Don’t read too much into solid August gain The solid 0.8% m/m increase in house prices in August suggested that house prices managed to retain some positive momentum despite growing pressure on households’ finances. But the drag on demand from the …
1st September 2022
Swiss inflation at 29-year high At 3.5% in August, up from +3.4% in July, Swiss inflation was a touch higher than expected (CE 3.3%, consensus 3.4%) and reached its highest level since August 1993. (See Chart 1.) In contrast, the core inflation rate was …
Manufacturing activity remains robust India’s manufacturing PMI moderated a touch in August but the more important point is that the reading is still consistent with robust growth in the sector. The RBI will remain comfortable tightening policy and we …
Q2 GDP to be revised down The smaller increase in capital spending reported in today’s “Financial Statements Statistics of Corporations” means that Q2 GDP will likely be revised downward slightly in next week’s second estimate. Capital spending excluding …
More signs that growth has stalled The larger-than-expected drop in Caixin manufacturing PMI was more significant than the slight rise in the official PMI, suggesting that downward pressure on industry intensified last month . There is more pain on the …
Capital spending will rebound over coming quarters The continued rise in machinery and equipment investment in Q2 won’t offset a plunge in construction investment, but firms’ optimistic capital plans suggest this will prove short-lived. Today’s capital …
Plunge in affordability to result in further strong price falls House prices are falling at the fastest pace in four decades. While leading indicators of housing market activity remain consistent with a mild downturn, rapidly worsening affordability due …
Early signs of economy stabilising Russia’s industrial production and retail sales figures for July were stronger than expected and provide the first tangible evidence that the downturn in the economy is bottoming out. Industrial production posted an …
31st August 2022
Commercial stocks could have further to fall US commercial crude oil stocks fell last week for the third week running, despite another release from strategic reserves. We think commercial stocks will remain under pressure over the coming weeks, …
Office employment showing signs of shrinking in some key office markets Almost all metros saw further gains in total employment in July, with Dallas continuing to lead, and joined by Houston, Charlotte and Miami as the fastest growers. But office-based …
Economy slowing faster than expected The weaker-than-expected second-quarter rise in GDP as well as the preliminary estimate of a small fall in output in July confirm the economy is slowing sooner than the Bank of Canada predicted. Nevertheless, given …
Growth disappoints, but won’t derail policy tightening Base effects caused a surge in headline Indian GDP growth in Q2 (Q1 of FY22/23), but underlying growth slowed relative to Q1. As a result, GDP growth won’t reach 9% in 2022 as we had thought. That …
Inflation to hit 10% before year end The further increases in headline and core inflation in August, and likelihood that they will keep rising, will add to the pressure on the ECB to step up the pace of tightening. The balance of probabilities is shifting …
Strong growth adds to inflation and external risks Turkey’s economy posted another robust quarter of growth in Q2, with GDP rising by 2.1% q/q, as stronger consumption and exports more than offset weaker investment. But strong growth is merely adding to …
Recovery continues to lose steam The official PMIs show a further loss in economic momentum this month as the reopening boost waned and the property downturn deepened. We continue to think the economy will struggle to make much headway during the coming …
Retail sales recovery in July belies underlying weakness Industrial production rose at a solid pace in July whereas most of the rise in retail sales values reflected soaring prices. While the manufacturing sector should bounce back this quarter, services …
House price growth hits the buffers House price growth hit the buffers in June, with Case-Shiller and FHFA reporting a sharp slowdown in month-on-month gains. Higher mortgage interest rates have stretched affordability and cut housing demand, shifting …
30th August 2022
Onwards and upwards Germany’s inflation rate resumed its upward trend in August. We expect it to be around, or above, 10% in October after the temporary measures which have suppressed prices since June are withdrawn and a gas levy is introduced. Moreover, …
Further decline in confidence as high energy prices weigh The further decline in the EC Economic Sentiment Indicator in August echoes the message from the other business surveys that the euro-zone economy is on the verge of recession as sky-high energy …
Net lending to property falls back as headwinds strengthen Net lending to the commercial property sector fell back in July, as mounting economic headwinds and stretched valuations weighed on investor sentiment. We expect lending will see further …
Sentiment falls again as growth momentum evaporates The EC’s Economic Sentiment Indicators for Central and Eastern Europe for August continued the trend in recent months of very weak data releases for the region and point to a sharp slowdown in GDP growth …
Rising mortgage rates will sustain downward trend in approvals While mortgage approvals ticked up in July, that only reversed a fraction of their previous decline. And the drag on buyer demand from the ongoing increase in mortgage rates and surging …
Outlook for credit weakening The decent rise in consumer credit values in July may overstate the current resilience of real consumer spending as credit is being supported by the rapid increases in consumer prices. Either way, as households’ spending power …
Mounting indication that labour force has peaked The unemployment rate stayed unchanged in July and we do not see much room for further tightening in the labour market in 2022. The labour force shrank by 0.06% m/m in July, but with the adult population …
Reopening boom to last for a while yet Not only did retail sales rise for the seventh consecutive month in July, the strong size of the increase strongly suggests that the Reserve Bank of Australia will hike rates by another 50bp next month. The 1.3% m/m …
29th August 2022
Bump in growth to be followed by slowdown GDP growth in Nigeria picked up to 3.5% y/y in Q2 as woes in the oil sector eased and the non-oil economy held up well. We expect the drag from the oil sector to diminish further in the coming quarters, but the …
26th August 2022
Recession now a certainty Although the Ifo Business Climate Index edged down only trivially in August it remained at a very low level and is consistent with the economy contracting sharply. After GDP expanded by a mere 0.1% q/q in Q2, we think Germany is …
25th August 2022
Demand indicators remain volatile, but point to some softness US commercial crude stocks fell again this week, despite a chunky release from the strategic reserve. Elsewhere, there was a large weekly decline in implied product demand. It appears that the …
24th August 2022
Durables dragged down by slump in defence orders The stagnation in durable goods orders in July was principally due to a 50% m/m slump in defence aircraft orders, which are both volatile and not reflective of the strength of private demand. Excluding …
Inflation falling, but interest rates to remain high The further fall in Brazil’s headline inflation rate to 9.6% y/y in the first two weeks of August was mainly due to tax cuts on energy and masks the fact that underlying price pressures remain strong. …
Upward inflation surprise raises threat of another 75bp hike The stronger-than-expected rise in Mexico’s headline inflation rate to 8.6% y/y in the first two weeks of August raises the risk that Banxico pushes through another 75bp interest rate hike at …
Uncomfortably high inflation to keep hawks in majority The latest rise in inflation in South Africa to 7.8% y/y in July will raise the pressure on Reserve Bank officials to continue tightening policy aggressively. Even as signs of a faltering economy …
Another sharp decline in sales, but further falls likely to be more gradual New home sales dropped sharply again in July on the back of rising mortgage rates. Stretched affordability will continue to weigh on housing market activity over the second half …
23rd August 2022
Production stuck in low gear Global steel production fell at a faster pace in July. The latest data are broadly consistent with our view that supply will fall this year, which should put a floor under prices even with soft demand . The World Steel …
Only a matter of time before PMIs point to a recession With the latest surge in wholesale gas prices set to intensify the cost of living crisis, it is probably only a matter of time before the activity PMIs start ringing the recession alarm bell. We think …
PMIs suggest that recession has begun August’s flash PMIs suggest that the euro-zone economy is now contracting. While global price pressures have become less intense in the past few months as supply chain problems have eased, soaring European gas prices …
Manufacturing and services fall further while prices seem to peak August’s PMIs indicate a further slowdown in the manufacturing sector as demand slumped even further, while services continue to bear the brunt from the record Covid-19 wave. According to …
The supply outlook has deteriorated Global aluminium production rose at a slightly slower pace in July, mostly because production in North America fell at a faster clip, while output in Europe continued to slump. Production growth could slow further this …
22nd August 2022
Stabilisation in July, but strong rebound unlikely in the months ahead July’s industrial production, retail sales and construction figures for Poland showed a stabilisation in activity after the surprise 2.3% q/q fall in GDP in Q2. But we expect the …
Retail sales volumes will struggle over the rest of 2022 The small gain in retail sales volumes in June appears to have been more than reversed in July. As the Bank of Canada is set to raise interest rates further and there is little reason to expect an …
19th August 2022
Existing home sales extend run of declines Higher mortgage rates led to another fall in existing home sales in July, which are now down by 26% from their peak in January. We expect a further fall of close to 5% by end-2022 to 4.6m annualised. From there, …
Signs of consumer resilience, another borrowing overshoot We doubt the recent resilience in consumer spending will last for much longer. Even so, July’s rise in retail sales provides another reason to think that the Bank of England will raise interest …
Inflation summit in sight, but BoJ will not budge Headline inflation was the highest since 1991 in July and we think it still has higher to climb. But this will not make the Bank of Japan budge on its ultra-easy monetary policy. Headline inflation climbed …
Disappointing Q2 likely followed by recession Chile’s economy merely stagnated in Q2 and the chances are high that it will fall into recession over the second half of the year. Meanwhile, current account risks are continuing to build – with the deficit …
18th August 2022
Underlying inflation still rising Final inflation data for July underline that price pressures remain strong and broad-based. With wholesale natural gas and electricity prices having surged again in the weeks since July, retail gas and electricity prices …
Labour market hasn’t turned for the worse just yet We wouldn’t read too much into the first drop in employment since last year’s lockdowns. Indeed, the continued tightening of the labour market should encourage the RBA to press ahead with another 50bp …
Signs of stronger demand failing to lift prices The large fall in US commercial crude stocks was mostly due to a renewed rise in exports. Implied gasoline demand rose for a second consecutive week, but this failed to lift prices amid growing concerns over …
17th August 2022
No escape from a fall in GDP in Q2 The hard activity data out of South Africa for June suggest that the economy contracted by around 1.0% q/q in Q2, and we think that activity will remain weak in the coming quarters too. June hard activity figures …
Lower gas prices helping to support spending on other items While overall retail sales were unchanged in July, the details were far more encouraging, with a price-related fall in gasoline sales freeing up households to increase spending on other goods . …
As good as it gets The chunky rise in euro-zone GDP in Q2 reflected the re-opening of the services sector and was accompanied by a further increase in employment. But a combination of high inflation, rising interest rates and the energy crisis will push …
