Upward surprise will keep Bank of England in hawkish mode The encouraging evidence that the upward pressure on underlying inflation from global factors has started to ease will be of little comfort to the Bank of England given the signs that this is being …
17th August 2022
Wage growth will reach 3.5% by mid-2023 Wage growth surpassed its pre-virus peak in Q2 and will jump above 3% this quarter due to a surge in the minimum wage and a tightening labour market. The 0.7% q/q rise in hourly wages excluding bonuses was a touch …
Trade deficit should narrow again Japan’s trade deficit widened to a record high in July but it should start to shrink over the coming months as supply shortages and commodity prices continue to ease. Export values grew by 19.0% y/y, slowing only slightly …
Darkening global backdrop suggests manufacturing strength won’t last The 0.6% m/m rise in industrial production in July was much stronger than we expected and provides another clear sign that the economy is still in expansionary territory. That said, the …
16th August 2022
Housing starts falling sharply as buyer traffic dries up Single-family housing starts fell for the fifth consecutive month in July, leaving them down by 25% from their high at the end of 2021. Leading indicators point to a much larger decline in the …
Underlying inflationary pressures still very strong The fall in headline inflation to 7.6% in July left it lower than the Bank of Canada’s recent forecast but, amid continued broad upward pressure on core prices, we still judge that the Bank is more …
Economy comes roaring back The stronger-than-expected 6.8% q/q annualised expansion in Israel GDP in Q2 confirms that the Q1 contraction was just a blip. Economic activity remains strong and alongside the red-hot inflation figures for July, the risks are …
Investor sentiment points recession The ZEW survey fell again in August and is at a level consistent with the economy contracting. We now think a recession is unavoidable in the second half of this year as the impact of high energy prices on both …
Wholesale inflation trending down, but still elevated The fall in Indian wholesale price inflation in July reflects easing wholesale food inflation and lower commodity prices. But given both WPI and CPI inflation are still elevated, we think the RBI will …
Jobs market still hot even as economy contracts June’s labour market figures revealed further evidence that the weaker economy is leading to a slightly less tight labour market. That said, by any metric the labour market is still exceptionally tight. And …
Little relief in sight for manufacturers Manufacturing sales volumes only inched up in June and, with the manufacturing surveys on both sides of the border weakening in recent months, the outlook is growing even more challenging. The 0.8% m/m fall in …
15th August 2022
Latest jump in inflation to keep CBN in tightening mood Inflation in Nigeria jumped to 19.6% y/y last month and we think that the headline rate will rise a bit further. Policymakers are likely to respond by raising the benchmark interest rate from 14.00% …
Another bumper month, but we expect lending growth to slow CRE lending was again exceptionally strong in July, outpacing even the gains seen in recent months. But with investment transaction totals softening in Q2 and our expectation of a further slowdown …
Inflation rises, but will soon drop back Saudi inflation picked up to 2.7% y/y in July due to strengthening underlying price pressures, but we think that it is now at or close to a peak and will gradually fall back over the rest of this year and next. If …
Recovery stalls on weakened property sector The July data suggest that the post-lockdown recovery lost steam as the one-off boost from reopening fizzled out and mortgage boycotts triggered a renewed deterioration in the property sector. We think the …
Thailand’s economy rebounded strongly in the first quarter of the year on the back of a strong reopening boost. Although higher commodity prices will drag on the recovery, with the tourism sector enjoying a decent rebound, we expect the recovery to …
Recovery will persist through second half Japan’s economy grew in Q2 driven mainly by private consumption, though the overall figure disappointed mainly due to fluctuations in stockbuilding that won’t last. The recovery should persist through Q3 and Q4, …
Sanctions take their toll with historic fall in GDP Russian GDP contracted by 4% y/y in Q2, consistent with a fall of 6% in seasonally-adjusted q/q terms – a much better performance than analysts had expected and than had seemed likely a few months ago. …
12th August 2022
Inflation trending lower, but underlying price pressures still strong The bigger-than-expected drop in inflation in July is a challenge to our view that the MPC will hike the repo rate by 50bps again next month. But core inflation remains pretty strong, …
Credit growth held back by mortgage boycotts Credit growth dropped back last month, with property market jitters weighing on bank lending. It may continue to disappoint in the near-term given that sentiment among homebuyers is likely to stay weak and …
Contraction in Q2 unlikely to be just a blip The 0.6% m/m drop in GDP in June was mostly due to the adverse effect of the extra Jubilee bank holiday. Even so, the GDP figures confirmed that the economy contracted by 0.1% q/q in Q2 as a whole and we have …
Growth remained strong in Q2 Turkey’s activity figures for June painted a mixed picture, with industrial production continuing to post solid growth but retail sales suffering a fresh knock. The bigger picture, however, is that the economy appears to have …
Further rise in core inflation will keep Riksbank in hawkish mode The decline in CPIF inflation in July will be of limited comfort to policymakers given that the core rate, excluding energy, jumped to 6.6%. We still think the Riksbank may raise its repo …
GDP growth in Malaysia edged down in q/q terms last quarter, and we expect a further slowdown over the coming quarters as commodity prices drop back and the boost from reopening fades. Figures released today show the pace of growth in Malaysia slowed from …
Industry remains soft Mexico’s industrial sector posted sluggish growth of just 0.1% m/m in June and the data suggest that the first estimate of Q2 GDP growth may be revised down. The backdrop of weakness in the US means that we expect Mexican industrial …
11th August 2022
Limited supply supporting pricing for now The RICS survey showed that weaker demand has not yet fed through to falls in prices, but sales volumes are beginning to wilt. We think it is just a matter of time before prices follow activity lower. The new …
Inflation pressures nowhere to be seen Russia’s month-on-month deflation deepened in July as consumer prices fell by a larger-than-expected 0.4% m/m (in y/y terms, the headline rate eased to 15.1%). The disinflationary impact of the strong ruble is likely …
10th August 2022
Lower prices are boosting gasoline demand The rise in US crude stocks was in large part down to a drop in exports. More interesting was the jump in implied gasoline consumption, which probably reflects the recent fall in prices. This may not be …
Headline inflation has peaked, although core will remain elevated Consumer prices were unchanged in July and there's a good chance that prices will fall outright in August. With core consumer prices increasing by a more modest 0.3% m/m last month, which …
Weaker pound to push inflation higher; further rate hikes on the cards Egypt’s headline inflation rate picked up to a three-year high of 13.6% y/y in July and we think it will remain above the Central Bank of Egypt’s (CBE’s) target range until early 2024. …
Chances of another 50 bp hike next week rising The increase in CPI-ATE to a record-high will have raised eyebrows at the Norges Bank. We think another 50 basis point hike at next week’s interim meeting is likely. The increase in the headline inflation …
Underlying inflation is still low Consumer price inflation rose to a 24-month high in July and is now nearing the government’s target of 3%. But that is still very low by global standards, and we think headline inflation is close to a peak and will drop …
Inflation fall eases pressure on Copom The sharp fall in Brazilian inflation to 10.1% y/y in July from 11.9% y/y in June was mainly a result of tax cuts on energy; inflation in most other price categories remains extremely strong. Even so, at the margin, …
9th August 2022
Further rise in inflation to prompt another 75bp on Thursday The rise in Mexico’s headline inflation rate to 8.2% y/y in July, coming alongside the stronger-than-expected Q2 GDP figures released in late-July, mean that Banxico is almost certain to hike …
Economic growth in the Philippines unexpectedly slowed in Q2 and we expect growth to remain subdued in the second half of 2022 as high commodity prices, rising interest rates and weaker global demand drag on the economy. Today’s figures show that the …
Exports still strong but headwinds mounting Exports held up well last month, thanks to a backlog of orders still being cleared. But it won’t be long before shipments drop back on cooling foreign demand. Meanwhile, imports continued to trend down, pointing …
8th August 2022
The Great Retirement? The second consecutive monthly fall in employment will raise a few eyebrows at the Bank of Canada but, as retirements were partly to blame, the unemployment rate remained at a record low and wage growth is strong, we doubt it will …
5th August 2022
Labour market still hot The unexpected acceleration in non-farm payroll growth in July, together with the further decline in the unemployment rate and the renewed pick-up in wage pressures, suggests the economy is still a long way from recession. That …
Manufacturing conditions to get tougher The small increase in German industrial production in June was not enough to reverse declines earlier in the year and left output well below pre-pandemic levels. Things are going to get more difficult in the second …
House prices stall Like Nationwide, Halifax reported that house price growth ground to a halt in July. As these house price indices are based on mortgage approvals, its possible that affordability rules put a temporary brake on prices. But equally it …
Economic growth in Indonesia remained strong in Q2, but we expect the economy to slow in the second half of the year as the jump in commodity prices goes into reverse and the boost from reopening fades. Today’s figures show that Indonesia grew by 5.4% y/y …
Minimum wage hike to provide support The jump in wage growth in June was mostly driven by a surge in summer bonus payments and the Bank of Japan’s 3% wage growth target will remain out of reach for a while yet . More positively, the strength in overtime …
Strength of exports unlikely to last much longer The fall in the trade deficit to an eight-month low of $79.6bn in June, from $84.9bn, leaves net trade well placed to support a rebound in GDP in the third quarter. But with the surveys consistent with …
4th August 2022
Trade surplus likely to narrow soon Export volumes outpaced import volumes in June but, with the survey-based export indices falling back, the outlook is growing more challenging. Together with the declines in commodity prices since June, it seems likely …
Higher interest rates to weigh on construction activity in H2 The latest RICS Construction Survey showed a further rise in workloads during Q2, though sentiment for the next 12 months worsened slightly. With labour and supply shortages remaining a major …
Optimism misplaced as activity slows The fourth consecutive decline in the headline construction PMI took the index below 50 for the first time since January 2021. While driven by an idiosyncratic drop in civil engineering activity, the upbeat new orders …
Jump in services imports limiting boost from net trade The surge in Australia’s trade surplus to yet another record-high in June suggests that net exports will boost Q2 GDP growth by around 1%-pt though that tailwind will fade before long . The trade …
Commercial stocks rise, but scope for further increases is limited Crude oil prices have been for a rollercoaster ride today, rising by $3 per barrel following the OPEC+ meeting, and then more than erasing those gains later on. Prices fell particularly …
3rd August 2022
No sign of any convergence in metro trends There was little evidence of any slowdown in June’s job figures, but the deep divisions in performance at the metro level remained. Dallas and Austin stood out on a range of comparisons, while Pittsburgh and L.A. …
No respite for mortgage demand Both refinancing and home purchase activity continued to trend lower in July, with the latter down by around 30% since the start of the year. Against a backdrop of stretched affordability and record-low homebuyer sentiment, …
