Higher prices dragging underlying sales volumes lower Although June’s retail sales figures were boosted in some areas by the extra Jubilee bank holiday and dragged down in others, the underlying trend is that the surge in prices is weighing on sales …
22nd July 2022
Manufacturing slowdown continues, services hit by fresh virus wave July’s PMIs suggest that the manufacturing sector is slowing as demand weakens, while the latest Covid-19 is starting to hit the services sector. According to today’s flash estimate, the …
“Core” goods inflation will accelerate further While inflation fell slightly in June, it will remain above the BoJ’s 2% target until early-2023, while underlying inflation will approach 2%. However, the Bank won’t respond with tighter policy. The weaker …
Economy now gripped in a slowdown The weak set of Polish industrial production and retail sales figures for June provide the strongest evidence yet that the economy is in the midst of a sharp slowdown. It is very likely that GDP contracted in q/q terms in …
21st July 2022
Borrowing overshoot will limit next PM’s ability to help households June’s public finances figures provided more evidence that the government’s fiscal position is worse than the Office for Budget Responsibility (OBR) predicted back in March. This may …
Trade deficit should narrow again Japan’s trade deficit in June was the largest it has been since 2014 but the recent fall in commodity prices suggests it will narrow again before long . The 19.4% annual rise in export values marked an acceleration from …
US commercial crude oil stocks looking fragile US commercial stocks fell last week, largely on the back of a rise in exports and a drop in imports. The fall came despite another bumper release from the strategic reserve. As those government stock …
20th July 2022
Sales fall below pre-pandemic level and are set to fall further Existing home sales dropped again in June, taking them to below their pre-COVID peak. With affordability looking as stretched as it was during the Global Financial Crisis (GFC), home buyer …
Some encouraging signs despite further rise Despite the further rise in inflation to a multi-decade high, the June data showed some encouraging signs, with the monthly price gains slowing across almost every category. Inflation will begin to fall in the …
Supply growth to remain muted Global aluminium production ticked up again in June, but the increase was not sufficient to explain the plunge in prices last month. Base effects will mean that China’s production growth will accelerate in the second half of …
Policymakers in a bind after another jump in inflation The jump in inflation in South Africa to 7.4% y/y in June keeps a 75bp interest rate hike on the table at the SARB’s meeting tomorrow. But with policymakers clearly concerned about the weakness of the …
Global pressures peaking, domestic pressures strengthening There are some encouraging signs that the upward pressure on underlying inflation from global factors has started to ease. But as it is being replaced by stronger upward pressure from domestic …
Sharp fall in homebuilder confidence points to further decline in starts Single-family housing starts fell by a sizeable 8.1% m/m in June, following a 9.0% m/m drop in May. With rising mortgage rates continuing to weigh on demand, homebuilder confidence …
19th July 2022
Strength of inflation will push ECB into aggressive tightening Final inflation data for June confirm that price pressures are very strong. Whether or not the ECB hikes by 50bp on Thursday, we think it will be the beginning of an aggressive 12 months of …
Jobs market still hot even as the economy slows The strong rise in the supply of workers in May helped to take some of the heat out of the labour market. Even so, the sharp increase in employment and pick-up in wage growth supports our view that the Bank …
Signs of slowing momentum in CRE lending growth CRE lending growth was again strong in June, but outside of the multifamily sector, there are signs the rate of growth may have peaked. And with investment transactions slowing, we expect a significant …
18th July 2022
Inflation has probably peaked The stronger-than-expected rise in consumer prices in Q2 adds some upside risks to our forecast that the Reserve Bank of New Zealand will lift rates to 3.5%, but we still think that weaker economic activity will force the …
Further evidence of growth slowdown The decline in industrial production in June, led by a fall in manufacturing output, could reflect weaker demand for goods, but we suspect that it is also due to the zero-covid shutdowns in China, which temporarily …
15th July 2022
Strength of sales almost entirely due to surging prices The 1.0% m/m rise in retail sales in June isn’t as good as it looks, as it mainly reflects the boost to nominal sales values from surging prices. Real consumption appears to have been largely …
Even weaker than meets the eye The statistics bureau claim that output in Q2 was slightly higher than a year ago. That’s implausible even accounting for the strong rebound shown on the monthly data for June. The official GDP data acknowledge that the …
Manufacturing continues to struggle Manufacturing sales volumes plunged in May amid renewed semiconductor shortages, but there is scope for a more sustained rebound over the second half of this year, despite the worsening global backdrop. The 2.0% m/m …
14th July 2022
Lenders to tighten credit standards even as demand softens The Q2 credit conditions survey shows that lenders will not loosen credit conditions to keep the house price boom going like they did in 2004-2007. Indeed, despite the fact demand is expected to …
Q2 contraction on the cards The disappointing batch of South African activity data for May suggests that the economy is on course for a mild fall in GDP in the second quarter. The hard activity figures released this week by StatsSA made for pretty grim …
Rise in inflation has a little further to go Saudi inflation rose a touch in June, to 2.3% y/y, on the back of higher food inflation. While we think that the headline rate will drift higher over the next couple of months months, it is unlikely to reach …
Stronger-than-expected inflation strengthens case for front loading hikes The stronger-than-expected increase in Swedish inflation in June will only strengthen the resolve of policymakers to squeeze inflation out of the system and raises the chance that …
Activity surpassing pre-currency crisis levels Turkey’s activity figures for May show that industrial production and retail sales have now both surpassed their highs from late-2021 despite the weight of sky-high inflation. With strong demand and high …
WPI inflation has probably peaked Wholesale price inflation in India dropped back in June from its record high, and now appears to have passed its peak. CPI inflation will also peak in the next few months, but in the near term it’s still likely to rise …
Economic reality finally catching up with the housing market There was an unmistakeable cooling in the housing market in June as the new buyer enquiries balance slipped further into negative territory. With mortgage rates continuing to rise and the …
Unemployment rate may fall to 3% before long The sharp fall in the unemployment rate in June is consistent with our view that the Reserve Bank of Australia will need to tighten monetary policy more aggressively than most anticipate. The 88,400 jump in …
Clear signs that high prices are weighing on demand Total crude stocks fell again, mainly due to ongoing sales from the strategic reserve. That said, the big news was hefty builds in petroleum product stocks, suggesting that high prices are finally …
13th July 2022
Another inflation shocker nails on a 75bp hike this month The stronger than expected 1.3% rise in consumer prices in June, which pushed headline inflation to 9.1%, from 8.6%, nails on another 75bp rate hike at the July FOMC meeting. But with commodity …
Outlook for manufacturing weak, despite increase in production May’s 0.8% monthly increase in euro-zone industrial production was largely due to a huge rise in Ireland’s output. Excluding Ireland, production decreased slightly in May. Moreover, …
Imports slump, exports jump Import volumes fell to a three-year low last month, pointing to continued weakness in China’s construction sector. Exports rebounded strongly as shipping bottlenecks eased. But we think this may be the last hurrah for China’s …
Resilience unlikely to last The recent resilience of GDP to the drag from the high rate of inflation probably won’t last and there is still a big risk that the economy falls into recession. Even so, the surprisingly strong rise in GDP in May might …
Inflation holds steady, but will climb again soon Headline consumer price inflation held steady in June, but the core rate rose further. We expect inflation to climb higher above the RBI’s target in July and August, which should be enough for the MPC to …
12th July 2022
Industry likely to remain weak Industrial production in Mexico rose by a disappointing 0.1% m/m and timely indicators suggest that the sector was even weaker still in June. With growth in the US weakening, we expect industrial activity to remain soft over …
Credit growth is only creeping higher A further slight pick-up in credit growth last month was given a big helping hand from government bond issuance as local governments were instructed to issue their annual allocation of bonds by the end of June. That …
11th July 2022
Another 50bp hike looking tempting for the Norges Bank The services-driven increase in Norway’s core inflation rate in June increases the chance that the Norges Bank will raise its policy rate by another 50bps at its August policy meeting. The increase in …
Inflation continues to drop back The further decline in Russia’s headline inflation rate to 15.9% y/y in June confirms that inflation has already passed its peak and we expect price pressures to ease further over the coming months. This is likely to …
8th July 2022
Surprise fall in employment a seasonal distortion The surprise fall in employment in June appears to reflect seasonal effects and, with wage growth surging to 5.2% y/y, the Bank of Canada will follow through next week on its hint of a larger 75 bp rate …
Robust payrolls undermine recession claims The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession. That may be enough to solidify the case for another 75bp …
50bp hikes on the cards The increases in inflation in Brazil (to 11.9% y/y) and Chile (to 12.5% y/y) last month set the ground for 50bp hikes in policy rates at their respective central banks’ next meetings (in Chile’s case, next Wednesday). In both …
US petroleum product demand to be seasonably soft US commercial crude stocks rose owing to a fall in net exports and lower inputs to refineries. For now, implied product demand remains in line with its seasonal norm, but we expect demand to be soft for …
7th July 2022
Healthy trade surplus to be maintained over second half of 2022 The recent falls in commodity prices mean that, after soaring in May and probably improving again in June, the trade surplus will decline in the coming months. Nonetheless, as we expect …
Net trade to save Q2 GDP growth The further narrowing in the trade deficit in May reflects the strength of exports and implies that net trade provided a decent boost to second-quarter GDP growth, which we estimate was close to 1% annualised. But with …
Multi-decade high inflation to keep Banxico hiking in 75bp steps The rise in Mexican inflation to 8.0% y/y, its highest rate since 2001, will sustain the hawkish shift seen on the Banxico Board at its latest meeting in June. A 75bp hike in the policy rate …
Inflation to rise further and more monetary tightening on the cards Egypt’s headline inflation rate slowed for the first time since November to 13.2% y/y in June, but inflation will remain above the upper bound of the Central Bank of Egypt’s (CBE’s) …
18-year high house price inflation will mark the peak The substantial rise in the Halifax house price index in June was surprising given the softening in the Nationwide figures in the same month, and the deterioration in leading indicators of housing …
German industry probably contracted in Q2 May’s small rise in industrial production in Germany was not big enough to change our view that output in the sector is likely to have declined in the second quarter. And with the timelier surveys softening in …
