Wholesale inflation drops for the sixth month in a row The drop in Indian wholesale price inflation for the sixth month in a row in December further reinforces our view that the MPC will draw the tightening cycle to a close after one more rate hike in its …
16th January 2023
Further fall in inflation despite utility price hike The softer-than-expected inflation reading in Russia in December, of 11.9% y/y, is likely to be followed by further sharp falls in the coming months towards 4% as last year’s surge in prices passes …
13th January 2023
Recession averted in 2022, but unavoidable in 2023 The small 0.1% m/m gain in real GDP in November (consensus -0.2% m/m, CE -0.3% m/m) suggests the economy did not contract in Q4 and is not in recession. Even so, it is too soon to conclude the economy …
Another rise in core inflation means 50bp hike in February nailed on Yet another larger-than-expected increase in the Riksbank’s target measure of inflation and in the core rate suggest that policymakers are highly likely to raise rates by 50bp in …
Reopening to boost imports but exports will still struggle China’s exports contracted year-on-year in December by the most since the Wuhan lockdown in early 2020. Imports held up slightly better but are still depressed. Inbound shipments should start to …
Another more muted gain in core CPI Core CPI inflation was still an elevated 5.7% in December but, with another more muted 0.3% m/m gain, the three-month annualised rate fell to a 20-month low of 3.1%. Admittedly, the latter is still slightly above the …
12th January 2023
Drop in headline inflation suggests end of tightening is imminent The further easing in headline CPI inflation in December to a 12-month low of 5.7% y/y supports our view that the tightening cycle is in its final throes. We expect just one more hike in …
Construction activity contracts as profits decline The latest RICS Construction Survey showed the first contraction in workloads since the height of the COVID-19 pandemic in mid-2020. Weakening demand and rising financing costs are cutting profits and …
Some very modest reopening effects Consumer price inflation ticked up in December, while producer price deflation eased. There are some early signs that the transition toward living with COVID is starting to put upward pressure on prices. But the uptick …
Net trade to provide sizeable boost to Q4 GDP growth The trade balance widened to a five-month high in November even though import prices outpaced export prices last quarter, which suggests that net trade provided a sizeable boost to Q4 GDP growth. The …
Commercial crude stocks surge and could have further to rise Commercial crude stocks surged last week at the fastest pace since February 2021, as net imports rose and disruption to refineries lingered from the recent cold weather disruption. Going …
11th January 2023
Industry stagnated towards end of last year, 2023 to be tough Mexico’s industrial sector stagnated in November as higher construction and utilities output offset a slump in manufacturing and mining. More timely survey indicators have continued to hold up …
Stubbornly high inflation will prompt further RBA rate hikes While falling job vacancies point to rising unemployment, the resilience in retail sales coupled with stubbornly high inflation will prompt the RBA to press ahead with another 25bp rate hike …
Inflation still too high for Copom to breathe easily The higher-than-expected Brazilian inflation reading of 5.8% y/y last month, coming alongside growing fiscal concerns, will give Copom more cause to delay the start of its easing cycle. The outturn was …
10th January 2023
Getting worse in December but soon likely to be getting better The downturn in credit growth extended in December amid the economic disruption from reopening. But the worst of the disruption may have already passed. The shift toward living with COVID and …
Strong core inflation to prompt one final Norges Bank hike The continued strength of core inflation will encourage the Norges Bank to press on with another 25bp interest rate increase next week. While there is still some more upside risk to underlying …
Household spending may have fallen in Q4 already The slowdown in household spending in November largely reflects base effects from the ending of lockdowns in 2021. Even so, the data suggest that household spending may have started to fall last quarter. …
Inflation falls again, Banxico to end tightening cycle in February Mexico’s headline inflation rate was unchanged at 7.8% y/y in December but policymakers at the central bank will have taken comfort from the fact that core price pressures are finally …
9th January 2023
Labour market even stronger than expected The stability of the euro-zone unemployment rate in November, at a record low of 6.5%, shows that the labour market held up even better than we expected at the end of last year. And the third successive monthly …
Outlook improved, but headwinds remain The rise in German industrial output in November confirms that industrial output held up better than we had expected in Q4. However, while the recent slump in gas prices should help energy-intensive firms in the …
Labour market data boost odds of a soft landing The solid 223,000 gain in non-farm payrolls and drop-back in unemployment to a 50-year low in December will, at face value, do little to ease the Fed’s concerns about resilient core services inflation. …
6th January 2023
Surge in employment locks in another interest rate hike The surge in employment in December and renewed fall in the unemployment rate suggest that the Bank of Canada will raise interest rates again later this month, although the fall in wage growth …
Deep downturn in Q4, but signs of improvement in December The latest EC Economic Sentiment Indicators for Central and Eastern Europe point to a regional decline in GDP in the order of 0.5% q/q in Q4, but it was encouraging that sentiment increased for the …
Headline index falls below 50 as recession hits property demand The headline CIPS construction index fell below 50 in December, indicating a contraction in activity, as the recession hit demand and developers’ concerns about capital values increased. With …
New year cheer but ECB will stick to hawkish script The fall in inflation and improvement in economic sentiment in December suggest that the euro-zone’s case of stagflation is not quite as acute as feared a few months ago. Nonetheless, a technical …
PMI picks up, but manufacturing sector set for tough 2023 South Africa’s manufacturing PMI picked up for a fourth consecutive month, to 53.1, in December but the backdrop of persistent power cuts, tight policy and a global recession means that we think …
House price falls already well advanced The further large fall in house prices recorded by Halifax in December suggests that the house price correction is further advanced than we previously thought. Indeed, while the Nationwide figures point to a …
Wage growth should settle around 1% this year The sharp slowdown in wage growth in November was mostly due to a plunge in volatile bonus payments and wage growth will rebound over the coming months . The slowdown in wage growth in November, from 1.4% to …
Hit to implied product demand from cold weather likely to be short-lived Commercial crude stocks rose last week due to refinery closures in the wake of the extremely cold weather. But this should be short-lived, with most refinery plants back online soon. …
5th January 2023
Trade hit by domestic and external weakness The sharp narrowing of the trade deficit to $61.5bn in November, from $77.8bn, came as a big fall in exports was offset by an even sharper drop in imports. Net trade still looks to have been a small drag on …
Lower commodity prices push goods trade into deficit Lower commodity prices have now wiped out the goods trade surplus, while the falls in export and import volumes present downside risks to the preliminary estimate that GDP edged up in November. The …
Industry stuck in the doldrums The 0.1% m/m fall in Brazilian industrial production in November and the weak surveys for December provide further evidence that the economy is in the midst of a slowdown. But the central bank will wait for further signs of …
Index drops into recessionary territory The decline in the ISM manufacturing index to a two-and-a-half year low of 48.4 in December, from 49.0, is another sign that the economy lost more momentum at the tail-end of last year. Nearly all the survey-based …
4th January 2023
Lending weak, but no longer falling A second consecutive increase in home purchase applications in December suggests that declining mortgage rates have allowed buyer demand to bottom out. Indeed, as we expect mortgage rates to continue to fall, the …
Net lending rises further despite worsening outlook Net lending to property accelerated in November to an 11-month high. But given the worsening economic and property outlook we expect it will soon go into reverse. Indeed, investment activity is now …
Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. This will be a constant theme over the year ahead, …
Approvals collapse as adjustment to higher rates begins in earnest The impact of the surge in mortgage rates following the “mini” budget on 23 rd September was realised in November as mortgage approvals collapsed. The modest drop back in fixed mortgage …
Gulf non-oil sectors lost steam at the end of 2022 December’s PMIs suggest that non-oil sectors across the Gulf lost some steam at the end of 2022, with the worsening global backdrop weighing particularly heavily on the UAE. Elsewhere, there were signs …
Further improvement, but recession still likely December’s final PMIs suggest the euro-zone economy held up better than we expected in Q4, but are still consistent with a mild recession. They also suggest price pressures remain very high. The upward …
Fall in headline rate but core rate rises Headline inflation in Switzerland fell in December but the rise in the core rate will be a concern for SNB policymakers. We still think that the Bank will raise rates by just 25bp in March, compared to the 50bp …
Strong PMI readings at odds with the hard activity data India’s manufacturing and services PMI readings rose to multi-month highs in December but are at odds with the hard activity data that point to a slowdown in domestic and external demand. India’s …
Plunge in inflation in December likely to reverse in January The sharp fall in German inflation in December was due to one-off energy subsidies so it will probably reverse in January. Headline inflation is still likely to decline rapidly in March, but we …
3rd January 2023
Further weakness ahead Manufacturing PMIs across the region rose slightly in December but remained weak overall. We continue to expect weaker global demand, high inflation and interest rates to drag on manufacturing ahead. December PMIs have been released …
Breakneck housing downturn has much further to run Australia’s house prices have never fallen so fast in such a short period of time and the risks to our forecast of a 15% peak-to-trough fall are shifting to the downside. The 1.2% m/m fall in house prices …
Growth slowed sharply in the first two months of Q4 and we expect a further slowdown over the coming months as high inflation, multi-decade high interest rates and weaker global demand weigh on prospects. The flash estimate for Q4 GDP, largely computed …
Headwinds from reopening continue into 2023 The latest surveys suggest that the reopening wave delivered another blow to the economy in December. Services activity looks to have slumped. Industry was not spared, although the hit appears more modest. But a …
Falls in house prices will continue throughout 2023 The slowdown in house price falls in December is little comfort when leading indicators point to further sharp declines. Despite mortgage rates edging lower in recent weeks, we continue to think that …
30th December 2022
US demand looks set to hold up well, despite slower economic growth Commercial crude stocks rose last week owing to a rebound in net imports, which was largely the result of the reopening of the Keystone pipeline. More interesting was the jump in implied …
29th December 2022
New home sales increase despite jump in mortgage rates New home sales increased for the second month in a row in November. That is at odds with other measures of market activity, which have fallen sharply in response to the jump in mortgage rates. We …
23rd December 2022
