Opposing messages from Ifo and PMIs Contradictory messages from the Ifo – which was very weak in May – and the Composite PMI mean the performance of the German economy in Q2 is very uncertain . But regardless of how well the economy held up this quarter, …
24th May 2023
This webpage has been updated with a table and chart of key data. Rising core inflation to keep policymakers in hawkish mood South Africa’s headline inflation rate dropped back to 6.8% y/y in April but the further strengthening of core inflation will …
Resurgence in core inflation means BoE to keep its foot on the interest rate brake Note: We’ll be discussing the UK April CPI report in a briefing at 10:00 BST/17:00 SGT on 24 th May. Register here. The smaller-than-expected fall in CPI inflation from …
RBNZ signals tightening cycle is at an end The RBNZ slowed the pace of tightening this month, while signalling that its tightening cycle was at a close. The Bank’s decision to hike its official cash rate by 25bp, to 5.50%, was correctly predicted by 20 …
MNB inching closer to an easing cycle Hungary’s central bank (MNB) left its base rate on hold at 13% as expected today and the post-meeting communications are likely to provide guidance on when the overnight daily deposit rate of 18% will be cut, which …
23rd May 2023
Stronger activity supporting price pressures May’s PMIs suggest that the economy is being supported by the services sector while manufacturing activity continues to struggle. The strength in services activity may be feeding into more persistent domestic …
Resilient services sector keeping growth and price pressures strong The fall in the euro-zone flash Composite PMI from 54.1 in April to 53.3 in May left it close to the consensus and our own forecast (both 53.5) and suggests at face value that the economy …
Shaky start to the new fiscal year April’s public finances figures got the new fiscal year off to a shaky start. But we doubt this will prevent the Chancellor from embarking on a fiscal splurge ahead of the next election, due to take place before January …
PMIs suggest economy strengthened further in May May’s flash PMI readings were the strongest they’d been in a while and point to gains in both industrial production and services spending, supporting our assessment that the economy continued to grow in Q2. …
Business investment likely off to a slow start this quarter We already know that business investment rose last quarter. As such, we wouldn’t read too much into the fall in machinery orders in March. Machine tool orders data point to a slight fall in …
22nd May 2023
Underlying inflation to rise further before falling due to stubborn food price pressures Headline inflation rose from 3.2% to 3.5% in April, despite a 4.4% fall in energy prices. As was the case with Tokyo, that was largely due to a rise in underlying …
19th May 2023
Tightening cycle at an end The central bank in the Philippines today left interest rates unchanged (at 6.25%) but stated it was ready to resume its tightening cycle later in the year. However, with inflation falling back and headwinds to the economy …
18th May 2023
Labour market will loosen further The labour market is showing signs of cooling, reinforcing our view that the RBA’s tightening cycle is over. The 4,300 fall in employment in April was much weaker than most had anticipated (Refinitiv Consensus: +25k, …
Falling energy imports supported trade balance The trade deficit narrowed in April as export values rose faster than import values. That’s more a reflection of lower energy prices, which decreased the value of fuel imports. Export values increased by 2.6% …
Sluggish wage growth suggests RBA is done tightening The Q1 wage price index showed that quarterly wage gains were a bit softer than the RBA had anticipated which supports our view that the Bank won’t raise interest rates any further. The 0.8% q/q rise in …
17th May 2023
Decent rebound in GDP as investment surprised to the upside GDP surprised to the upside last quarter, mainly because of stronger performances in private consumption and business investment than preliminary data had indicated. That suggests that there is …
Surveys suggest April strength will soon be reversed The 1.0% m/m surge in manufacturing output in April adds to the evidence that the economy enjoyed a strong start to the second quarter, helped by renewed strength in the motor vehicle sector. But the …
16th May 2023
A step backward The renewed acceleration in the monthly changes in CPI-trim and CPI-median in April, combined with the recent rapid turnaround in the housing market, leaves us doubting our view that the Bank of Canada will be ready to cut interest rates …
Real consumption growth still slowing The 0.4% m/m rebound in retail sales in April indicates that higher interest rates and tightening lending standards are yet to deal a major blow to consumers. That said, with the April gain coming after two months of …
Cooling labour market eases some pressure on BoE to raise rates further The labour market loosened by a bit more than the Bank of England expected in March. That may alleviate some pressure on the Bank to raise rates further at the next policy meeting in …
This page has been updated with additional analysis and charts since the initial publication. A mixed start to Q2 Growth on most indicators accelerated in y/y terms in April. But this was due to a weak base for comparison from a year ago when Shanghai and …
RBA retains its tightening bias The minutes of the RBA’s May meeting were on the hawkish side, but we still think that the Bank’s tightening cycle is already over. Although the Board discussed the option of leaving the cash rate unchanged, it ultimately …
Slump in March to be followed by further weakness The 4.1% slump in euro-zone industrial production in March was much worse than expected and means that industry was a drag on GDP growth in Q1. While the fall seems to be partly driven by one-off factors …
15th May 2023
This webpage has been updated with a table and chart of key data. Inflation steady, but should resume its slowdown over the rest of the year Saudi Arabia’s inflation rate was unchanged at 2.7% y/y in April, as an increase in non-food inflation offset …
Better showing for Erdogan, now in the driving seat for victory Turkey’s presidential election this weekend was incredibly tight and looks to have produced no clear winner, but President Erdogan performed better than recent polls had suggested and this …
Positive surprise brings end of tightening cycle nearer Inflation fell a bit more than we, the consensus and the Riksbank had anticipated in April, strengthening the case for the Riksbank to end its tightening cycle sooner rather than later. We still …
Economic recovery underway Thailand’s election has dominated the headlines over the past 24 hours and we will have more to say on the economic implications later in the day, but GDP figures released just now show the economy bounced back strongly in the …
Sharp drop in confidence reflects poor expectations The tumble in the University of Michigan consumer sentiment index to 57.7 in early May, from 63.5 in April, leaves it at its lowest level since November and illustrates the impact of growing uncertainty …
12th May 2023
Still no recession, but economic growth soggy The news that the economy contracted by 0.3% m/m in March and grew by just 0.1% q/q in Q1 as a whole (consensus +0.1% q/q, Bank of England 0.0% q/q, CE +0.1% q/q) suggests that low real income and high …
Partial rebound, bleak outlook for the year The economy expanded in Q1 but failed to completely offset the decline from Q4, as we had expected. Economic growth is likely to remain weak over the coming quarters as elevated interest rates and weak external …
Rates may have peaked, but risks of one or two more hikes remain Today’s 25bps rise in interest rates from 4.25% to 4.50% takes rates to our long-held forecast and may be the last hike, although another hike or two is perfectly possible. We suspect the …
11th May 2023
This page has been updated with additional analysis and charts since first publication. Credit demand much weaker than expected A widely-anticipated acceleration in credit growth didn’t materialise last month, suggesting that momentum may already be …
Economy set to struggle in 2023 Economic growth slowed in Q1 and we expect the economy to weaken further over the coming quarters against a backdrop of elevated interest rates and weak global demand. According to the advanced estimate published today, GDP …
This page has been updated with additional analysis and charts s ince first publication. Fluctuations in food and energy prices outweigh impact of reopening Producer price deflation deepened further last month to a 35-month low, and consumer price …
Rates on hold, window for cuts this year narrows Poland’s central bank (NBP) left its main policy rate on hold as expected again today, at 6.75%, and we think there is a small window for rate cuts by year-end. But with core inflation proving sticky and …
10th May 2023
Core inflation refusing to budge The 0.4% m/m gains in headline and core consumer prices in April leaves core inflation at 5.5%, broadly unchanged from its level at the start of this year, further illustrating that the previous downward trend has stalled. …
Disinflation process largely on track, rate cuts in 2024 Romania’s central bank (NBR) left its policy rate on hold as expected today, at 7.00%, and we think that it will keep policy rates unchanged throughout this year. Interest rate cuts are likely to …
This webpage has been updated with additional analysis and key chart and table of data. Inflation eases, but another rate hike on the cards next Thursday Egypt’s inflation rate slowed from a near-five-year high of 32.7% y/y in March to 30.6% y/y in April, …
Core inflation edges up again The higher-than-expected core inflation rate for April supports our view that the Norges Bank will raise its key policy rate from 3.25% to a peak of 3.75% later this year. The small reduction in headline CPI inflation, from …
More dovish consensus emerging The record of the Riksbank’s April policy meeting underlines that there was unanimous agreement to slow the pace of rate hikes in future. After the 50bp hike in April, the Bank is likely to raise rates by 25bp at the end of …
9th May 2023
This page has been updated with additional analysis and charts since first publication. Exports set to struggle further China’s export volumes partially reversed March’s jump last month. Shipments of most consumer goods declined due to weak global demand …
More scope for wage growth to slow Labour cash earnings rose by 0.8% for the third consecutive month, broadly in line with our 0.7% forecast and far below the average 1.8% increase across 2022. As we had expected, regular earnings growth slowed from 0.8% …
Labour market resilient, but small cracks emerging The decline in full-time positions in April means that the large rise in total employment was weaker than it looks. Hours worked only crept up during the LFS reference week and, given the public sector …
5th May 2023
April strength offset by downward revisions to earlier months The 253,000 gain in non-farm payrolls in April suggests that the labour market remains resilient despite the banking sector turmoil and broader signs of an economic slowdown. Nevertheless, that …
Growth likely to slow ahead The economy grew by 5.03% y/y in the first quarter of the year, which was almost the same pace of expansion as that in Q4 2022 (5.01%), but we expect growth to slow in the coming quarters as tight monetary policy and weaker …
Downside risks to Q1 GDP growth The small rise in export volumes and slump in import volumes in March confirms that net trade boosted GDP growth last quarter. However, as lower imports are likely to be reflected in slower inventory building – which the …
4th May 2023
Strength of exports and unit labour cost growth unlikely to last The sharp fall in the international trade deficit to $64.2bn in March, from $70.6bn in February, was driven by a rebound in exports, but the surveys continue to suggest that renewed declines …
ECB slows the pace and signals peak is close The decision to raise the deposit rate by 25bp to 3.25% today was in line with market expectations and was predicted by 57 of the 69 forecasters polled by Reuters. (We had forecast 50bp.) This marks a slowing …
Decline in bank deposits doesn’t look like a bank run March’s money and credit data showed that the collapse of the US bank SVB and the takeover of Credit Suisse in early March triggered a small withdrawal of funds from the overall UK banking system. …
This page has been updated with additional analysis and charts since first publication. Growth still strong but slowing The latest survey data add to wider evidence that while China’s recovery remains robust, it is losing some momentum. In particular, the …
