Inflation has not peaked yet The easing in CPI inflation from 10.1% in July to 9.9% in August (consensus forecast and CE 10.2%, BoE 9.9%) is a bit of a relief after yesterday’s US CPI shocker, but overall and core UK CPI inflation haven’t peaked yet. As …
14th September 2022
Business investment to remain strong this quarter Although the surge in “core” machinery orders growth in July was driven by a handful of non-manufacturing sectors, the result still points to strong non-residential investment growth this quarter, chiming …
Only faint signs of a loosening in the labour market The further fall in the unemployment rate to a new multi-decade low of 3.6% in July together with the extra pick-up in wage growth will increase the pressure on the Bank of England to deliver another 50 …
13th September 2022
Rise in headline rate paves way for another 50bp hike this month The rise in Indian CPI inflation in August to further above the RBI’s 2-6% target range should ensure that the central bank delivers another 50bp hike to the repo rate (to 5.90%) in its …
12th September 2022
Inflation will remain below government’s ceiling this year Consumer price inflation fell in August and remains below the PBOC’s preferred ceiling of 3%, leaving room for the Bank to ease policy further. Meanwhile, producer price inflation declined to its …
9th September 2022
Lower inflation and smaller recession, but higher interest rates and more govt debt It seems that the size and structure of the Prime Minister’s policy to freeze utility prices is broadly as expected and will reduce inflation and limit the size of the …
8th September 2022
Further tightening to be “measured and gradual” Malaysia’s central bank (BNM) today raised its main policy rate by 25bp (to 2.5%), and with inflation likely to remain elevated, further hikes are likely. Today’s move came as little surprise and was …
Lower iron ore price to weigh on export values The biggest fall in Australia’s trade balance in history partly reflects bad weather that held back coal exports, but the recent fall in the iron ore price hasn’t fully fed through so export values will …
Bank gives little away as it hikes by 75 bp The Bank of Canada remains concerned about the risk of high inflation expectations becoming entrenched but, with the economy now slowing sharply and inflation easing by more than the Bank expected, we still …
7th September 2022
NBP brings its tightening cycle to a close The National Bank of Poland (NBP) slowed down the pace of its tightening cycle again today with a 25bp interest rate hike to 6.75%, and with policymakers seemingly more concerned about the deteriorating economic …
Export volumes rose by more than we expected in July but, with the fall in import volumes painting a weak picture of domestic demand, it still looks likely that GDP growth will slow sharply this quarter. The 2.8% m/m fall in export values in July was the …
Trade deficit narrows as consumer imports slow The trade deficit narrowed to a nine-month low of $70.7bn in July, from $80.9bn, driven by a sizeable drop back in consumer goods imports, although almost half that decline was due to lower imports of …
No respite in sight for German industry German industrial output fell a bit less than anticipated in July but that was mainly due to a rebound in construction activity and there were signs that manufacturing production is starting to be hit hard by the …
Exports drop back amid cooling global demand Export volumes fell by the most since March in a sign that slowing global growth and the normalisation of consumption patterns is starting to weigh on demand for Chinese goods. In contrast, there was a slight …
GDP growth will slow sharply over coming quarters The 0.9% q/q rise in Australia’s Q2 GDP was broadly in line with the RBA’s expectations and won’t move the needle in terms of the size of the next rate hike. That result was a touch below the analyst …
ISM surveys consistent with solid growth in Q3 The slight rise in the ISM services index to 56.9 in August, from 56.7, strikes a further blow against the idea the economy is close to recession, with a weighted average of the two ISM surveys consistent …
6th September 2022
RBA will slow pace of tightening before long While the RBA hiked rates by 50bp today as widely anticipated, it dropped some hints that further tightening will be less aggressive. The Bank’s decision to hike the cash rate by 50bp was correctly anticipated …
GDP growth to slow further over coming quarters The partial GDP data released over the last couple of days suggest that GDP growth was much weaker last quarter than we had anticipated. With the housing downturn now starting to bite, it will slow to a …
Real wages to continue shrinking but spending will be supported by savings Labour cash earnings growth weakened slightly in July as growth in bonuses slowed and further moderation is in store from August with the end of the summer bonus season. Overall …
OPEC+ announced a 100,000-barrel per day cut to production in October at its regular monthly meeting today. The cut is not a complete surprise as there have been mutterings for a few weeks, notably from the Saudi energy minister, Abdulaziz bin Salman al …
5th September 2022
Fiscal plans of Truss may limit depth of recession, but result in higher interest rates The news that Liz Truss will become the new Prime Minister tomorrow suggests that a big loosening in fiscal policy will limit the depth of the recession, but that …
Labour market conditions normalising The slower pace of payroll gains in August, together with the big rebound in the labour force, and the more modest increase in wages, would seem to favour a smaller 50bp rate hike from the Fed next month, rather than a …
2nd September 2022
Rebound in new orders provides some reassurance The stabilisation in the ISM manufacturing index at 52.8 in August, unchanged from July, provides some further reassurance that the economy is not yet sliding into recession. While the details suggest …
1st September 2022
More signs that growth has stalled The larger-than-expected drop in Caixin manufacturing PMI was more significant than the slight rise in the official PMI , suggesting that downward pressure on industry intensified last month. There is more pain on the …
Capital spending to rebound over coming quarters The continued rise in machinery and equipment investment in Q2 won’t offset a plunge in construction investment, but firms’ optimistic capital plans suggests this will prove short-lived. Today’s capital …
Growth set to slow sharply this quarter The weaker-than-expected second-quarter rise in GDP as well as the preliminary estimate of a small fall in output in July confirm that the economy is slowing sooner than the Bank of Canada predicted. Nevertheless, …
31st August 2022
New ADP index provides little insight into official payrolls The ADP’s revamped employment report showed private payrolls rising by a muted 132,000 last month, but with only limited details as to how they arrived at that number, we have little confidence …
Inflation to hit 10% before year end The further increases in headline and core inflation in August, and likelihood that they will keep rising, will add to the pressure on the ECB to step up the pace of tightening. The balance of probabilities is shifting …
Recovery continues to lose steam The official PMIs show a further loss in economic momentum this month as the reopening boost waned and the property downturn deepened. We continue to think the economy will struggle to make much headway during the coming …
Recovery to stall by September Industrial production made another stride towards pre-virus levels in July but the recovery should stall by September. Meanwhile, retail sales are in for a weak quarter despite a decent showing in July, as soaring inflation …
MNB firmly focused on inflation and the forint Hungary’s central bank (MNB) continued with its aggressive tightening cycle today as it raised its base rate by another 100bp, to 11.75%. It’s clear that the MNB is struggling to contain very strong and …
30th August 2022
Some resilience in spending The £1.4bn (consensus £1.5bn) increase in consumer credit in July supports other evidence suggesting that consumer spending is not collapsing, although this is obviously before the big hit to households’ spending power from the …
Not much room left for further tightening The unemployment rate stayed unchanged in July and we do not see much room for further tightening in the labour market in 2022. The labour force shrank by 0.06% m/m in July, but with the adult population shrinking …
Reopening boost to last for a while yet Not only did retail sales rise for the seventh consecutive month in July, the strong size of the increase strongly suggests that the Reserve Bank of Australia will hike rates by another 50bp next month. The 1.3% m/m …
29th August 2022
Powell continues pushback against early pivot Fed Chair Jerome Powell’s keynote speech at Jackson Hole added to the tide of recent Fed speakers pushing back against market expectations that the Fed is close to pivoting toward rate cuts. Nevertheless, as …
26th August 2022
Inflation moderates, real consumption growth still muted The 0.2% m/m increase in real personal spending was a little weaker than we had expected and, as a result, we now expect third-quarter real consumption growth to be 1.6% annualised, whereas we …
Economy holding up better than headline GDP suggests The upward revision to second quarter GDP, to a contraction of 0.6% annualised, from 0.9%, together with the news that real Gross Domestic Income (GDI) expanded by 1.4% in the second quarter, after a …
25th August 2022
Recession now a certainty Although the Ifo Business Climate Index edged down only trivially in August it remained at a very low level consistent with the economy contracting. After expanding by a mere 0.1% q/q in Q2, we think the German economy is heading …
BoK hikes rates, tightening cycle to finish by year-end The Bank of Korea today raised its main policy rate by 25bp (to 2.5%), and further hikes are likely over the next few months. However, with economic growth set to slow in the second half of the year …
Durables dragged down by slump in defence orders The stagnation in durable goods orders in July was principally due to a 50% m/m slump in defence aircraft orders, which are both volatile and not reflective of the strength of private demand. Excluding …
24th August 2022
Composite PMI plunges deep into recessionary territory The further slump in the S&P Global composite PMI for the US to 45.0 in August, from 47.7, leaves it at a level consistent with a deep recession. Based on the historical relationship, it suggests GDP …
23rd August 2022
PMIs not pointing to a recession…yet Even though the S&P Global/CIPS composite flash PMI stayed above the no-change level of 50.0 in August, it probably won’t be long before it joins other indications suggesting that the economy is already in recession. …
PMIs signal recession has begun August’s flash PMIs suggest that the euro-zone economy is now contracting. While price pressures have become less intense in the past few months as global supply chain problems have eased, soaring gas prices and strong …
Bank will tighten policy further Bank Indonesia (BI) hiked interest rates by 25bp to 3.75% today, and the hawkish commentary from the press conference suggests that the Bank will tighten policy further over the coming months. Today’s decision came as a …
Slowdown continues as supply shortages and virus wave persist August’s PMIs indicate a further slowdown in the manufacturing sector as demand slumped even further, while services continue to bear the brunt from the record Covid-19 wave. According to …
PBOC extends lifeline to struggling economy Today’s reductions to both the one-year and five-year Loan Prime Rates (LPR) continue the PBOC’s efforts to support the faltering economy. We expect additional easing to follow in the coming months, but …
22nd August 2022
Abdalla begins with a hold as pressures mount on pound The Central Bank of Egypt (CBE) kept interest rates on hold, at 11.25%, in the first meeting under new caretaker governor Hassan Abdalla but, with pressure mounting on the pound, we still think …
18th August 2022
The Philippines is entering a demographic sweet spot that could provide a big boost to economic growth, but only if enough new jobs can be found for the wave of young people that will enter the workforce over the coming decade. … …
17th April 2015
