Services sector propping up activity, but for how long? The rise in the euro-zone Composite PMI in April suggests that the services sector rebound from the Covid restrictions earlier in the year is offsetting weakness in the manufacturing sector. But with …
22nd April 2022
Solid expansion in Q1, but growth to soften this quarter Industrial production and retail sales figures in Poland remained incredibly strong in March and point to a solid expansion in Q1. A lot of this strength is unlikely to last as the effects of the …
Gloomy signs of spending crunch The hefty fall in retail sales in March marks the second consecutive month of decline and adds to signs that the real wage squeeze is hitting consumer spending. With CPI inflation already at a 30-year high and set to keep …
All set for 2% Inflation picked up in March due to a further rise in utilities inflation and a jump in food inflation. And headline inflation will hit 2% in the April data released in just under a month’s time as most of the drag from mobile phone tariffs …
Consumption to be a significant drag on growth The rise in consumer confidence in April was slightly better than expected. Nevertheless, confidence is still very low and points to household spending falling in April. That’s consistent with our assumption …
21st April 2022
Inflation hasn’t peaked yet Headline inflation rose to 7.4% in March and further increases are likely. This will put a big dent in consumer spending, so we think that 2022 will be a year of stagflation for the euro-zone. Data released this morning showed …
Inflation is now around its peak The 1.8% q/q rise in consumer prices in Q1 was broadly in line with the RBNZ’s expectations, which reduces the likelihood of another 50 basis point hike in the OCR in May. But we still think high inflation throughout 2022 …
US commercial crude oil stocks look set to recover this year Commercial crude oil stocks fell last week on the back of a rise in exports and a decrease in imports. Going forward, though, the US government’s plan to further draw down its strategic oil …
20th April 2022
Higher mortgage rates weigh on home sales Surging mortgage interest rates pushed March existing home sales down to their lowest since the height of COVID-19-restirctions in mid-2020. We expect mortgage rates to rise further over the next year, and that …
Further surge in inflation a big surprise for the Bank The surge in inflation in March was much larger than the Bank of Canada expected and suggests it will follow its 50 bp interest rate hike last week with another similar-sized move at its next meeting …
High power costs keep a lid on aluminium output. Global aluminium output fell by 1.5% y/y in March with high power costs keeping a lid on production growth. Looking ahead, we expect regions where energy prices are more manageable to continue to increase …
Inflation near top of target range The rise in inflation in South Africa in March, to 5.9% y/y, will keep the Reserve Bank’s tightening cycle going at the next meeting in May. But the weakness of core inflation supports our view that interest rates will …
Shortages still hampering exports The export data were disappointing again in March, though exports are set for a strong rebound once supply shortages ease in hard-hit sectors such as automobiles. The 14.7% annual rise in export values in March was weaker …
Starts rise but face headwinds from materials shortages Housing starts rose a by a marginal 0.3% m/m in March, driven by the volatile multifamily sector. Single-family starts saw a small fall, as did building permits. While we expect new home demand to be …
19th April 2022
Worse is still to come Official GDP growth beat expectations last quarter but it still slowed in q/q terms. In practice, the figures probably understate the slowdown. And growth looks set to be even weaker in Q2 given the mounting disruption from the …
18th April 2022
Output surging as bottlenecks clear The strong 0.9% rise in industrial production in March reflected a sharp rebound in autos production as well as another big increase in mining output. The US will not be immune to the global slowdown in manufacturing …
15th April 2022
Surge in energy prices hits real consumption The 0.5% m/m rise in retail sales in March was flattered by a price-related surge in the nominal value of gasoline sales, with the details suggesting that consumption fell in real terms. The 18% m/m surge in …
14th April 2022
Producers ramped up despite protest blockades The 4.2% m/m rebound in manufacturing sales in February was much better than we were expecting, as firms continued to boost production even though the blockade at the key Ambassador Bridge border crossing …
Inflation to drift higher Saudi inflation rose to 2.0% y/y in March on the back of stronger food and transport prices, and we think it will continue to strengthen over the coming months and peak at around 2.5% y/y in Q3. Data released today showed that …
Activity figures paint downbeat picture South Africa’s hard activity data for February were a stark contrast to the recent upbeat surveys as output dropped back in the mining, manufacturing and retail sectors. Electricity problems, fiscal austerity and …
Rising market rates tighten conditions Banks expect mortgage availability to fall back in Q2 as lenders push up borrowing rates to reflect increases in Bank Rate, but other lending criteria are expected to be stable or loosen. The availability of mortgage …
Inflation at a 31-year high The stronger-than-expected increase in Swedish inflation in March is likely to give more ammunition to the hawks in the Riksbank, and lends support to our view that the Bank will start to raise the repo rate and press ahead …
Signs of a more balanced market emerging The latest RICS survey brought early signs that, having been a sellers’ market for the past two years, the balance is shifting. That suggests we are right to expect a moderation in house price growth in the second …
Unemployment rate to fall further before long The unemployment rate remaining at its joint lowest rate since the 1970s should be enough to keep the RBA on track to begin hiking rates in June. The 17,900 rise in employment was lower than the Bloomberg …
SPR releases to boost commercial stocks significantly in months ahead Crude stocks in commercial storage shot up last week, as the US government made more sales from its strategic reserve and refineries curbed output in the wake of weaker demand. With …
13th April 2022
High inflation means BoE will have to raise rates further than it expects The rise in CPI inflation in March from 6.2% to a new 30-year high of 7.0% was the sixth upside surprise in as many months and will pile more pressure on the Bank of England to …
Demand not supply is mostly to blame for pullback Goods trade dropped back sharply last month. While disruptions from the latest COVID-19 outbreak are partly to blame, shifts on the demand-side played a bigger role. Export growth decelerated from +16.3% …
Business investment to bounce back from Omicron The sharp fall in machinery orders in February supports our view that business investment fell further in Q1 after a disappointing 2021. However, survey evidence and strong corporate profits point to firms …
Inflation set to fall sharply over rest of the year The surge in energy prices helped drive headline CPI inflation up to a 40-year high of 8.5% in March but, with base effects set to become much more favourable and signs that monthly gains in core prices …
12th April 2022
Inflation surges to 17-month high Headline consumer price inflation soared beyond even our above-consensus forecast in March and, given that it is likely to rise further over the coming months, we think the RBI will start hiking the benchmark repo rate …
Mounting signs of stagflation Final inflation data for Germany in March and the first survey of economic sentiment for April underline the acute problems which the German economy now faces. Energy inflation and underlying price pressures are rising even …
Industry and retail sales on diverging paths Turkey’s activity data for February point to a growing divergence between industry, which is being supported by a weak lira, and retail sales which continues to struggle in face of the surge in inflation. On …
Some signs of a softening in labour demand The latest batch of data brought some signs of a softening in labour demand, but with the unemployment rate having fallen to pre-COVID levels, job vacancies at a record high and wage growth rising, the labour …
Industrial recovery stalling The disappointing 1.0% m/m fall in Mexico’s industrial production in February was partly because a temporary boost to mining output at the start of the year reversed course. But there were broader signs of weakness in industry …
11th April 2022
Credit growth rebounds to an eight-month high Broad credit growth was much stronger than expected last month amid increased policy support. With more easing on the horizon, we expect a further acceleration although a sharp pick-up in lending still seems …
Lower-than-expected inflation won’t stop Norges Bank hiking Although headline and core inflation came in below expectations in March, underlying price pressures are likely to push both measures up a bit in the coming months. Meanwhile, the Norges Bank is …
Recovery slowing and at risk of stalling The news that the economy was hardly growing at all in February suggests the economy had a little less momentum in Q1 than we had previously thought, and increases the risk of a contraction in GDP in the coming …
Inflation climbs amid higher commodity prices Factory gate inflation picked up last month, though this was masked in the headline figures by base effects. Consumer prices continued to rise as well. Although the price of some goods will stay high in the …
Largest monthly increase since the late-1990s The 7.6% m/m rise in consumer prices in Russia in March was the highest monthly increase since the 1990s. It pushed the headline inflation rate up to 16.7% y/y and we think it will rise towards 23% y/y in the …
8th April 2022
Unemployment rate falls to lowest since the 1970s Another solid rise in employment drove the unemployment rate down to a 48-year low of just 5.3% in March, but the still-muted pace of wage growth suggests the Bank of Canada may not need to tighten policy …
Inflation spikes to keep central banks in tightening mode The larger-than-expected rises in inflation in both Chile and Brazil last month (to 9.4% and 11.3%, respectively) support our view that their central banks will raise interest rates by more than …
Inflation has not yet peaked The rise in Mexico’s headline and core inflation in March, to 7.45% y/y and 6.8% y/y respectively, has further to run in the near term as food and energy inflation edges higher. Broader price pressures will also remain strong, …
7th April 2022
Modest growth before the war in Ukraine The small increases in euro-zone retail sales and German industrial production suggest that economic activity was growing at a modest pace in February. With much higher energy prices now weighing on manufacturing …
Still no sign of house price growth cooling Another large jump in house prices in March kept Halifax’s measure of house price inflation comfortably in double figures. With competition between buyers still intense, house price inflation could remain high …
US commercial oil stocks unexpectedly rise, dragging prices down Commercial crude stocks rose last week, beating market expectations of a decline, due to rising domestic production and another sale from the Strategic Petroleum Reserve. If sustained, …
6th April 2022
Southern metros set to remain the big winners at the expense of the north The jobs recovery continued in February, for both total employment and office-based roles. But the divergence in performance of the last two years is persisting, reinforcing our …
Mortgage rates rise toward 5% Mortgage rates continue their upward climb in March, reaching a 40-month high of 4.9% by the end of the month. As yet, that has done little to cut home purchase demand. Indeed, applications saw a marginal increase last month. …
PMI results mixed, with more concern on the horizon The continued strength of the construction PMI in March suggests that activity in the sector increased despite ongoing headwinds from supply constraints and cost inflation. The rise in new orders …
Omicron rebound continued, but inflationary risks growing India’s March PMIs show services as the bright spot last month as looser virus restrictions allowed activity to rebound. Unless COVID-19 cases pick up again, the outlook for the services sector …
GDP growth hit by falling exports Although the nominal trade deficit was unchanged at $89.2bn in February specifically, the recent weakness of real exports suggests that net trade was a substantial drag on first-quarter GDP growth. The stability of the …
5th April 2022
