Underlying price pressures to remain very strong The rise in core inflation in Germany in October confirms that underlying price pressure in the country are still building. We expect the core rate to remain well above 2% throughout next year. Final HICP …
11th November 2022
Recession begins and not because of the extra bank holiday About half of the 0.6% m/m fall in real GDP in September and half of the 0.2% q/q decline in Q3 as a whole was caused by the one-off reduction in the number of working days due to the extra bank …
A slowdown in Q3 Turkish activity data for September show that industrial production has come under more pressure while retail sales have continued their remarkable resilience in the face of high inflation. On balance, we think that GDP growth slowed from …
Malaysia’s economy slowed in Q3, and we think growth will struggle over the coming quarters as lower commodity prices, weaker global demand and tighter monetary policy drag on prospects. According to figures published today, economic growth slowed to 1.9% …
Goods deflation begins; 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 …
10th November 2022
Further fall in inflation won’t stop Copom from keeping policy tight The fourth consecutive decline in Brazil’s inflation rate, to 6.5% y/y in October, will be welcomed by policymakers at the central bank. That said, inflation is still well above target …
Households stop borrowing outright as leadership recommits to zero-COVID Much weaker than expected credit growth – and an extremely unusual outright fall in lending to households – again underlines the difficulties policymakers are facing stimulating …
Inflation hits a four-year high and will climb higher This publication has been updated with further analysis, as well as a chart and table of key data. The acceleration in Egypt’s CPI inflation rate from 15.0% y/y in September to a four-year high of …
Strong inflation requires Norges Bank to keep on hiking October’s stronger-than-expected inflation data pose an upside risk to our forecast for the policy rate to peak at 3%. But with house prices falling, the Norges Bank faces a tricky balancing act. The …
Demand collapses The October RICS Residential survey showed that the spike in quoted mortgage rates to over 6%, a level last seen in 2008, has triggered a collapse in buyer demand comparable to that seen in the financial crisis. That’s consistent with our …
The Philippines economy rebounded 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. GDP grew by 2.9% in seasonally-adjusted q/q terms …
Oil demand defies high prices and slowing economy, for now Commercial crude stocks rose this week even though more crude was used by refiners. And despite the increase in refining output, gasoline and distillate stocks fell on strong demand. We think …
9th November 2022
Inflation pressures remain soft Inflation in Russia fell more sharply than expected in October, to 12.6% y/y, but this won’t be enough to prompt the central bank to restart its easing cycle as policymakers are concerned about inflation risks in the …
Softer inflation gives Banxico food for thought, but 75bp hike on the cards Mexico’s headline inflation rate came in at a weaker-than-expected 8.4% y/y in October and, while this is unlikely to prevent Banxico from delivering another 75pb interest rate …
Q4 spending rebound may not materialise Current readings picked up in October’s Economy Watchers Survey but remain well short of the peaks seen after previous virus waves ended. The deepening gloom captured by the outlook readings suggest that spending …
Factory-gate 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 …
Rise in retail sales not a sign of things to come September’s increase in euro-zone retail sales is unlikely to be sustained. Falling real incomes and rock bottom consumer confidence suggest that household spending will fall sharply over the winter. …
8th November 2022
Regular wage growth to fall alongside inflation and profitability The 2.1% rise in labour cash earnings in September was the fastest since 1997 but it was mostly driven by volatile bonus payments and won’t be sustained. However, regular earnings growth …
Halifax confirms house price declines are now entrenched The 0.4% m/m fall in house prices reported by Halifax backs up the data from Nationwide that house price falls are becoming entrenched. Surging mortgage interest rates have flattened demand, as many …
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 …
Slower growth ahead 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 continued strong gains on the payroll survey while the household measure 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, …
Improvement in headline index will not last long As was the case last month, an improvement in delivery times and subcontractor availability drove a surprise rise on the headline construction PMI in October. But a slowing economy and higher financing …
Recession looms while inflation stays exceptionally high The final euro-zone PMIs for October paint a clear picture of falling activity and sky-high inflation. We expect the ECB to prioritise the fight against inflation and press on with raising the …
Export strength overshadowed by record fall in building permits The improvement in crop yields boosted export volumes in September, but the strength of exports was overshadowed by the also-reported record slump in building permits, which suggests that …
3rd November 2022
Exports fading; better news on unit labour costs 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 that weakness in exports likely to last for some …
Construction activity set to slow as financing constraints bite The latest RICS Construction Survey showed a rise in workloads in Q3, although the gain was small. Looking ahead, a slowing economy and higher financing costs will soon lead to a cut in …
Labour market still strong but likely to soften from here The fall in the euro-zone unemployment rate to 6.6% in September shows that the labour market remained very tight even as the economy headed towards recession. We expect unemployment to rise in …
Falling inflation will allow SNB to raise rates less than others The decline in both core and headline inflation in October supports our view that Switzerland has passed peak inflation. We expect further falls in the coming months which will allow the …
Inflation pressures show little sign of easing Inflation in Turkey rose to 85.5% y/y in October due to a broad-based strengthening of price pressures. Even so, the central bank will remain under pressure from President Erdogan for looser policy and …
Rebound in trade surplus won’t prevent drag from net trade in Q3 While the trade surplus bounced back in September, we’ve pencilled in a drag from net trade to Q3 GDP growth as export volumes probably didn’t rise fast enough to offset a surge in imports. …
Demand remains resilient to high prices and slowing economy, for now Last week’s fall in commercial and strategic crude stocks dragged total reserves to their lowest level since November 2001, contributing to a rise in prices today. Gasoline and …
2nd November 2022
Economy lacking momentum There were broad-based falls in Russian industrial production and retail sales in September. The economy may have narrowly avoided another q/q contraction in GDP in Q3 as a whole, but there’s clearly no momentum in the economy …
Lagging metros unlikely to reach pre-pandemic peaks anytime soon Employment continues to trend higher across the 30 metros, but nearly half remain short of pre-pandemic peaks, including all six major metros. Indeed, with job growth slowing, we don't …
Mortgage applications point to further falls in sales On the back of a rise in mortgage rates to above 7%, home purchase applications took another step down in October. That points to further declines in home sales in the coming months. With mortgage …
Labour market strength adds to case for 75bp hike 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 rise in employment …
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 …
Industry a drag on growth in Q3 The 0.7% m/m decline in Brazilian industrial production in September suggests that the sector made a negative contribution to GDP growth over Q3 as a whole. With other sectors faring surprisingly well, Brazil’s economy …
PMI picks up, but outlook remains gloomy South Africa’s manufacturing PMI picked up in October but persistent electricity supply problems, tight fiscal and monetary policy and a worsening external backdrop mean that the economic recovery will continue to …
The 0.4% q/q contraction in Czech GDP in Q3 provides the first clear sign that the economy as a whole is buckling. We think the economy is now in a recession which will last until early next year. Meanwhile, the manufacturing PMIs for October underscore …
Manufacturing activity remains resilient India’s manufacturing sector appears to have bucked the weaker regional trend, with an increase in its PMI last month. There was nothing in today’s release to dissuade the RBI from further tightening. The …
House prices now falling as higher mortgage rates bite The jump in mortgage interest rates is now being felt in house prices, with Nationwide reporting the first month-on-month fall since July 2021. House prices are now set to stay on a sustained downward …
Asian manufacturing to remain weak Manufacturing PMIs across the region were downbeat in October owing to weak external demand and a deterioration in the employment outlook. We expect manufacturing to remain subdued, as weaker global demand, elevated …
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 …
Largest price declines behind us but housing downturn not over yet The worst of the housing downturn is probably behind us but we still expect prices to fall by another 10% following the 1.1% m/m drop in October. While the 1.1% m/m drop in house prices …
Economy performed well in Q3, but tougher road lies ahead Provisional GDP figures show that Mexico’s economy expanded by a stronger-than-expected 1.0% q/q in Q3, but a recession in the US alongside tight fiscal and monetary policy mean that the economy …
31st October 2022
Approvals begin to fall as rising rates take effect Mortgage approvals fell in September as buyers began to adjust to rising interest rates. With further rate rises likely in the coming months, we expect this downward trend to continue and for lending to …
Households take caution as real spending power falls The increase in precautionary household saving in September and weakening demand for credit poses an extra downside risk to our forecast that the economy will contract by 2% during a recession. These …
