Mediocre labour market data will encourage RBA to stick to 25bp hikes While the unemployment rate held steady at a 48-year low in April, the slowdown in employment growth and the sluggishness of wage growth will probably convince the RBA to hike rates by …
19th May 2022
Net trade to boost growth this quarter Export volumes fell in April, and they are likely to remain subdued over the coming months until supply shortages dissipate and allow exporters to make up for lost ground. The 12.5% annual rise in exports in April …
Q1 resilience to be followed by steep downturn in Q2 The 3.5% expansion in Russia’s GDP in Q1 is consistent with a small contraction in q/q terms, and this will almost certainly be followed by a steep fall in output in Q2 as the effects of Western …
18th May 2022
High product prices to suppress demand this summer Commercial crude oil stocks fell last week due to exports rising faster than imports and refineries stepping up operations. But high petroleum product prices should hold back demand in the coming months, …
Inflation edges even higher as food prices surge CPI inflation edged up to a new cyclical high of 6.8% in April, from 6.7%, and, together with the more marked increases in core inflation, that almost guarantees the Bank of Canada will hike its policy rate …
Housing starts drop back as higher interest rates curb demand Housing starts dropped by a marginal 0.2% m/m in April, driven by the single-family sector which also saw building permits fall for the second month in a row. Housing demand is faltering due to …
Q1 contraction and headwinds building The 0.8% q/q contraction in Chile’s GDP in Q1 suggests the economy is coming back down to earth after a stellar 2021, and there is a growing chance of a recession this year. Meanwhile, the current account deficit …
Activity struggling even before hit from floods South Africa’s activity data for March were weak and that was even before flooding in KwaZulu-Natal province dealt a fresh blow to the economy. Inflation figures released earlier today may have increased the …
Inflation close to a peak but will stay well above target for a long time April’s inflation data will confirm to policymakers – if any further evidence was needed – that they want to start raising interest rates very soon. A hike in July looks a near …
Rise in core inflation raises risk of 50bp hike tomorrow South Africa’s headline inflation rate remained close to the upper bound of the Reserve Bank’s 3-6% target range in April, at 5.9% y/y, and will stay there over the coming months. Tomorrow’s …
Worse to come as inflation may yet climb to 10% If the rise in CPI inflation from 7.0% to a 40-year high of 9.0% in April wasn’t bad enough, inflation will probably rise further to 10% in October and will then fall back to the 2% target only slowly. …
Consistent wage growth to keep the RBA on track The unchanged pace of quarterly wage growth in Q1 should ensure the RBA won’t accelerate its hiking cycle just yet. But with the labour market still tightening and inflation still rising, we think wage …
Consumer caution to soften reopening rebound Japan’s economy only contracted slightly in Q1 as consumption held up well despite prolonged restrictions during the Omicron wave. But while the economy will bounce back this quarter, we think Japan’s delayed …
Economy firing on all cylinders The 0.8% rise in manufacturing output last month underlines that it is not just consumer spending powering the economy forward. While the survey evidence suggests global manufacturing demand is cooling, the gradual easing …
17th May 2022
Never bet against the US consumer Never bet against the US consumer has always been a good adage to bear in mind throughout my 20-plus years in the markets. Despite the surge in prices weighing on their purchasing power, the US consumer now appears to be …
Bright labour market, weaker activity The euro-zone economy grew slightly faster in Q1 than previously estimated and there was a solid increase in employment at the start of the year too. While we expect the labour market to remain a relative bright spot, …
Overheating in Q1 Q1 GDP figures for Central and Eastern Europe smashed expectations in Poland, Romania and Hungary and suggest that their economies were running hot at the start of the year. The war in Ukraine will dampen activity in Q2, but demand is …
Still tightening even as economy slows Even though the economy contracted in March and may be on the brink of a recession, jobs growth strengthened, the unemployment rate fell to a 47-year low of 3.7% and wage growth accelerated. This supports our view …
Following continued growth in the first quarter, the pace of the recovery will largely depend on how quickly tourists return now that the country has fully reopened to foreign visitors. GDP grew by 1.1% q/q in Q1, down from the 1.8% expansion recorded in …
Rise in manufacturing sales entirely due to higher prices The rise in manufacturing sales in March was entirely due to higher commodity prices, but the orders data and the business surveys suggest that sales volumes will do better in the coming months. …
16th May 2022
Latest rise in inflation puts pressure on CBN to tighten Inflation in Nigeria jumped to 16.8% y/y last month and the headline rate is likely to rise further as spillovers from the war in Ukraine filter through. Pressure to tighten monetary policy is …
Rapid lending growth in April reflects record high investment activity Lending growth accelerated in April, seeing the strongest monthly gain in over 12 years. And with transactions having seen a fast start to the year, we think there is more to come in …
Q1 contraction not a sign of weakness The 1.6% q/q annualised contraction in Q1 GDP in Israel was weaker than analysts expected, but it was more or less in line with our forecast and doesn’t change the bigger picture that Israel’s economy is operating in …
A cyclical trough The April data were even weaker than expected and are consistent with a sharp contraction in economic activity. Provided that the virus situation continues to improve, the economy should begin to rebound this month. But the recovery is …
Monthly price increases slow sharply as ruble appreciates Russian inflation came in broadly as expected in April, rising from 16.7% y/y to a two-decade high of 17.8% y/y and it looks like further increases in the coming months will be modest. This will …
13th May 2022
Ukraine war weighing on production The decline in industrial output in March shows that the war in Ukraine is having a severe impact on manufacturers. With further Russian energy import bans looming and supply shortages remaining acute, we think this is …
Lockdowns held back credit growth Lending was much weaker than expected last month as lockdowns weighed on credit demand. This should nudge the PBOC to announce further easing measures soon. But the central bank continues to signal a relatively restrained …
Better-than-expected Q1, but economy faces strong headwinds Turkey’s activity data for March suggest that the economy held up better than expected in Q1 as a weak lira appears to have supported industry, while policies to preserve households’ purchasing …
Strong first quarter will be followed by continued recovery Malaysia’s economy continued to rebound strongly at the start of this year and should grow at a decent pace throughout the rest of 2022. That said, there is still a long way for the recovery to …
Inflation surges to eight-year high Headline consumer price inflation surged beyond even our above-consensus forecast to an eight-year high of 7.8% y/y in April. Given that it is likely to rise even higher over the coming months, further hikes to the repo …
12th May 2022
Risk of a recession has suddenly increased It now seems likely that GDP will contract in Q2. And with the full hit of the cost of living crisis yet to be felt, the chances of a recession have just risen. Even so, with price pressures still strengthening, …
Inflation at a 31-year high The stronger-than-expected increase in Swedish inflation in April was partly due to high energy and food prices but also because of broadening price pressures. We expect the core rate to remain above the Riksbank’s target for …
Rising mortgage rates not yet hurting demand The housing market shrugged off the effects of rising mortgage rates and the cost-of-living crisis in April as intense competition between buyers bid up prices further. However, with mortgage rates set to …
Growth strong, for now The Philippines economy beat expectations again in Q1 and should have gained further momentum in recent months. But we suspect the strength of the recovery will begin to wane soon. GDP grew by 1.9% in seasonally-adjusted q/q terms, …
Unless prices fall, US demand is likely to remain soft Commercial crude stocks will be boosted in the coming weeks by the ongoing release of strategic reserves, regardless of what is happening with domestic oil demand. That said, there are now clear signs …
11th May 2022
Inflation still set to fall over the coming months The falls in headline and core inflation in April marks the beginning of a sustained decline, as base effects improve and supply shortages ease, although the 0.6% monthly jump in core prices indicates …
Inflation hits highest rate since 2003 The jump in Brazilian inflation to 12.1% y/y in April was driven by a broad based increase in price pressures and supports our view that the central bank’s tightening cycle has further to run. We still expect an …
CPI inflation ticks up but factory gate inflation eases Consumer prices rose at a faster pace last month. But inflation remains relatively subdued and there are already signs in the producer price data of upstream price pressures easing. As such, …
ZEW indicator makes German recession look more likely The small rise in the ZEW measure of German investor sentiment in May left it still very low. And the current conditions index fell further, which is consistent with our view that the economy will …
10th May 2022
Inflation leaps, further interest rate hikes beckon Egypt’s headline inflation rate jumped to a near-three year high of 13.1% y/y in April on the back of the spillovers from the war in Ukraine and effects of the devaluation of the pound. Inflation will …
Inflation pick-up brings 50bp hike in June on the table The stronger-than-expected increase in core inflation in April raises the chances that the Norges Bank will step up the pace of tightening at its next rate decision, in June. The increase in CPI …
Broad-based inflationary pressures The rise in Mexico’s headline and core inflation in April, to 7.7% y/y and 7.2% y/y respectively, has a bit further to run in the near term. This will prompt Banxico to deliver another 50bp rate hike this week, to 7.00%, …
9th May 2022
Regional divergence grows April’s batch of whole economy PMIs showed a loss of momentum at the start of Q2 but continued to highlight the growing divergence between the Gulf and non-Gulf economies as a result of the spillovers from the war in Ukraine. In …
Growth slowed in Q1 as Omicron held back the recovery at the start of the quarter. Activity is rebounding now that the economy has reopened, but other headwinds are growing. We estimate that the 5.0% y/y growth reported today for the first quarter is …
Exporters have a bigger problem than lockdowns Goods trade softened further last month. Virus disruptions continued to take a toll but the main headwind to exports is weakening foreign demand. The pace of export growth slowed sharply from +14.7% y/y in …
Wage growth to touch 2% Nominal wage growth stayed at 1.2% in March and we think it could touch 2% over the coming months as overtime and bonus payments get back to their pre-virus levels. But with base pay growth still weak, we think overall wage growth …
Sharp slowdown in employment growth partly due to temporary factors The sharp slowdown in employment growth and large decline in hours worked in April present downside risks to GDP growth but, as temporary factors seem to explain much of the weakness, …
6th May 2022
Labour market conditions remain robust The solid 428,000 gain in non-farm payroll employment in April illustrates that the Fed was right to ignore the misleading contraction in first-quarter GDP, with the economy still on a firm footing. Admittedly, we …
Reality bites as PMI shows signs of a slowdown in activity The construction PMI for April showed that building activity remained solid, but that the pace of growth has slowed. An easing in new orders growth also hints at a further slowdown ahead, as the …
