Gulf economies continue to lead the way July’s batch of PMIs were a mixed bag, but the readings reinforce our view that activity in non-oil sectors in the Gulf remains strong. Meanwhile, there were further signs that price pressures are easing. In Saudi …
3rd August 2022
A disappointing end to Q2 The sharp fall in euro-zone retail sales in June means sales contracted in Q2 as a whole. With the final PMI surveys pointing to price pressures continuing to intensify and demand softening, we think household spending will …
Inflation close to a peak, but will remain high The modest rise in Turkey’s headline inflation rate to 79.6% y/y in July suggests that inflation is nearing a peak, but it will remain close to these very high rates for several more months and will be slow …
Inflation appears to have peaked Swiss inflation appears to have peaked in July at an enviably low level compared to that of most other advanced economies. That said, the core rate reached its highest level in more than two decades, which is likely to …
Services coming off the boil, price pressures past their peak India’s July PMIs show a reversal of the recent outperformance of services. That said, both the services and composite PMIs remain high by pre-pandemic standards, pointing to growth continuing …
Rising unemployment suggests RBNZ will soon stop hiking The first rise in New Zealand's unemployment rate since mid-2020 suggests that the RBNZ's hiking cycle is nearing its end. Indeed, we expect the RBNZ to start cutting interest rates next year . …
Broad based weakness in industry The 0.4% m/m fall in Brazilian industrial production in June, taken together with softer surveys last month, provides further evidence that the economy is losing momentum. GDP growth in the second half of the year is set …
2nd August 2022
Increases in house prices slow to a crawl While the rise in the annual rate of house price growth from 10.7% in June to 11.0% in July will make most of the headlines that was driven by base effects. Instead, we think the main takeaway from the July …
Manufacturing downturn set to continue Although the ISM manufacturing index fell again in July, to 52.8 from 53.0, the rate of decline does at least appear to be slowing and, for now, it remains consistent with GDP growth of roughly 1.5% annualised – in …
1st August 2022
Power crisis dealing heavy blow to manufacturing sector The decline in South Africa’s manufacturing PMI in July points to a large hit to activity from weaker global demand as well as severe power cuts at home. It will probably take some time before …
Economic recovery to remain tepid Hong Kong’s GDP ticked up last quarter as the easing of virus restrictions boosted consumption. But the recovery was muted, held back by a drop in exports. We think growth will remain weak given rising interest rates, …
Labour market to remain tight In June, the number of unemployed people rose in the euro-zone for the first time in 14 months. Nevertheless, we expect the labour market to remain tight even as the economy heads into recession, maintaining the upward …
PMIs point toward a contraction in industry Manufacturing PMIs for July fell to levels consistent with contractions in industrial production in Q3, with the exception of in Russia, where the downturn in manufacturing seems to have stabilised. There was an …
Weak exports weigh on industrial demand Manufacturing PMIs for July fell back amid further signs that global demand is weakening. With global growth set to slow further and domestic interest rates set to continue rising, the region’s industrial sectors …
Domestic demand propping up manufacturing activity India’s manufacturing PMI was remarkably strong in July, with domestic demand supporting activity despite a negative global backdrop. The rebound will give the RBI more confidence to hike by 50bps this …
Rebound slows as manufacturing sputters The surveys suggest that China’s economic recovery slowed in July as the one-off boost from reopening faded. It is consistent with our view that activity will remain below trend in the coming quarters. The official …
House prices will continue to fall sharply Allowing for seasonal swings, house prices in July fell as much as they did at the height of the 2017-2019 downturn. With soaring mortgage rates weighing on affordability, prices will continue to fall sharply …
Conditions continue to deteriorate in industry Favourable base effects kept y/y growth in India’s core infrastructure industries elevated in June. But once those base effects are removed, it’s clear that the industrial sector is entering a weaker phase. …
29th July 2022
Economy losing momentum Although activity was stronger than initially estimated in May, the economy still failed to grow and the preliminary estimate suggests that GDP only crept up in June. Together with the weakening of the consumer and business surveys …
Another solid quarter, but recovery to struggle from here Provisional GDP figures show that Mexico’s economy grew by a stronger-than-expected 1.0% q/q in Q2 and we have nudged up our forecast for GDP growth this year to 2.3% (from 1.8% previously). Even …
Re-opening boost to fade, fast The chunky increase in euro-zone GDP in Q2 was due to the re-opening of the services sector which has masked a deterioration in most other parts of the economy. We expect a triple whammy of high inflation, tighter monetary …
Consumers borrowing more to cope with higher inflation The chunky increase in unsecured borrowing in June suggests that households are having to rely more on credit due to the cost of living crisis. But households won’t be able to fully offset the hit to …
Net lending to property ticks up, but improvement will be short-lived Lending activity in the commercial property sector surprised on the upside in June, driven by a rise in net lending to standing property investments. But looking ahead, rising interest …
Rising core inflation adds to pressure on ECB With headline and core inflation rising more than expected yet again, the case for the ECB to pursue further aggressive tightening of interest rates is unassailable. A 50bp hike in September now looks nailed …
Slip in mortgage approvals in June a sign of the slump to come Mortgage approvals slipped back to below 2019 levels in June supporting our view that higher interest rates will cause housing market activity to slump over the next two years. Indeed, further …
GDP in Taiwan contracted last quarter as a surge in COVID-19 cases weighed heavily on consumer-facing sectors and exports slowed. Although consumption should bounce back now that virus cases are falling and mobility is rebounding, the worsening prospects …
Weakness in Q2, contraction likely in Q3 The 0.2% q/q expansion of Czech GDP in Q2 beat the consensus expectation for a small contraction, but it was roughly in line with what we had expected, and still marked a sharp slowdown in growth from Q1. We think …
Rebound in industrial output has further to run While industrial output bounced back strongly in June, the recovery in the labour market is stalling and consumer spending is faltering. One reason is that rising consumer prices are weighing on confidence. …
Another upside surprise The increase in German inflation to 8.5% in July was higher than most anticipated and suggests that euro-zone inflation will also come in above expectations tomorrow. This will support what we assume is the majority view on the ECB …
28th July 2022
Falling GDP not enough to prompt Fed pivot The 0.9% annualised fall in GDP in the second quarter is disappointing but doesn’t mean the economy is in recession. The decline was partly due to a huge drag from inventories, while most other coincident …
Sharp reverse in real estate sentiment in Q2 The latest RICS survey for the US highlighted the steepest drop in confidence since early 2020, abruptly reversing the building optimism of recent quarters. This adds to the growing evidence that the peak of …
Sentiment falls further, but price pressures show signs of easing The EC’s Economic Sentiment Indicators for Central and Eastern Europe showed declines across the region and across sectors in July, supporting our view that economies in the region are in …
Downbeat surveys raise the spectre of recession The bigger-than-expected decline in the EC Economic Sentiment Indicator in July adds to a growing list of indicators pointing to activity slowing markedly in July. With the region’s gas supply now reduced …
Recovery in occupier activity proves short-lived After briefly recovering in Q1, the latest RICS survey showed that occupier demand dropped back in Q2 as concerns over the economic outlook and cost pressures weighed on activity. Both rental and capital …
Q2 GDP to prove a high-water mark until late 2023 The 1.4% q/q increase in Swedish GDP in Q2 poses upside risks to our below-consensus forecast for GDP growth in 2022. But with a recession on the cards in late 2022 and early 2023, activity is unlikely to …
Consumption will remain resilient The sixth consecutive rise in retail sales in June underlines that households are weathering the headwinds from falling house prices, soaring inflation and surging mortgage payments well and we reiterate our long-held …
Data pointing to a 9% contraction in Q2 The Russian industrial production figures for June were surprisingly strong, which likely reflects a pick-up in oil production. But retail sales remain depressed and show no sign of a turnaround. Our provisional …
27th July 2022
Rising exports are becoming increasingly controversial There were large increases in both crude and product exports in the latest data, which will add fuel to lobbyists’ calls for restrictions on exports while prices are high . The EIA’s weekly US …
Investment growth slowing despite jump in orders The jump in durable goods orders in June mainly reflected a surge in defence aircraft orders. Private equipment investment growth still looks to have slowed in the second quarter, although the latest trade …
Inflation to peak around 7% While inflation picked up in Q2, it wasn’t as strong as we had expected. That suggests that the RBA may opt for another 50bp rate hike at next week’s meeting rather than the 75bp we had been anticipating. The 1.8% q/q rise in …
Weak sales are consistent with our call for a fall in house prices Case-Shiller reported a slowdown in month-on-month house price growth in May, adding to the signs that the housing market is cooling rapidly. The annual growth rate dropped below 20% and …
26th July 2022
Inflation has peaked, but will remain high The drop in inflation in Brazil to 11.4% y/y in the first half of July provides the first clear sign that inflation has passed its peak and is now on a downwards path. But even so, with the headline rate far …
Annual returns now past their peak and set to slow further in H2 NCREIF total returns fell back again in Q2, dropping to 3.2% q/q from their end-2021 peak of over 6%, as higher interest rates and weaker growth hit property performance. We expect the …
As good as it gets Korean GDP growth picked up slightly in the first quarter, but this is likely to be as good as it gets for the economy. We expect growth to slow in the second half of 2022 as rising interest rates, higher commodity prices and weaker …
Heading for recession The further decline in the German Ifo Business Climate Index (BCI) in July adds to the evidence that the German economy is on the brink of a recession as high energy prices and worries about energy security take their toll on firms’ …
25th July 2022
Slump in confidence points to sales weakness ahead Retail sales rose by a bit more than we anticipated in May, but the preliminary estimate implies that most of the gain in sales volumes was reversed in June and the slump in consumer confidence suggests …
22nd July 2022
Production to remain sluggish this year Global steel production growth slowed in June as higher power costs in advanced economies contributed to lower output there. By contrast, the decline in China’s output slowed slightly. Overall, we expect global …
Further rise in inflation to prompt another 75bp hike The further rise in Mexico’s headline inflation rate to 8.2% y/y in the first two weeks of July means that Banxico is all but certain to deliver another 75bp hike in interest rates, to 8.50%, at its …
Pipeline price pressures have peaked Spending on travel and leisure is supporting activity and has so far prevented the UK composite flash PMI from joining the euro-zone’s PMI in contraction territory. Perhaps even more encouraging was that price …
Euro-zone on brink of recession July’s flash PMIs suggest that the euro-zone is teetering on the brink of recession due to slumping demand and rising costs while inflationary pressures remain intense. The ECB will have to follow up on yesterday’s historic …
