Further hikes likely in the near term, but tightening cycle to be over by early next year The central bank of the Philippines (BSP) today raised its main policy rate by a further 75bps (to 5.0%), and we think further tightening is likely in the near term. …
17th November 2022
Yen rally to help narrow trade deficit The trade deficit widened but stayed below the record high in August, but with the yen strengthening significantly in recent weeks, the deficit should narrow later this quarter. Export values rose by a slower 25.3% …
Manufacturing close to stagnation In contrast to the earlier news of consumer resilience, there are signs of a deterioration in the manufacturing sector, with output rising by only 0.1% in October, September’s gain cut from 0.4% to 0.2%, and downward …
16th November 2022
Core inflation pressures better than they look Headline inflation was unchanged at 6.9% in October and the CPI-median and CPI-trim measures of core inflation increased, but the latter was mainly due to unfavourable base effects. It appears that the …
Consumer refuses to buckle under weight of higher borrowing costs The US consumer is hanging in there under the weight of rapidly rising borrowing costs, with retail sales increasing by a solid 1.3% m/m in October. Admittedly, sales last month were …
CPI inflation may have peaked, but inflation battle is not yet won It’s possible that the big leap in CPI inflation from 10.1% in September to a new 40-year high of 11.1% in October (consensus 10.7%, BoE 10.9%) will mark the peak. But core inflation may …
Imminent rebound in orders to be soft “Core” machinery orders fell for a second consecutive month in September due to weakness in manufacturing orders. While the usual see-saw patterns in orders point to a rebound that should materialise in October’s …
This webpage has been updated with additional analysis, table, and chart of key data. Inflation passed its peak Saudi inflation eased a touch from 3.1% y/y in September to 3.0% y/y in October (Consensus: 3.0% y/y; CE: 2.8% y/y) and we think the headline …
15th November 2022
Labour market looks like it may be turning a corner September’s labour market figures reveal further signs that the labour market is becoming less tight. That may alleviate some of the pressure on the Bank of England to repeat November’s 75 basis point …
Economy to continue struggling The October data point to a further loss of momentum, with retail sales dropping sharply amid worsening virus outbreaks. November is shaping up to be even worse. With exports cooling, the property sector still in the …
Economy to rebound in Q4 after Q3 contraction Japan’s economy contracted in Q3, with both private consumption and business investment posting far weaker results than timelier data had suggested. The single largest drag was from net trade due mostly to a …
Sentiment buckles under weight of higher interest rates The drop back in the University of Michigan’s consumer sentiment index to a five-month low of 54.7 in November, from 59.9, appears to reflect the damage that higher interest rates are doing, …
11th November 2022
Recession begins and not just because of the extra bank holiday Although at least half of the 0.6% m/m decline in GDP in September (consensus -0.4% m/m, CE -0.5% m/m) and the 0.2% q/q decline in Q3 as a whole (consensus and BoE forecasts -0.5% q/q) was …
Growth likely to decelerate further The economy slowed sharply during the third quarter, and we think growth will ease further over the coming quarters with lower commodity prices, weaker global demand and tighter monetary policy set to drag on prospects. …
Another 75bp hike, but end of tightening cycle on the horizon Mexico’s central bank delivered a fourth consecutive 75bp interest rate hike, to 10.00%, today but, with inflation now past its peak and the economy likely to slow sharply over the coming …
10th November 2022
Goods disinflation broadening; health insurance flips The better than expected 0.3% m/m increase in core consumer prices in October won’t on its own persuade the Fed to drop its hawkish stance. But we expect this to mark the start of a much longer …
Weaker growth ahead as headwinds mount The Philippines economy rebounded sharply in the third quarter of the year, but we expect growth to slow over the coming months as high inflation, rising interest rates and weaker global demand weigh on prospects. …
Doves take control at the NBP Poland’s central bank (NBP) announced (very late by its usual standards) that it had left interest rates unchanged at 6.75% at today’s MPC meeting, confirming previous comments from policymakers that they believe the current …
9th November 2022
Republicans fail to deliver knock-out blow While the results remain too close to call, the Republicans are on course to win only the narrowest of majorities in the House, and control of the Senate will probably be decided by another run-off election in …
PPI deflation setting in Consumer price inflation eased last month from September’s 29-month high and remained below the government’s preferred ceiling of 3%. It is set to stay low by global standards over the coming quarters. Meanwhile, producer price …
NBR’s tightening cycle nearing an end The National Bank of Romania (NBR) slowed down the pace of its tightening cycle today, with a 50bp interest rate hike to 6.75%. We think that the tightening cycle is nearing an end, but that interest rates will have …
8th November 2022
Inflation and reopening boost to keep earnings growth high Overall earnings rose 2.1% y/y in September, the fastest since 1997, but we don’t think this can be kept up consistently, given that a large spike in volatile bonus payments was key to hitting …
7th November 2022
German industry still set for a tough winter German industrial production rose significantly in September but we doubt this is a sign of things to come. With industry facing headwinds from high energy costs, rising interest rates and cooling demand, we …
As good as it gets Economic growth in Indonesia accelerated in the third quarter, but this is likely to be as good as it gets. We expect lower commodity prices, tighter monetary policy and elevated inflation to drag on growth over the coming quarters. …
Exports set to fall further as outlook darkens China’s export volumes dropped back sharply in October, due to a deterioration in global economic conditions and a reversal in pandemic-related demand. We expect exports to weaken further over the coming …
Mixed employment report won’t alter the Fed’s hawkish bent The October employment report had something for everyone, with payrolls pointing to continued strong employment gains while the household survey showed a sharp fall in employment and a rise in …
4th November 2022
Jump in employment and wage growth pressures the Bank to do more The 108,300 surge in employment in October makes a mockery of claims that the economy is on the cusp of recession and, with wage growth accelerating sharply despite favourable base effects, …
Services activity at a two-and-a-half-year low The decline in the ISM services index to a two-and-a-half-year low of 54.4 in October, from 56.7, leaves it at a level that has historically been consistent with only muted GDP growth of around 1% annualised. …
3rd November 2022
Dovish CNB unlikely to tighten further The Czech National Bank (CNB) left its policy rate on hold, at 7.00%, for a third consecutive meeting today. With inflation nearing a peak and the economy now contracting, we think rates will be left unchanged over …
Export outperformance overshadowed by record fall in building permits The improvement in crop yields boosted export volumes in September, but the outperformance of exports was overshadowed by the also-reported record slump in building permits, which …
Strength of net exports fading; better news on unit labour costs won’t stop the Fed hiking yet A drop back in exports and small rebound in imports means the trade deficit bounced back to $73.3bn in September, from a downwardly revised $65.7bn. With the …
Dovish tilt, but rates may still rise to 5.00% Although the Monetary Policy Committee (MPC) raised interest rates today by 75bps, from 2.25% to a 14-year high of 3.00% (consensus 3.00%), it sent a strong signal that it is unlikely to raise rates to the …
PMIs picked up last month, regional divergence continues This page has been updated with additional content. October’s batch of PMIs picked up in most of the region but there remains a stark divergence in growth prospects between the Gulf and non-Gulf …
BNM closing in on the finish line Malaysia’s central bank (BNM) raised its main policy rate by 25bp (to 2.75%) today, but with inflation falling and growth set to slow, we think the tightening cycle is nearing an end. Today’s move came as little surprise …
Rebound in trade surplus won’t prevent drag from net trade While the trade surplus bounced back in September, we’ve pencilled in a drag from net trade to Q3 GDP growth. The rebound in the trade balance, from $8.7bn to $12.4bn in September, was well above …
Fed continues with 75bp hike, but open to smaller 50bp increase next month The Fed raised its policy rate by another 75bp today, to between 3.75% and 4.00%, but laid the groundwork in the accompanying statement for a probable drop down to a 50bp hike at …
2nd November 2022
Although the resignation of Liz Truss as Prime Minister leaves the UK without a leader when it faces huge economic, fiscal and financial market challenges, the markets appear to be relieved. The pound has climbed from $1.12 to $1.13 and 30-year gilt …
Labour market strength will encourage RBNZ to hike by 75bp this month New Zealand’s labour market remained very tight last quarter and coupled with the continued strength in inflation. the RBNZ will probably hike by 75bp in a couple of weeks. The 1.3% q/q …
1st November 2022
Goods price pressures evaporating as demand weakens The further fall in the ISM manufacturing index to 50.2 in October, from 50.9, illustrates that global economic weakness and the earlier surge in the dollar are catching up with the factory sector. But …
RBA will lift rates more sharply than most anticipate The Reserve Bank of Australia hiked rates by 25bp today and the upward revision to its inflation forecasts are consistent with our view that rates will peak at an above-consensus 3.85%. The Bank’s …
Better than expected but still consistent with a slowdown The Caixin manufacturing PMI rose in October but remained weak. Taken together with the official survey published yesterday, it points to a slowdown in industrial activity last month. We think the …
Households take caution as real spending power falls September’s money and credit figures point to further signs that consumers have been become more cautious in response to the weakening economic outlook. The £0.7bn rise in consumer credit (consensus …
31st October 2022
Weak exports will continue to hold back the city’s recovery Hong Kong’s economy contracted last quarter due to a sharp decline in exports. While the ongoing easing of virus-related restrictions should continue to support a recovery in retail spending, …
COVID disruptions and global downturn hit activity The official PMIs point to a further loss of momentum in this month as virus disruptions worsened and export orders remained under pressure. With the zero-COVID policy here to stay, we think the economy …
Retail sales will come off the boil before long While retail sales kept rising for the ninth consecutive month in September, growth in volumes is slowing sharply and will remain subdued over coming quarters as real incomes fall and the savings rate …
Weakening global economy weighing on manufacturing outlook Industrial production declined in September whereas retail sales values saw another relatively strong rise. We are expecting a strong fourth quarter for retail sales, but industrial output looks …
Economy performed better than feared last quarter The economy performed better than expected last quarter but, with the business surveys deteriorating in recent months, GDP growth is likely to slow to a crawl this quarter and we expect a mild recession in …
28th October 2022
Wage growth gradually slowing, even as economy holds up Although core PCE inflation rebounded to 5.1% in September and real consumption looks to have more momentum than previously thought, the Fed may still draw some encouragement from the more modest …
CBR brings its easing cycle to a halt Russia’s central bank left interest rates on hold at 7.00% today and highlighted the pro-inflationary risks stemming from the recent mobilisation of reservists. That said, we think this is likely to mark a pause in …
Growth to weaken sharply in coming quarters The economy returned to growth in Q3, after the Omicron-induced slump in the second quarter, but we expect growth to weaken considerably over the coming quarters as exports struggle and the reopening boost to …
