in recession. But they also suggest …
Note: Join our Asia Drop-In on whether China is in a balance sheet recession, the July BOJ meeting and more at 09:00 BST/16:00 SGT on Thursday, 27 th July . Register here . This article has been updated with additional analysis and charts since it was …
