Double-digit inflation will keep ECB hawkish The increase in euro-zone GDP in Q3 does not alter our view that the euro-zone is on the cusp of a recession. But with inflation having jumped to well over 10%, the ECB will prioritise price stability and press …
31st October 2022
Investor caution to weigh on net lending Net lending to commercial property was positive in September but, looking through the monthly volatility, there is a clear downward trend in lending. With the economy entering a recession and property yields now …
Weak exports will continue to hold back the city’s recovery Hong Kong’s economy contracted last quarter due to a sharp decline in exports. While the ongoing easing of virus-related restrictions should continue to support a recovery in retail spending, …
Another robust quarter, but sharp slowdown on the cards Saudi Arabia’s economy posted a strong 2.6% q/q expansion in Q3, driven in large part by rising oil output. The subsequent OPEC+ cuts mean that that boost will fade over the coming quarters and we …
COVID disruptions and global downturn hit activity The official PMIs point to a further loss of momentum this month as virus disruptions worsened and export orders remained under pressure. With the zero-COVID policy here to stay, we think the economy will …
Sales volumes running out of steam While retail sales kept rising for the ninth consecutive month in September, growth in volumes is slowing sharply and will remain subdued over coming quarters as real incomes fall and the savings rate returns to normal …
Capital goods shipments strength to wane, retail sales outlook buoyant Industrial production declined in September whereas retail sales values saw another relatively strong rise. We are expecting a strong fourth quarter for retail sales, but industrial …
Economy performed better than feared last quarter GDP performed better than expected last quarter but, with the business surveys weakening significantly, growth is likely to slow to a crawl this quarter and we expect a mild recession in 2023. The 0.1% m/m …
28th October 2022
Strong inflation prints will keep ECB in tightening mode Renewed inflation shockers in Germany, France and Italy in October pour cold water on expectations that the ECB’s softer tone on rate hikes yesterday will pave the way for a “pivot”. We continue to …
Sentiment remains depressed as headwinds mount The EC’s Economic Sentiment Indicators for Central and Eastern Europe were a mixed bag in October, but the big picture is that sentiment in most countries is very depressed which supports our view that the …
Economy contracting, price pressures intense The further fall in the European Commission’s economic sentiment indicator in October adds to the evidence that the euro-zone economy is contracting. But the labour market still looks tight and firms’ price …
Taiwan’s economy returned to growth in Q3, after the Omicron-induced slump in the second quarter, but we expect growth to weaken considerably over the coming quarters as exports struggle and the reopening boost to domestic demand fades. According to …
Recession postponed The unexpected resilience of Germany’s economy in Q3, with GDP rising 0.3% q/q, has probably only postponed the recession which we now expect to begin in the fourth quarter. Business surveys show that activity has already begun to …
Government subsidies to tame surging inflation The unemployment rate rose slightly in September on the back of a large jump in the labour force but a continued rise in the job-to-applicant ratio suggests that the labour market will tighten again before …
GDP rebounds, but underlying demand stagnates The 2.6% annualised rebound in third-quarter GDP looks impressive, but it was entirely due to a 2.8%-point boost from net external trade. Final sales to private domestic purchasers, a better measure of …
27th October 2022
Occupier and investor sentiment turned negative in Q3 The RICS Q3 survey indicated confidence has continued to fall from last quarter, as occupier sentiment turned negative for the first time in 2022. With a US recession looking likely early next year, …
Occupier demand falls as economy slows The slowing economy and cost-of-living crisis are now having a clear impact on occupier demand, with surveyors reporting the first drop since the start of 2021. That has fed through to rent and capital value …
GDP growth in Korea slowed sharply in the third quarter of the year, and we think the economy will remain weak over the coming quarters as higher interest rates and weaker export demand weigh on prospects. According to figures published today, GDP growth …
Commercial stocks rise despite record exports US commercial crude stocks rose last week, as drawdowns from the Strategic Petroleum Reserve boosted commercial stocks. But the big news was that crude exports rose to a record high, probably encouraged by …
26th October 2022
Leading indicators suggest sales have further to fall The 10.9% m/m fall in new home sales in September partly reversed last month’s surprise jump. But they are still out of lockstep with both buyer traffic and mortgage applications. Those indicators …
Returns falling sharply and set to turn negative in Q4 As expected, NCREIF all-property total returns dropped back significantly in Q3, to just 0.6% q/q, as investor demand pared back in response to higher alternative asset yields and the poor outlook …
Inflation will approach 8% by year-end Inflation was stronger than expected last quarter and will rise further in Q4. That’s consistent with our forecast that the Reserve Bank of Australia will hike rates more aggressively than most anticipate. The 1.8% …
House price falls gain momentum Both Case-Shiller and the FHFA reported an acceleration in month-on-month house price falls in August. With mortgage rates rising to a 20-year high in October and the economy set to enter a recession, we expect house …
25th October 2022
China aside, steel production is in decline Although base effects will boost output in y/y terms in the final months of this year, the bigger picture is that slower economic activity and still-high energy costs will weigh on global steel demand and output …
Copom to be relieved by inflation drop The drop in Brazilian inflation to an 18-month low of 6.9% y/y in the first half of October reinforces the view that the central bank’s tightening cycle is at an end. Even so, the strength of inflation in many core …
Yet more evidence of recession The Ifo Business Climate Index held up better than expected in October but was still extremely low. With other business surveys also persistently weak, we think Germany will experience the deepest recession among euro-zone …
Inflation drops back, but another 75bp hike still on the cards Mexico’s mid-month inflation reading of 8.5% y/y in October was a bit weaker than expected and, while core inflation edged up again, this was mainly driven by food products. With the Fed still …
24th October 2022
PMIs point more firmly to recession The decline in the composite flash PMI to 47.2 in October took it further below the boom-bust level of 50.0, placing it deeper into contraction territory. This is consistent with recent data that suggests the economy …
Note: We’ll be discussing key takeaways from our Outlook published earlier in the week on Tuesday, 25th October. Register here . PMIs signal recession and high inflation The flash PMIs for October provide yet more evidence that the euro-zone is sliding …
Omicron hit reversed but momentum still weak Growth ticked up in Q3 as the hit from the Omicron wave reversed. But this leaves output only slightly higher than where it started the year. And momentum is now weakening again. GDP growth picked up from 0.4% …
Consumers shrug off higher interest rates The stronger-than-expected gain in retail sales in August and preliminary estimate of only a small decline in September show that higher interest rates are yet to weigh on consumption, which is another reason to …
21st October 2022
Recession just around the corner September’s industrial production and retail sales figures out of Poland showed that activity continued to recover last month. Even so, it may be touch-and-go as to whether Poland’s economy was already in a technical …
Fiscal tightening on its way as next PM has to work hard to restore credibility The weakness in retail sales and overshoot of the Office for Budget Responsibility’s (OBR) March public borrowing forecast won’t make the next Prime Minister’s task any …
Higher inflation from weaker yen won’t prompt BoJ tightening Headline inflation remained at a three-decade high in September and will climb slightly higher by early 2023. That said, the Bank of Japan will remain steadfast in maintaining its ultra-easy …
Relentless fall in sales continues The 1.5% m/m fall in existing home sales in September showed that rising mortgage rates continued to weigh on housing market activity. Given the recent step-down in mortgage applications as mortgage rates approached …
20th October 2022
China drives global production growth, for now The acceleration in year-on-year production growth in September paints a prettier picture of supply than reality. The global economic downturn and high energy prices will weigh on supply from here. …
Unemployment rate will remain low for now Australia’s labour market is starting to sputter but with unemployment set to remain low, the RBA will continue to hike interest rates. The number of employed people rose by just 900 last month, well below the …
Weaker yen to offset falling commodity prices The trade deficit narrowed from its record high in August, but with the yen weakening significantly in recent days, any further narrowing of the deficit will likely be delayed. Export values accelerated to …
SPR releases look set to continue in the coming months US commercial crude stocks fell last week, but distillate stocks rose slightly as high US prices probably took away some of the incentive to export. All eyes will be on today’s announcement by the US …
19th October 2022
Housing starts back on a downward trajectory September’s decline in starts supports our view that last month’s increase was a one-off and starts will fall further in the coming months. We expect the rise in mortgage rates to near 7% to continue to weigh …
Strength of core inflation points to another 75 bp hike The Bank’s core CPI inflation measures were unchanged in September but, as we expected a decline due to more favourable base effects, that increases the odds of another 75bp interest rate hike next …
August data increases chances of a technical recession August’s hard activity data out of South Africa and more timely indicators point to a small fall in GDP in Q3, marking a technical recession. Even so, we expect the Reserve Bank to stay focused on …
Inflation data show that price pressures are broad based Final inflation data for September confirm that price pressures are very strong and broad-based. While headline inflation should fall next year as energy and food inflation drop back, the core …
Inflation ticking down, but monetary policy to remain hawkish While South Africa’s headline rate edged down to 7.5% y/y in September, the surprising strength of core inflation will push policymakers to deliver another 75bp hike in the benchmark interest …
Underlying inflation strengthening despite weaker outlook The further strengthening in domestic price pressures despite the clear weakening in the economic outlook supports our view that the Bank of England will raise interest rates by 100 basis points, …
Manufacturing can’t defy global slowdown for much longer The 0.4% m/m gain in manufacturing output in September, together with some modest upward revisions to prior months, suggests that the factory sector is just about holding up despite the …
18th October 2022
Weak sentiment points firmly to recession Although the headline ZEW investor sentiment indicator edged up in October it is still at a very low level, while the current conditions index – which is more closely corelated with GDP – actually fell by more …
Strong inflation will prompt further rapid tightening The much stronger than expected rise in consumer prices in Q3 will encourage the Reserve Bank of New Zealand to hike rates by another 50bp at its November meeting and poses upside risks to our view …
17th October 2022
Mixed messages on inflation expectations The Bank of Canada’s quarterly surveys offer some evidence that aggressive policy tightening is having the intended effects, with widespread fears of recession leading to a moderation in wage expectations and an …
Lending growth begins to slow as economic headwinds mount CRE lending growth slowed significantly in September, with both multifamily and other commercial sectors seeing the smallest rise in outstanding debt for at least six months. We expect the rate of …
