A strong April, but approaching a turning point In contrast to Nationwide’s measure of house price inflation, there was no sign of house price growth slowing in the Halifax figures for April. But with mortgage rates only just starting to climb to reflect …
6th May 2022
Ukraine war hitting hard The slump in output in March shows that the war in Ukraine is hitting manufacturers hard even before a ban on Russian energy imports has taken effect and before the ECB has raised interest rates. We think this is the start of a …
Construction sector activity to face rising pressures in short term The latest RICS Construction Survey indicated that activity in Q1 remained solid, while sentiment about for the next 12 months remained optimistic. But it also showed that labour and …
5th May 2022
Inflation closes in on 2002 peak Turkey’s headline inflation rate recorded another sharp increase to 70.0% y/y in April and there’s a strong chance that it moves beyond its peak in the early 2000s in the coming months. Despite this inflation backdrop, a …
Activity robust, but price pressures intensifying India’s April PMIs show activity picking up, but power shortages may weigh on output soon. The surveys also provide more evidence of price pressures growing. That suggests the RBI will follow up …
Trade was a big drag on growth in Q1 The rise in the trade balance in March won’t be enough to prevent trade from being a significant drag on growth in Q1. In the months ahead higher export prices due to the war in Ukraine should lift the trade surplus …
High petroleum product prices to constrain US oil demand Commercial crude oil stocks rose last week on higher imports, lower exports and less crude oil being used by refineries. Implied product demand, meanwhile, was little changed and towards the lower …
4th May 2022
Jump in imports likely to be partly reversed The surge in the trade deficit to a record high of $109.8bn in March, from $89.8bn, was driven by a huge rise in imports as port congestion cleared. We suspect imports will fall back over the coming months, …
Goods trade surplus to widen this quarter The trade surplus unexpectedly fell in March, despite the surge in commodity prices, but it is likely to rise in the second quarter, as export volumes recover while import volumes drop back. The goods trade …
Rise in mortgage rates dampens home purchase demand The sharp rise in mortgage rates over the past couple of months, to a 12-year high of 5.37% in the middle of April, is now weighing on mortgage demand. Home purchase applications dropped to their lowest …
Chances of a contraction in Q2 growing The decrease in euro-zone retail sales in March is the first indication from official data that the war in Ukraine is weighing on consumption. With the final PMI surveys pointing to price pressures intensifying and …
Subdued net lending expected to be the norm in the near term Net lending to property eased for a third consecutive month in March, but continued to show growth. We expect increasing economic headwinds and structural changes within some sectors to weigh on …
Consumer spending appears to be holding up well so far The decent increase in unsecured borrowing in March suggests that the plunge in consumer confidence and fall in real incomes have not caused consumer spending to collapse. This lends some support to …
Robust for now Unchanged mortgage approvals in March showed that the housing market remained buoyant throughout the first quarter. But the emerging trend of rising mortgage rates on new loans rising will only accelerate, which will reduce demand and …
Weak confidence won’t hold back consumption recovery Retail sales defied the weakness in consumer confidence in March and with the household savings rate still high, we expect consumption to keep expanding at a strong pace . The 1.6% m/m rise in retail …
Tight labour market sets stage for another 50bp hike by RBNZ The continued tightness in the New Zealand labour market despite the omicron outbreak provides further evidence that the economy is still running hot. That’s why we expect the RBNZ to hike rates …
Signs of life in Brazilian industry The 0.3% m/m increase in Brazilian industrial production in March suggests that the sector made a stronger contribution to GDP growth in Q1 than in Q4, and there are signs of further improvement in April. This supports …
3rd May 2022
Manufacturing sector knocked down in early Q2 The plunge in South Africa’s manufacturing PMI in April suggests that there was a large blow to activity from flooding in a key province and renewed power cuts. One consequence of this economic weakness is …
Labour market looks tight The euro-zone unemployment rate fell to a new record low in March, and the latest business surveys suggest that employment will continue to increase at a decent pace. With the surveys also showing that the labour market is …
Fastest growth in a decade sets up a strong 2022 Saudi Arabia’s economy expanded by a robust 2.2% q/q in the first quarter of the year, which translated into year-on-year growth of 9.6% – the fastest pace recorded since 2011. With oil production to …
Growing headwinds spells modest recovery despite easing virus outbreak Hong Kong’s GDP contracted in the first quarter of the year, and although there are signs that activity is rebounding, we expect the recovery to prove weak. While virus containment …
Asia’s export-focussed industry softens further, more weakness ahead. Regional Manufacturing PMIs point to a further worsening of industry conditions, chiming with Korean trade data which suggest a major softening of external demand. Both reinforce the …
Global manufacturing slowdown will spread to US soon The decline in the ISM manufacturing index to a 20-month low of 55.4 in April, from 57.1, is mostly due to weakening demand amid a broader slowdown in global manufacturing, rather than a renewed supply …
2nd May 2022
Economy surges as Omicron wave fades The jump in GDP in February means that, despite the Omicron wave, the economy was even stronger than expected in the first quarter. But signs of a sharp slowdown in the housing market in April suggest there are …
29th April 2022
Core industries painting a mixed picture Growth in India’s core infrastructure industries slowed in March as production of some energy commodities fell. However, there are tentative signs that the rise in commodity prices caused by the war in Ukraine may …
Solid Q1 but growth to slow sharply in Q2 The pick-up in Mexico’s GDP growth to 0.9% q/q last quarter was largely a result of a strong carryover from late 2021, and the economy was weakening sharply heading into Q2. As the headwinds from high inflation …
Stagflation risks building The small increase in euro-zone GDP in Q1 means that the region will avoid a technical recession in the first half of the year. But rising inflation and the fallout from the Ukraine war mean that GDP is likely to contract in Q2, …
Slowdown in Q1, contraction likely in Q2 The 0.7% q/q expansion of Czech GDP in Q1 was slightly stronger than expected, although it still marked a slowdown in growth and, in particular, there were signs of weakness at the end of the quarter. We think that …
Signs the housing market is turning the corner mount The slowdown in house price inflation in April adds to signs that the housing market is beginning to cool and suggests that the peak in house price inflation is now behind us. We expect house prices to …
Stalling real economy won’t stop the Fed The unexpectedly severe 1.4% annualised decline in first-quarter GDP probably won't stop the Fed from hiking interest rates by 50bp next week, since officials will chalk it up to the temporary impact of Omicron and …
28th April 2022
Recovery in sentiment broadens out in Q1, but unlikely to last The RICS Q1 survey showed a further improvement in sentiment, driven by more confidence in prospects for the office and retail sectors. However, since the survey was conducted, the outlook for …
Small fall in energy inflation will not put ECB off rate hikes The further rise in headline inflation in Germany, and increase in the underlying rate in Spain, suggest that euro-zone inflation will come in around 7.4% in April. This will do nothing to …
Office and retail occupier activity stages a comeback The latest RICS survey showed that office and retail occupier activity improved significantly in Q1 and that respondents were more positive about the prospects for property over the next 12 months. But …
A further pickup in exports drove continued strong Taiwanese GDP growth in Q1, but we expect the economy to lose momentum over the coming quarters as the external sector weakens and COVID-19 weighs on consumer spending. GDP grew by 1.56% q/q in the first …
Activity to recover strongly across Q2 The strong rebound in retail sales in March suggests that the post-Omicron recovery got off to a good start. Meanwhile, industrial production edged up last month, but it will continue to be held back by supply …
Surprising resilience in March, but deeper downturn likely in Q2 The latest activity data for Russia beat expectations in March and suggest that the economy entered a softer downturn than had been expected. We have reservations about the accuracy of the …
27th April 2022
Still a long way back to previous peaks for some of the worst-hit metros The recovery in employment broadly continued in March. However, the laggards in the recovery still look many months away from previous peaks in terms of both total and office-based …
Inflation jump to keep Copom tightening The jump in Brazilian inflation to 12.0% y/y in the middle of April, coming alongside the recent fall in the real, means Copom will almost certainly raise the Selic rate by another 100bp (to 12.75%) when it meets …
Inflation to surpass 6% Inflation surged in Q1 and is on track to surpass 6% later this year, exceeding the levels reached around the GST hike in 2000. With trimmed mean inflation already higher than at the start of previous tightening cycles, the Reserve …
Month-on-month house price growth hits record high Month-on-month house price growth rose to a record high in February, as households desperate to buy before interest rates increased bid up the price of those few homes for sale. But the surge in mortgage …
26th April 2022
Equipment investment resilient The solid increase in durable goods orders in March reflects both easing supply shortages as well as strong underlying investment demand. Business equipment investment is usually one of the more rate-sensitive parts of the …
Strong start to 2022, but higher rates will slow returns later in the year Total returns on the NCREIF index were strong again in Q1, at 5.3% q/q. That was led by industrial, where they reached 11% q/q, with apartments at just over 5% and the other …
Public finances won’t offer much help to the Chancellor in 2022/23 Total borrowing for the 2021/22 fiscal year overshot the Office for Budget Responsibility’s (OBR) March 2022 forecast by some £24bn, rounding out the third-worst year for the public …
Employment to continue to rebound Employment bounced back in March and it should continue to recover over the coming months as long as the reopening doesn’t go into reverse again. That should push the unemployment rate back down to its pre-virus level of …
A rebound is already underway following the economic hit from Omicron, which today’s provisional Q1 GDP figures show was relatively mild. But, after an initial pick up in Q2, we expect the recovery to slow as headwinds to growth mount. That should see the …
Slight recovery in April but Q2 contraction still likely The Ifo survey for April was a little stronger than we had expected and suggests that the services sector in particular is growing rapidly. But the index is still well below its pre-Ukraine war …
25th April 2022
Retail sales understate the pick-up in overall spending Retail sales were basically unchanged in February, but this understates the strength of total spending following the lifting of the Omicron wave restrictions on high-contact services. As consumer …
22nd April 2022
High energy costs keep squeeze on steel production Global steel production fell in y/y terms in March, as largest producer China recorded a decline for the third consecutive month this year. Looking ahead, we expect high energy costs to act as a …
Price pressures intensifying The rise in Mexico’s inflation to 7.7% y/y in the first two weeks of April was driven by a broad based strengthening of price pressures, which will be a concern for the central bank. This, alongside the increasingly hawkish US …
PMIs point to continued easing in economic growth The fall in the composite PMI in April suggests GDP growth has continued to slow as the cost of living crisis has intensified. But economic activity doesn’t appear to be collapsing. And, beneath the …
