Jump in approvals likely a rush to beat soaring rates The surprise jump in mortgage approvals in August probably reflected a rush to lock in mortgage offers as interest rates surged. There is a possibility that could be repeated next month, but …
30th September 2022
Looser fiscal policy to send cost of borrowing soaring The surge in interest rate expectations since the Chancellor’s “mini-budget” will sharply raise the cost of borrowing in the economy. We now expect Bank rate to reach a peak of 5.00% which will push …
Economic headwinds weigh on lending to property Net lending to commercial property was negative for the second consecutive month as economic headwinds weighed on investor sentiment. With the cost-of-living crisis constraining rental growth and rising …
Inflation hits double digits and upside risks remain The jump in the euro-zone’s headline inflation rate in September into double digits will be of grave concern to the ECB. Despite the weak economic outlook, we expect the Bank to prioritise inflation and …
Smaller economy a blow to Chancellor’s fiscal plans The good news is that the economy is not already in recession. The bad news is that contrary to previous thinking, it still hasn’t returned to pre-pandemic levels. It’s the only G7 economy in that …
The stall that precedes the fall The stall in house prices in September was little surprise given the growing downward pressure on demand from rising mortgage rates. We suspect that, despite the reduction in stamp duty announced last week, this marks …
Industry and services both take a hit The surveys suggest that China’s economy continued to lose momentum in September, with the global downturn weighing on exports and virus disruptions dealing a fresh blow to services activity. While the latter should …
Labour market continues to tighten, while consumers shrug off virus wave The unemployment rate dropped to a four-month low in August and a continued rise in the job-to-applicant ratio suggests that the labour market will continue to tighten. Meanwhile, …
Growth slowing but economy doing better than feared Strong gains in the natural resource sector will prevent the economy from contracting this quarter but, with the business surveys deteriorating and the global economy facing recession, it looks …
29th September 2022
Inflation headache getting worse The sharp increase in Germany’s headline inflation in September cannot be explained by temporary factors. With business surveys showing that price pressure remain strong and the labour market likely to remain tight despite …
Further fall in sentiment points to regional recession The EC’s Economic Sentiment Indicators for September out of Central and Eastern Europe revealed a further decline and suggest to us that the region as a whole is at the start of a recession. …
Sentiment falls to a two-year low as the energy crisis weighs on confidence The EC Economic Sentiment Indicator fell to a two-year low in September with business surveys echoing the message from more timely surveys that activity has slowed sharply. With …
Economy resilient but headwinds growing Vietnam recorded another quarter of strong growth last quarter, and while higher interest rates will act as a drag on demand, strong export demand should ensure the economy continues to outperform. Vietnam’s …
To early to declare victory on inflation The inaugural release of Australia’s Monthly CPI Indicator showed that inflation eased a bit in August, though we still expect it to approach 8% in Q4. Meanwhile, the first drop in job vacancies since last year’s …
Economy bottoming out, but no recovery in sight Russia’s industrial production and retail sales figures for August suggest that the downturn has bottomed out, but activity is only levelling off and a sustained recovery looks some way off. The strong 1.2% …
28th September 2022
Rebound in implied demand likely to prove short-lived US commercial crude stocks fell slightly for the first time in four weeks, while product stocks decreased much further. The latter was mostly owing to the sharp increase in product demand. But we doubt …
Losing metros showing little sign of reaching pre-pandemic peaks The greater number of metros seeing a decline in total jobs in August comes as little surprise given the slowdown in the national data this month. But for the major six metros and poorer …
Resilience in consumption will prompt RBA to keep tightening aggressively The eight consecutive rise in retail sales in August will convince the RBA to hike rates by another 50bp at next week’s meeting. And with the savings rate still well above pre-virus …
House prices fall in July, with more to come The fall in prices reported by the FHFA in July supports our view of a sustained decline over the next 12 months. With mortgage rates rising to above 6% in September, we think it is only a matter of time …
27th September 2022
Orders data suggest equipment investment holding up, for now The 0.2% m/m fall in durable goods orders in August wasn’t as bad as we expected and suggests that business equipment investment is, for now at least, still holding up in the face of surging …
Food and energy drag headline rate down further The fall in inflation in Brazil to a 16-month low of 8.0% y/y in the first half of September confirms that the monetary tightening cycle is over. By the same token, the fact that inflation remains very …
Slump in Ifo signals deepening recession The further big fall in the Ifo Business Climate Index (BCI) in September adds to the gloom surrounding the German economy as worries about energy prices and declining household real incomes hit confidence hard. …
26th September 2022
Demand woes persist while inflation will stay high for longer September’s flash PMIs indicate yet another slowdown in the manufacturing sector, while services appear to be recovering from the recent record virus wave. According to today’s flash …
Retail sales volumes set to fall sharply this quarter The fall in retail sales volumes in July leaves them on track for their weakest quarter since the initial pandemic lockdowns in early 2020. With the Bank of Canada’s policy rate hikes still feeding …
23rd September 2022
PMIs pointing to a recession The slip in the composite flash PMI to 48.4 in September took it further below the boom-bust level of 50 and sits comfortably with recent data that suggests the economy is already in a recession. That’s hardly a good start …
PMIs point to recession and strong price pressures September’s PMI surveys are consistent with a small decline in euro-zone GDP in Q3. And the increases in the prices indices suggest that inflation is not yet at a turning point. The fall in the …
Supply ticked up, but the bigger picture is of weak steel output A pick-up in supply from China boosted global steel production in August. However, with economic activity starting to slow and high energy costs across the world, the outlook is for steel …
22nd September 2022
Stronger inflation & hawkish Fed mean another 75bp hike next week The stronger-than-expected Mexican inflation figure of 8.8% y/y in the first two weeks of September, coming alongside the hawkish Fed decision yesterday, means that we now think Banxico …
High export demand is boosting refinery activity US commercial stocks rose for the third successive week in part due to a bounce back in imports, but also subdued domestic demand. The backdrop of rising interest rates and still-high prices suggest that …
21st September 2022
Existing sales have further to fall We doubt the smaller 0.4% m/m fall in existing home sales in August marks a floor for activity. Indeed, it is line with the levelling off in mortgage demand seen in July as the rise in mortgage rates took a brief …
Inflation passed its peak, but monetary policy hawks still hold most sway The fall in inflation in South Africa, to 7.6% y/y in August, marked the first sign that price pressures are turning a corner. But we doubt this will be enough to convince the …
Signs of recovery after difficult Q2 The industrial production and retail sales figures for Poland for August show that economic activity has started to recover after suffering contractions in Q2. But this recovery is unlikely to be sustained heading into …
Fiscal stimulus will put borrowing back on upward trend The public finances figures brought some cheer for the new Chancellor, Kwasi Kwarteng, ahead of his fiscal statement on Friday. That said, the government’s huge fiscal expansion and the weakening …
Starts rise in August, but further falls seem likely Housing starts surprised on the upside in August, rising for the first time in six months. But we still expect them to fall further this year as stretched affordability continues to weigh on new home …
20th September 2022
Headline and core inflation moving in right direction The larger-than-expected falls in headline and core inflation in August suggest that the Bank of Canada will enact a smaller interest rate hike in October, particularly with the labour market now …
The supply outlook continues to worsen Global aluminium production rose at a slightly faster pace in August than in July, as Chinese production picked up and helped to compensate for a steeper reduction in European output. However, it looks as though …
Inflation will get another boost in October Headline inflation jumped in August to yet another three-decade high and it still has a stretch higher to climb. That said, the Bank of Japan will remain steadfast in maintaining its ultra-easy monetary …
Strength and breadth of price pressures will lead to further large rate hikes Final inflation data for August confirm that price pressures are very strong and broad-based. While energy and food inflation are particularly high, measures of underlying and …
16th September 2022
Downward momentum gathering pace The weakness in August’s retail sales volumes figures suggests that the downward momentum is gathering speed and supports our view that the economy in already in a recession. But that won’t stop the Bank of England from …
Economy to stay weak amid zero-COVID and property woes China’s economy held up slightly better than anticipated last month, but momentum still weakened relative to July amid renewed virus disruptions and factory closures due to power shortages. September …
Manufacturing weighed down by global malaise Manufacturing output edged up by 0.1% m/m in August, as notable gains in petroleum & coal, machinery and electronics were partly offset by a drop back in motor vehicles and parts. With global manufacturing …
15th September 2022
Consumers reluctant to spend gasoline savings The stagnation in underlying retail sales in August suggests that plunging gasoline prices are not providing any significant boost to real consumption. But that could change over the coming months as …
Inflation surpasses 20% Nigeria’s headline inflation rate surpassed 20% y/y for the first time in 17 years in August and we think that this will prompt the central bank to respond with a 50bp increase to its benchmark interest rate, to 14.50%, later this …
Strong pay growth in first half of 2022 The pick-up in euro-zone hourly wage costs in Q2, along with a big upward revision to Q1, on the face of it suggests that pay pressures in the region continued to build. The detail provides a more nuanced picture, …
Inflation strongest in over a year, but probably at its peak Saudi inflation rose to 3.0% y/y in August largely on the back of stronger non-food inflation, but we think that the headline rate is close to its peak and will slow over the rest of this year …
Unemployment rate will yet fall a bit further While the first rise in Australia’s unemployment rate since last year’s Delta lockdown should be followed by a renewed fall, it will encourage the Reserve Bank of Australia to slow the pace of tightening to …
Trade deficit to shrink as import prices ease Japan’s trade deficit widened to yet another record high in August, but the peak shouldn’t be far away now. Commodity prices continue to ease, and the yen should end the year stronger than its current lows, …
GDP growth will slow sharply as higher interest rates bite Despite a large rise in Q2, New Zealand’s GDP remains well below its pre-virus trend and that shortfall will widen as the surge in interest rates weighs on activity. The 1.7% q/q rise in …
US demand to remain subdued for some time yet US commercial stocks rose, despite a fall in net imports and a rise in refinery activity. Although export demand remains strong, domestic demand is weak, probably reflecting falling real incomes. The EIA’s …
14th September 2022
Manufacturing activity remains muted Although manufacturing sales fell by 0.9% m/m in July, in line with the preliminary estimate, that was a better outcome than we had expected given the more downbeat export data. Furthermore, the decline was mainly due …
