Sanctions take their toll as activity falls sharply in April The April activity data for Russia released today show that the imposition of Western sanctions has caused a sharp fall in oil and gas production, a plunge in motor vehicles output and resulted …
1st June 2022
Easing supply shortages lend support to activity The rise in the ISM manufacturing index to 56.1 in May, from 55.4, was better than we had anticipated and suggests a continued easing of supply shortages is supporting activity. But we expect a slowdown in …
Winning and losing metros increasingly reflect structural pandemic impact The ongoing jobs recovery continued in April, although employment remained below its pre-pandemic level in more than half the 30 metros covered. Those losers tend to be expensive …
Mortgage demand sees further falls even as interest rates edge back A small fall in mortgage rates over the second half of May failed to arrest a downward trend in mortgage demand, with applications for home purchase ending the month at a two-year low. …
A bright spot in an otherwise gloomy landscape The euro-zone unemployment rate remained at a record low in April and the latest business surveys suggest that employment will continue to increase at a decent pace. With the labour market remaining tight, …
Partial rebound underway in manufacturing sector The rebound in South Africa’s manufacturing PMI last month reversed some of its losses in April, but the recovery in the manufacturing sector is on shaky footings given ongoing power cuts. And price …
Weak external demand and war in Ukraine take their toll Manufacturing PMIs for May showed that weaker external demand weighed on export orders in Emerging Europe, and that spillovers from the war in Ukraine hit output. There were some signs of improvement …
More evidence that house price increases have peaked There was another slowdown in the annual rate of house price inflation in May according to the Nationwide. That was in line with our expectation of sustained slowdown through the rest of the year, …
Manufacturing performing well, but few signs of inflation easing India’s manufacturing PMI held steady in May, but there are further signs of price pressures becoming more intense last month. That supports our view that the RBI will frontload its policy …
Cost pressures remain high, signs of easing disruption in China Manufacturing PMIs for May suggest that cost pressures remain high, but there were more encouraging signs on the external front, with new export orders showing signs of stabilising. …
Industrial activity improves but recovery will be slow The Caixin manufacturing index published today rebounded last month thanks to the easing of virus containment measures. Taken together with the official survey, they suggest that a recovery in …
GDP growth to accelerate in Q2 The solid rise in Q1 GDP supports our view that the economy will hold up better in the face of rising interest rates and falling real incomes than most anticipate . The 0.8% q/q increase in output was stronger than the …
Housing downturn just beginning The monthly decline in house prices in May is the start of a significant housing downturn as the RBA’s hiking cycle continues. There’s a risk that this prompts the RBA to end its hiking cycle early, but our central forecast …
House price growth hits new records, but will slow rapidly from here House prices surged in March, with Case-Shiller reporting record gains on both a monthly and annual basis. That reflects the jump in housing demand seen over the turn of the year, when …
31st May 2022
Economy well-placed for 2022, but downside risks growing Indian GDP data for Q1 (Q4 of FY21/22) show that activity held up much better during the Omicron outbreak than during previous virus waves. The economy is well-placed for strong growth over 2022 as …
Q1 growth weaker, but strong momentum going into Q2 First-quarter GDP growth slowed to 3.1% annualised, from 6.6%, as the Omicron-related restrictions had more of an impact than previously thought. But the 0.7% m/m increase in monthly GDP in March …
Consumers funding spending through borrowing, not savings The solid rise in unsecured borrowing in April suggests that households have turned to credit to support their spending as the cost of living squeeze has intensified. But consumers do not yet …
Net lending defied economic headwinds in April Net lending to property rose sharply in April, after three consecutive months of easing. But the latest jump is most likely a once-off as we expect that credit demand will be dented by rising interest rates …
Approvals drop back to pre-COVID-19 levels in April The drop in mortgage approvals in April provided early evidence that interest rate increases are starting to hurt activity. As we expect the rises in both policy and mortgage rates to continue apace over …
Further jump in inflation clinches case for prompt ECB action With headline and core inflation rising more than expected yet again, the case for exiting from negative interest rates promptly is now irrefutable. The ECB looks sure to confirm next week that …
Solid Q1 but activity will have softened in Q2 The stronger-than-expected increase in Swiss GDP in Q1 provides a solid base for year-on-year growth rates throughout 2022. But with surveys heading south, and signs of stagnation in the euro-zone in Q2, we …
Resilient Q1, but economy to struggle over rest of 2022 Turkey’s economy performed better than expected in Q1, with GDP rising by 1.2% q/q, as the boost to net trade from the lira’s collapse late last year more than offset the blow to household spending …
Past the worst but weakness persists The official PMIs add to broader evidence that activity has started to rebound as containment measures were rolled back. That said, the recovery is likely to remain tepid amid weak external demand and labour market …
Q2 rebound could disappoint While employment recovered sharply in April and should soon reclaim its pre-pandemic level, the weakness in both goods production and goods consumption last month suggests that the economy’s Q2 rebound could be more muted than …
Surging inflation boosts case for rapid rate normalisation German and Spanish inflation data for May provide more ammunition for those who will argue at next week’s monetary policy meeting that the ECB should exit negative interest rates promptly, rather …
30th May 2022
Sentiment a mixed bag in May The EC’s Economic Sentiment Indicators for Central and Eastern Europe were a mixed bag in May, but there were some encouraging signs that industrial sentiment has started to improve and that price pressures may be nearing a …
Sentiment still depressed The EC Economic Sentiment Indicator for May was almost unchanged from April, well below its pre-Ukraine war level and consistent with economic activity stagnating in Q2. The survey also suggests that inflationary pressures remain …
Strong Q1 performance pushes 2022 forecasts higher The latest IPF Consensus Survey indicates that the outlook for this year is stronger than expected three months ago, though after 2022 forecasts were more pessimistic. Our view remains more downbeat than …
27th May 2022
Consumption to defy falling real incomes and rising interest rates The fourth consecutive rise in retail sales values in April underlines that consumers are not throwing in the towel in the face of falling real incomes and rising interest rates . The 0.9% …
Sales hit by supply-related slump in autos Retail sales values were unchanged month-to-month in March, as a further supply-related slump in motor vehicle sales offset a largely price-related surge in gasoline station sales and solid increases in other …
26th May 2022
Investment to rebound in earnest in the years ahead We estimate that private investment fell by 1.3% q/q in Q1, but firms’ expectations of future capital expenditure suggest investment will strengthen before long. Today’s private capital expenditure …
Commercial stocks to continue to lean on strategic reserves for support Commercial crude oil stocks fell again last week, but at a slower pace. Once again, lower net imports and higher refinery inputs led to the drawdown. Although both drivers became more …
25th May 2022
Business equipment investment growth moderating The modest 0.4% m/m rise in durable goods orders in April suggests that rate-sensitive business equipment investment growth is beginning to slow, with underlying capital goods shipments consistent with a …
The decent upwards revision to Q1 GDP data reveals that the economy gained more momentum at the end of the quarter, a trend which is likely to carry on throughout Q2. The second estimate of Q1 GDP shows that output grew by 0.7% q/q after a 2.3% rise in Q …
Steel production still depressed by high energy costs Global steel production fell in y/y terms in April, as all major producers bar India recorded declines. High energy costs and soft demand for steel are both likely to persist for much of the remainder …
24th May 2022
New home sales drop to a two-year low New home sales dropped sharply to a two-year low in April. But while rising mortgage rates are weighing on sales, the drop looks large given the fall in mortgage applications seen so far and may be revised up over the …
Copom’s tightening cycle has a little further to run The further rise in Brazilian inflation, to 12.2% y/y in the middle of May, supports our view that there will be another 75pb of hikes in the current tightening cycle (to 13.50%). Investors seem to have …
Inflation stabilising While Mexico’s headline inflation edged down to 7.6% y/y in the first two weeks of May, this will provide little comfort to the central bank as price pressures remain stubbornly strong. The risks are still skewed towards Banxico …
Activity stalling, but inflationary pressures remain acute The flash PMI survey for May suggests that economic growth has slowed to a crawl and that the risk of a recession has not gone away. Even so, weakness in the economy doesn’t seem to be filtering …
Temporary factors buoying euro-zone activity The small fall in the euro-zone Composite PMI in May suggests that activity is holding up better than we had feared. But the services rebound is likely to run out of steam amid high inflation and the drop in …
Changing economic winds may prevent the Chancellor from going big The economic wind that has recently been blowing the public finances to undershoot forecasts adds more pressure on the Chancellor to launch in the coming weeks a big package of measures to …
Industrial activity still held back by supply shortages While the flash manufacturing PMI was little changed in May, the details suggest that supply shortages worsened yet again, weighing on output and lifting prices. According to the flash estimate …
Economy will continue to lose steam Nigeria’s GDP growth slowed to 3.1% y/y in Q1 as robust growth in the non-oil sector was more than offset by a slump in the oil sector. Looser fiscal policy ahead of elections in early 2023 will provide some support to …
23rd May 2022
Stronger than feared but economy still struggling The Ifo survey for May suggests that activity in Germany may be holding up a little better than we had feared. But the headline Business Climate Index is still consistent with GDP contracting in …
Soft start to Q2 April’s activity data for Poland suggest that the economy lost some steam at the start of Q2 and the effects of the war in Ukraine will remain a key headwind over the coming months. That said, we think Poland will avoid a contraction and …
Consumer confidence remains depressed The small increase in euro-zone consumer confidence in May left it only slightly higher than its low point at the start of the pandemic. With confidence extremely low and real incomes squeezed by high inflation, we …
20th May 2022
China could ride to the rescue After a weak start to the year, it looks increasingly as though a rebound in China’s output will more than offset lower production in Russia and Europe so that global production will rise a touch this year. That said, supply …
Signs of resilience The unexpectedly strong rise in retail sales in April suggests the cost of living crisis hasn’t caused consumer spending to collapse and means the economy may have a little more momentum than we previously thought. It also supports our …
Above-target inflation won’t prompt policy tightening Inflation rose above the Bank of Japan's 2% inflation target for the first time since 2008 and we expect underlying inflation to approach 2% later this year, but this won't prompt the Bank to tighten …
Buyer traffic drops sharply as higher mortgage rates bite Existing home sales fell once again in April, although for now they remain above their pre-COVID-19 level. But, with mortgage rates set to stay high and credit conditions unlikely to loosen …
19th May 2022
