Inflation nearing peak The rise in Nigeria’s headline inflation rate to a 17-year high of 20.8% y/y last month reinforces our view that policymakers will raise the benchmark rate by a further 100bp, to 16.50%, in November. That will likely mark the end of …
17th October 2022
Sales slump, leaving more excess inventory The 1.7% m/m decline in real manufacturing sales in August more than reversed the gains over the preceding couple of months, leaving volumes at a seven-month low. Admittedly, sales are being held back by …
14th October 2022
Real consumption growth muted as higher rates bite With retail sales unchanged in September there is still little evidence that the boost to purchasing power from the earlier sharp fall in gasoline prices has helped real consumption. Energy prices are …
Wholesale inflation drops to 18-month low The fall in Indian wholesale price inflation to an 18-month low in September comes as welcome news following the stronger-than-expected consumer price data released earlier this week. And with headline CPI …
Core inflation continues to ease Consumer price inflation rose to a 29-month high in September and is now scraping up against the government’s preferred ceiling of 3%. But this was due to a rise in food inflation that is likely to prove temporary. With …
Pressure on refineries is still evident There was a large rise in US commercial crude stocks last week, but product stocks declined, as demand held steady while refinery throughput dropped. That combination, mixed with uncertainty around French …
13th October 2022
Continued hot inflation means 75bp hikes could keep coming The stronger than expected 0.4% rise in consumer prices in September, driven yet again by a stronger increase in core prices, nails on a 75bp rate hike at the November meeting and, in contrast to …
Credit conditions already tightening prior to market turmoil The Q3 credit conditions survey doesn’t capture the impact of the market turmoil of recent weeks, with the deadline for responses falling a week before the “mini-budget”. Nonetheless, it shows …
Core inflation to remain uncomfortably high The reversal of temporary measures to reduce travel costs played a big role in the surge in German inflation in September. But underlying price pressures remain strong and broad based. We continue to expect that …
Inflation now at (or near) a peak Saudi inflation edged up to 3.1% y/y in September largely due to stronger food and housing inflation, but we think that the headline rate has now peaked and will drop back over the coming months and into early 2023. If …
Another bigger-than-expected rise in core inflation The large increase in inflation in September, to 10.8%, confirms that the Riksbank will press on with its rapid monetary policy tightening. For now we have assumed that rates will peak at 2.5% in …
Growing acceptance price falls are in the pipeline While optimists can still point to limited supply, a fifth consecutive drop in new buyer enquiries in the RICS survey in September has convinced a majority of surveyors that house prices are heading for a …
Headline inflation rises, but now set to drop back The rise in headline consumer price inflation in September to further above the RBI’s 2-6% target range challenges our view that the RBI will slow the pace of tightening. But with food and energy …
12th October 2022
Industry soft and struggles set to continue Mexico’s industrial sector stagnated in August as weakness in the manufacturing, construction and utilities sectors was only offset by higher mining output. More timely indicators paint a mixed picture but, with …
On the cusp of recession The 1.5% m/m increase in industrial production in August was partly due to an out-sized rise in Ireland and was not enough to reverse the fall in July. All the evidence suggests that euro-zone industry is heading for a …
A slowdown in Q3 The latest activity data show that retail sales and industrial production bounced back in Turkey in August, but this follows a period of softness and industry is on track for a large quarterly contraction in Q3 as a whole. We think GDP …
Economy contracts as markets fret The contraction in real GDP in August won’t ease the jitters in the financial markets at a time when the recent behaviour of politicians and the words of the Governor of the Bank of England are making the markets …
Policy support starts to gain traction Credit growth surprised to the upside last month, edging up thanks to official efforts to boost lending via policy banks. But wider appetite for borrowing still appears depressed, which will probably keep credit …
All signs still point to strong Q3 business investment Although “core” machinery orders dropped sharply in August due to a crash in non-manufacturing orders, Q3’s average still points to an expansion in non-residential investment growth this quarter, …
Inflation falls, but central bank will keep rates high for a long time The plunge in Brazil’s inflation rate to 7.2% y/y last month (from 8.7% in August) confirms that the central bank’s tightening cycle has ended. But with some goods and services …
11th October 2022
Labour market won’t make the Bank of England’s task any easier While there were tentative signs that the labour market is cooling from the red-hot conditions seen in recent months, the shortfall in labour supply is keeping it exceptionally tight. That …
Spending to recover in earnest Q4 Current readings picked up in September’s Economy Watchers Survey but fell well short of the peaks seen after previous virus waves ended. However, we suspect that the fading virus wave, the domestic travel subsidy …
Inflation rises to four-year high, adding fuel to calls for rate hikes Egypt’s headline inflation rate rose to 15.0% y/y in September, its fastest pace in nearly four years as the impact of the falls in the pound fed through. Inflation will accelerate …
10th October 2022
Strong inflation likely to prompt another 50bp Norges Bank hike The Norges Bank signalled at its last meeting that it would slow the pace of rate hikes, but the strength of September’s inflation data – published this morning – makes another 50p hike …
Returning to m/m inflation Inflation continued to fall in Russia in September, to 13.7% y/y, but at a much slower rate than in previous months. The recent period of strong disinflation is coming to an end and the central bank is likely to scale back the …
7th October 2022
Fall in hours worked another downside risk to Q3 GDP growth The first rise in employment in four months was not as strong as it looked, as it was driven entirely by the public sector, while the fall in hours worked points to downside risks to GDP growth. …
Labour market conditions cooling only gradually The 263,000 gain in non-farm payrolls in September is another signal that labour market conditions are cooling. But with the unemployment rate dropping back to 3.5% the report is unlikely to significantly …
Inflation seems to have peaked, but Banxico to keep tightening for now Mexico’s headline inflation rate was unchanged at 8.7% y/y in September and will probably start to drop back over the coming months. But it will remain above the upper end of Banxico’s …
Halifax confirms that house prices have stalled The 0.1% monthly fall in the Halifax house price index in September echoed the message from Nationwide earlier this week that house prices have now stalled. Given the sharp rise in mortgage rates over the …
Industrial contraction to drag Germany into recession The larger-than-expected drop in German industrial production in August was driven mainly by some volatile components and, together with some upward revisions to July’s data, suggests industrial …
No sign of FX sales, but PBOC pushing back in other ways The decline in China’s foreign exchange reserves appears to be due to valuation effects rather than direct intervention in the FX market. But we still think the PBOC will try, and may well succeed, …
Fastest rise in regular earnings in a generation won’t be sustained The 1.6% annual rise in regular earnings last month was the largest since 1997 and jars with the fact that the labour market still isn’t as tight as it was pre-pandemic. We suspect …
Improving supply chains temporarily boost construction activity The surprise increase in the construction PMI reflected an improvement on the supply side, as easing demand cut delivery times and improved contractor availability. But a slowing economy …
6th October 2022
Retail sales sliding The 2% year-on-year decline in euro-zone retail sales in August will probably look mild by the end of the year. Measures of consumer confidence point to sales falling much further, which seems quite plausible given that nominal wage …
Economy holding up amid policy tightening India’s PMI readings moderated in September but the more important point is that they still indicate healthy growth in both manufacturing and services. The RBI will remain comfortable tightening policy over the …
Export revenue will fall further The further fall in the trade surplus in August largely reflects a plunge in export prices and net trade should still provide a small boost to Q3 GDP. But with commodity prices now clearly down from their peak, export …
OPEC+ decision adds pressure on the US to increase SPR releases The fall in US commercial crude stocks last week is just one factor pushing the Brent crude price over $93 today, with the other being the decision by OPEC+ to cut its output quota by 2m …
5th October 2022
Surging exports keeping economy afloat The further sharp decline in the trade deficit to $67.4bn in August, from $70.5bn, means that net exports provided a big boost to third-quarter GDP growth. But the twin drags from the surging dollar and the …
Weak export volumes a risk to third-quarter GDP growth The drop in export volumes in August and the large downward revision to the trade surplus in July present downside risks to our already-weak estimate for third-quarter GDP growth of 0.8% annualised. …
Industry a weak spot in Q3 The 0.6% m/m fall in Brazilian industrial production in August wiped out July’s gains and the sector may have been a drag on the economy over Q3 as a whole. That said, the surprisingly strong surveys for other parts of the …
Demand falls as mortgage rates hit 16-year high The sixth consecutive month of falling home purchase activity in September was driven by a sharp rise in mortgage rates to 6.75% at the end of the month. With a significant easing in credit conditions not …
Activity falling, price pressures increasing The final euro-zone PMIs for September suggested that price pressures in the region are not yet starting to ease, even as activity appears to be in decline. We think some economies, including Germany, are …
Saudi Arabia continues to lead the way as Egypt struggles The batch of PMIs for September continued to paint a picture of economic divergence between the Gulf economies and the rest of the Middle East and North Africa. With fiscal policy set to be …
4th October 2022
Manufacturing sector slowing; shortages still easing The sharper than expected fall in the ISM manufacturing index to 50.9 in September, from 52.8, leaves it consistent with GDP growth of just 0.5% annualised. The weakness in activity is helping to ease …
3rd October 2022
Manufacturing sector struggling to recover from Q2 downturn The drop back in South Africa’s manufacturing PMI in September paints a worrying picture that the sector may have contracted again in Q3. Ongoing electricity supply problems, combined with a …
Industry remains in contraction territory Manufacturing PMIs for September were a mixed bag, but continued to paint a weak picture of industrial activity in Turkey, Czechia and Poland in Q3. In contrast, the downturn in Russian industry appears to have …
Swiss inflation appears to have peaked The fall in the headline rate of inflation in Switzerland in September suggests that price pressures may have peaked there, which is consistent with the message from the latest business surveys. Meanwhile, the …
Asian manufacturing to remain weak Manufacturing PMIs across the region were downbeat in September, as new export orders declined again. We expect conditions to remain subdued, as weaker global demand, high inflation and tighter monetary policy continues …
Worsening affordability weighing on housing market Australia’s house prices have now fallen by 5% since the start of the current downturn and rapidly worsening affordability suggests they will fall by another 10%. The 1.4% m/m drop in house prices across …
Record capex projections likely overstate real investment growth Today’s Tankan survey suggests that while the services sector is benefitting from the subsiding virus wave, the outlook for the manufacturing sector continues to worsen. The Tankan’s …
