RBA will keep hiking for now despite consumption slowdown Following a strong eight consecutive rises since the start of the year, the decline in retail sales in October isn’t a disaster. A fall in sales volumes across Q4 now looks very likely but we …
28th November 2022
Nationwide inflation to rise further and drag spending growth Headline inflation in the capital set a new three-decade high in November on aggressive rises in food inflation excluding fresh food and industrial goods inflation. The upshot is that …
25th November 2022
Marked pick-up in growth unlikely following Q3 slump GDP growth in Nigeria slowed to 2.2% y/y in Q3 as woes in the oil sector intensified and key parts of the non-oil economy, such as agriculture and manufacturing, performed poorly. Even with …
24th November 2022
Stronger core inflation will support the hawks at Banxico The further fall in Mexico’s headline inflation rate, to 8.1% y/y, in the first two weeks of November was driven by easing non-core price pressures. But core inflation picked up, which will …
Small improvement in business climate won’t prevent recession The increase in the Ifo Business Climate Index in November does not change the big picture that the German economy is likely to contract in Q4. November’s uptick in the Business Climate Index …
Inflation to fall alongside November output price index November’s flash PMIs point to further weakness in the manufacturing sector, corroborating firms’ forecasts. At the same time, services activity appears to be struggling due to the rapid rise in …
Commercial crude stocks fell for a second consecutive week and are likely to come under further pressure if strategic reserve releases wind down. Despite this, oil prices slid on demand worries and as rumours around the G7’s plan to cap the price of …
23rd November 2022
Sales level off, but leading indicators point to declines New home sales have levelled off in recent months, but leading indicators support our view that sales will fall a little further by the end of the year. Looking ahead, we expect stretched …
Equipment investment refusing to roll over despite surging rates The solid 1.0% m/m rise in durable goods orders in October indicates that business equipment investment continues to hold up reasonably well in the face of higher borrowing costs, helped by …
PMIs suggest we’re already in recession While the composite flash PMI improved marginally in November, it stayed firmly below the no-change level of 50.0, which is consistent with our view that the economy is already in recession. However, with domestic …
Soft start to Q4 October’s activity data for Poland suggest that the economy lost some steam at the start of Q4 and we think it was probably at the start of recession. We expect that evidence of a deeper downturn taking hold over the coming months will …
Contraction in Q4 very likely, inflation nearing a peak The flash PMIs for November add to the evidence that the economy will contract in Q4. The price indices suggest that inflation will soon peak, but they remain extremely high by past standards. The …
Surprisingly strong inflation to keep hawks in majority South Africa’s headline inflation rate picked up unexpectedly in October, to 7.6% y/y, and the jump in core inflation will be a particular worry for policymakers. Another 75bp hike in the repo …
Revised GDP data confirm that the economy rebounded strongly in the third quarter. However, we don’t expect this strength to last. A combination of weaker global growth, high inflation and tighter monetary policy will weigh heavily on activity over the …
Retail sales struggling for momentum The small fall in retail sales volumes in September appears to have been reversed in October but, more generally, sales volumes have been little changed for the past six months and the low leve of consumer confidence …
22nd November 2022
Cracks in global steel supply widening Global steel production growth is deteriorating a bit faster than we had thought. Even very flattering base effects failed to keep steel output growth in positive territory. With global economic activity weakening …
Energy price support puts borrowing back on upward trend October’s public finances figures showed that government borrowing is no longer coming in below last year’s monthly totals. And the combination of the government’s energy price support and …
Weak demand and high energy costs weighing on aluminium output While the latest year-on-year increase in global aluminium production is suggestive of an improving supply environment, output actually fell in absolute terms and probably has further to …
21st November 2022
Thailand’s economy accelerated in the third quarter on the back of a surge in service exports. Although the global downturn and higher interest rates will weigh on prospects, we expect growth to hold up relatively well over the coming quarters as …
Rising mortgage rates cut sales A renewed rise in mortgage rates led to the largest month-on-month decline in existing home sales since February. As the impact of higher rates continues to feed through in the coming months, we expect sales to fall further …
18th November 2022
Teetering on the brink of recession The 1.2% q/q contraction in Chile’s economy in Q3 was even steeper than expected and we think that the downturn has further to run – our forecasts is for the economy to contract by 1.3% over 2023 as a whole. Meanwhile, …
Only a temporary halt to the downward path The 0.6% m/m rise in retail sales volumes was larger than both we (0.0% m/m) and the consensus (+0.2% m/m) had expected. Sales volumes were probably supported by the reversal of bank holiday effects in October. …
Government intervention to tame inflation Headline inflation set a new three-decade high in October on aggressive rises in food inflation excluding fresh food and will remain near those highs this quarter. That said, government support measures will lower …
Weak builder confidence points to further declines in starts Single-family starts fell to 855,000 annualised in October which was much stronger than what was implied by the low level of homebuilder confidence. We expect further declines in new home sales …
17th November 2022
Little sign of goods price pressures easing Final inflation data for October confirm that price pressures strengthened and became more broad-based. Unlike in the US and UK, there is little sign that goods inflation has passed its peak. While headline …
Unemployment rate to rise sharply next year Australia’s labour market held up well in October, consistent with our expectations for a near-term acceleration in wage growth and a further 100bps of rate hikes by the RBA. But we think employment will start …
Deficit to narrow by end-2022 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% y/y …
More declines in store for commercial crude oil stocks Oil prices were little swayed by the latest EIA data showing the biggest decline in commercial crude stocks in about three months last week, given that the data were similar to industry data released …
16th November 2022
Economy stabilising Russia’s economy appeared to stabilise in Q3 as the 4% y/y contraction in GDP reported by Rosstat today is consistent with output rising marginally in seasonally-adjusted q/q terms. That said, there’s little sign in the latest monthly …
Consumers refuse to buckle under weight of higher rates The strength of underlying retail sales despite higher borrowing costs is encouraging, but manufacturing is slowly succumbing to the global malaise. The consumer is hanging in there, with retail …
Core inflation pressures better than they look Although the annual rates of CPI-median and CPI-trim edged up in October, the 3-month annualised rates that the Bank of Canada is now focussed on declined. As that for CPI-median is now in the 1% to 3% …
Economy now entering slower growth The slowdown in GDP growth in Israel in Q3, to 2.1% q/q annualised, was in line with expectations as private consumption contracted and net trade exerted a drag. We think Israel’s economy will hold up better than other …
September’s hard activity data out of South Africa were a mixed bag, but it looks like the economy narrowly avoided another contraction in Q3 (and thus a technical recession). Even so, with headwinds mounting, economic activity is likely to stay subdued …
Inflation may have peaked, but battle 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 will mark the peak. But core inflation may yet rise further, which is why we think the …
Wage growth will peak at 3.5% by mid-2023 Wage growth climbed above 3% in Q3 for the first time since 2013 and we expect it to climb further to 3.5% by the middle of next year. The 1.0% q/q rise in hourly wages excluding bonuses was above the analyst …
Losing streak has further to run Weakness in the manufacturing sector led to “core” machinery orders falling for a second consecutive month in September. Worse still, machine tool orders indicate that the two-month losing streak, rare as it is, hasn’t …
Strong Q3 to be followed by sharp slowdown The stronger-than-expected 1.6% q/q expansion in Colombia’s GDP in Q3 took output further above its pre-pandemic trend and means that Colombia is on course to be a regional outperformer in 2022. That said, there …
15th November 2022
Manufacturing sales volumes set to fall further Manufacturing sales volumes edged down in September and, with the business surveys continuing to weaken and inventory levels now looking unusually high, they are likely to fall further. We expect weaker …
Fresh upwards pressures pushing up inflation Data out of Nigeria showing a pick-up in inflation to 21.1% y/y in October offered little sign that price pressures are abating. And that’s before the effects of recent flooding and currency weakness have fully …
Recovery in sentiment won’t prevent recession The rebound in the ZEW and other sentiment indicators in November does not change the fact that the German economy is firmly headed for recession. The rise in the ZEW economic sentiment indicator from -59.2 …
A mixed performance in Q3, but recessions on the horizon Q3 GDP figures for Central and Eastern Europe were generally a bit better than we had expected, but pockets of weakness were beginning to emerge as the Czech and Hungarian economies both …
The eve of recession Euro-zone GDP growth slowed to just 0.2% q/q in Q3 and with all of the timelier surveys pointing downwards, the economy looks set to fall into recession in Q4. Nevertheless, surveys of firms’ hiring intentions suggest that the …
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 …
Rise in core inflation will keep Riksbank in hawkish mode Another bigger-than-expected increase in core inflation, to 7.9% in October, will keep the Riksbank focused on slowing demand when policymakers meet next week. We expect a further 75bp rate hike, …
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 …
Technical recession looms in H1 2023 Japan’s economy contracted in Q3, with private consumption and business investment posting far weaker results than timelier data had suggested. Growth should turn positive in Q4, amid a rebound in inbound tourism and a …
Bounce-back in lending not expected to last CRE lending saw a surprise uptick in growth in October following a rebound in the multifamily sector, although net lending remains below the average for this year. Despite the bounce-back this month, we still …
14th November 2022
Prices pressures are moderating in earnest The substantial falls in both headline consumer and wholesale price inflation in October reinforce our view that the Reserve Bank will slow the pace of monetary tightening in its next scheduled policy meeting in …
Resilience won’t last much longer The unexpected strength of euro-zone industrial production in September was largely due to the rebound in vehicles production and distortions affecting Ireland’s data. While vehicle output may continue to recover in the …
Industry rebounds, but headwinds growing Industrial production in India rebounded strongly in September, but we don’t expect this strength to last. Higher interest rates and the slowdown in global demand look set to weigh heavily on the sector over the …
11th November 2022
