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House prices may soon start to fall again House price growth kept slowing in November and, with affordability the most stretched since the early 1990s, that slowdown has further to run. In seasonally-adjusted terms, house prices across Australia’s eight …
30th November 2023
House price rally will slow in earnest With house prices now at a record high and affordability constraints becoming increasingly binding, Australia’s housing rebound will soon run out of steam. In seasonally-adjusted terms, house prices across …
1st November 2023
House price gains will slow further over coming months The housing rebound will continue to lose momentum over coming months as affordability is increasingly stretched, but policy easing by the RBA should provide a renewed boost to prices next year. …
2nd October 2023
Housing recovery remains in high gear Australian house prices rose at a blistering pace in August, as demand continued to outstrip supply. Although the property market is likely to remain tight in the near term, we think house price growth will moderate …
1st September 2023
Housing rebound continues unabated Australia’s house-price rebound went full steam ahead in July. At the margin, that should strengthen the case for the RBA to lift its cash rate by a further 25bp at its meeting later today. Nonetheless, with resurgent …
1st August 2023
Australia’s house-price rebound showed no signs of slowing in June. However, with the RBA set to swing its rate hammer a few more times, we’re sticking with our view that the upturn will prove fleeting. House prices rose by 1.1% m/m in seasonally-adjusted …
3rd July 2023
Gains in sales & output both muted The 0.3% m/m increase in retail sales included a 1.4% m/m gain in the value of motor vehicle sales, which is very hard to square with the 6.5% m/m decline in light vehicle unit sales already reported by manufacturers. …
15th June 2023
Sales benefitting from easing supply shortages The resilience of manufacturing sales suggests easing supply shortages are still supporting activity, with the transport sector reaping much of the benefits. Nevertheless, the surveys point to a weaker …
Tight labour market will prompt more monetary tightening With the labour market still firing on all cylinders, we’re happy with our forecast that the Reserve Bank of Australia will lift the cash rate all the way to 4.85% by September. The 75,900 rise in …
Stagnant exports a prelude of downturn to come The trade deficit narrowed for an eighth consecutive month in May as both import prices and volumes continued to fall. “Core” machinery orders rebounded in April, but that still points to a fall in capital …
Recession will drive RBNZ to cut rates by Q4 The contraction in Q1 GDP means that a recession is now well under way in New Zealand. Accordingly, we’re sticking with our forecast that the RBNZ will shift gears and start cutting rates before year-end. The …
Output will weaken despite increase in April The uptick in industrial production in April was mostly driven by strong growth in Ireland, with many other major euro-zone economies recording a fall in output. We expect industry to struggle this year as …
14th June 2023
Resurgence in activity unlikely to last Note: We’ll be discussing the UK’s economic, housing market and policy outlook in light of the BoE’s June rate decision in an online briefing on 22nd June at 10:00 EDT/15:00 BST . Register now . The 0.2% m/m rise in …
Core inflation still uncomfortably high Headline CPI inflation fell to a more than two-year low of 4.0% in May, thanks to favourable base effects and another sharp drop back in energy prices last month but, with core price inflation still as high as …
13th June 2023
Borrowing curbed in response to rising interest rates With mortgage rates surging, the number of loans issued to buy a home dropped sharply in Q1, with Buy-to-Let (BTL) lending seeing the most severe drop. Those that did press ahead with a home purchase …
Reacceleration in wage growth supports the case for further rate hikes Note: We’ll be discussing the Fed and ECB June decisions and previewing the Bank of England's upcoming meeting in a briefing at 10:00 EDT/15:00 BST on 15 th June. Register here . The …
Labour market starting to loosen The fall in employment and the increase in the unemployment rate to 5.2% in May will probably not prevent the Bank of Canada from raising interest rates again at its July meeting, but the moves reinforce our view that the …
9th June 2023
Net trade to boost GDP in Q2 The narrowing of the trade surplus in April was driven in large part by a deterioration in the terms of trade. We think net exports will actually provide a modest boost to GDP growth this quarter. The decline in the trade …
8th June 2023
Exports still benefitting from easing support shortages Easing supply shortages supported strong export growth in April but, with the surveys of export orders still very weak, that strength is likely to fade soon. Canada’s goods trade surplus widened from …
7th June 2023
Weak demand to weigh on industry The disappointingly small rebound in German industrial production in April suggests that the boost from lower energy prices and improved global supply conditions at the beginning of the year has run its course. And …
RBA could be forced to keep hiking into economic downturn Real GDP growth slowed sharply last quarter as household spending ground to a standstill. However, with productivity falling for a fourth consecutive quarter, unit labour costs grew apace. …
Renewed strength in regular pay growth won’t last Wage growth fell in April due to a fall in overtime pay and mostly stagnant bonus payments, while regular pay growth rebounded. But labour market conditions should loosen in the second half on account of a …
6th June 2023
Despite employment strength, unemployment up and wage growth down The bigger-than-expected 339,000 increase in non-farm payroll employment in May will dominate the headlines, but the employment report was not all positive – with a big drop in the …
2nd June 2023
Recession risks remain high The slight decline in the ISM manufacturing index to 46.9 in May, from 47.1, reinforces our view that the jump in manufacturing output in April won’t be sustained. But the bigger news was the renewed plunge in the new orders …
1st June 2023
Higher interest rates start to weigh more heavily on bank lending While the £7.3bn rebound in total UK bank deposits in April followed the £16.1bn decline in March and suggests that concerns over the stability of UK banks have faded, the more interesting …
House prices gain traction With house prices having risen for the third month in a row, there is a growing risk to our view that the housing downturn has further to run. Nonetheless, with rising interest rates set to squeeze affordability even more, we …
Upside surprise further boosts the case for another rate hike The larger-than-expected 3.1% annualised rise in first-quarter GDP and the strong preliminary estimate in April boost the case for another interest rate hike from the Bank of Canada, which …
31st May 2023
Good news on inflation but core rate still high The fall in German headline inflation in May and signs that core price pressures eased echo the message from the inflation figures for France and Spain and supports the case for the ECB to limit further …
Renewed acceleration will prompt further RBA tightening While the pick-up in inflation in April mostly reflects base effects from the excise duty cut a year ago, trimmed mean CPI picked up as well. With inflation set to overshoot the RBA’s forecasts this …
Balanced risks to Q2 GDP outlook April’s activity data were a mixed bag. The fall in industrial production and sharp drop in retail sales volumes pose downside risks to our Q2 GDP growth forecast . By contrast, capital goods shipments data suggest …
House price declines reverse In line with the stronger-than-expected economic data releases at the start of the year, house prices proved resilient in March. But we expect the economy to weaken in the coming months, which will weigh on homebuyer …
30th May 2023
Unemployment rate still set to rise in H2 The unemployment rate reversed the sharp rise in March last month and the job-to-applicant ratio stabilised, but a recession in H2 should still see the unemployment rate peak at 3% by year-end. The labour force …
Improved outlook for retailers, but higher interest rates to restrain spending The 0.5% m/m rise in retail sales volumes in April suggests that higher interest rates are not yet taking a toll on spending. While the worst of the declines in retail sales …
26th May 2023
Sluggish consumption adds to case for RBA pause Coupled with rising unemployment and lukewarm wage growth , the weakness in retail sales in April supports our view that the Reserve Bank of Australia is done hiking interest rates . Retail sales values were …
Inflation to fall below 3.0% by year-end Tokyo headline inflation fell to 3.2% in May largely due to a sharp fall in energy inflation, but inflation excluding fresh food and energy ticked up due to faster gains in “core” goods prices. We still expect a …
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 uncertain. But regardless of how well the economy held up this quarter, we …
24th May 2023
BoE will need to work harder to conquer inflation 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 Bank of England won’t be able to ignore the smaller-than-expected fall in CPI …
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. Stronger activity supporting domestic price pressures May’s PMIs suggest that economic growth is being supported by the services sector …
23rd May 2023
UK Drop-In (24th May): Join our UK team for a 20-minute online briefing on the implications of April’s CPI inflation release at 10:00 BST on Wednesday, 24th May. Register Now . Shaky start to the new fiscal year won’t prevent pre-election splurge April’s …
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 in for a tough H2 We already know that business investment rose despite a plunge in capital goods shipments last quarter . As such, we wouldn’t read too much into the fall in machinery orders in March. The bigger picture is that as …
22nd May 2023
Weakness mainly due to lower vehicle sales The fall in retail sales in March was driven mainly by lower vehicle sales. Overall sales volumes still rose by 4.9% annualised last quarter, suggesting that a pick-up in consumption supported GDP growth, but the …
19th May 2023
Inflation should fall rapidly in H2 on stronger yen, weaker wage growth Underlying inflation pushed past 4.0% for the first time in 40 years partly due to a spike in food inflation. Meanwhile, services inflation set a fresh 30-year high, largely …
Sales in a slump Existing home sales fell back towards their recent lows in April, not helped by a very tight inventory. The high cost of a new mortgage is acting to discourage homeowners with a low fixed-rate mortgage from moving, which is disrupting …
18th May 2023
The weakness in April’s jobs data suggest that the labour demand is starting to cool. Admittedly, there continue to be some pockets of resilience in the labour market. However, with wage growth remaining sluggish, we think it’s more likely than not that …
Exports outlook improving in Q2, but not for long The trade deficit narrowed in April as export values rose faster than import values, largely reflecting the faster fall in import prices. Export climate readings suggest export volumes will continue to …
Weakening economy to weigh on starts Homebuilders have turned their attention to finishing off the large number of homes under construction rather than starting new ones, keeping single-family starts close to their recent lows in April. While starts …
17th May 2023
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 …
Exports downturn to drag economy into recession in H2 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 …
Resilience of activity likely to fade Solid gains in retail sales and manufacturing output in April indicate that the economy remains resilient to the impact of higher interest rates and tightening lending standards. That said, real consumption growth is …
16th May 2023
