Goods trade surplus to widen again soon The goods trade surplus unexpectedly narrowed in February but, with commodity prices rising strongly since then and some of the jump in imports set to be reversed, it will rebound in March. The goods trade surplus …
5th April 2022
Regional divergence widens on back of war in Ukraine March’s batch of whole economy PMIs were a mixed bag but further highlighted that the spillovers from the war in Ukraine are driving a divergence between the Gulf and non-Gulf economies. In Saudi …
Output expectations hardest hit in Germany March’s final euro-zone PMI surveys confirmed that output expectations fell sharply, with Germany experiencing the biggest drop. Meanwhile, price pressures remain intense across the currency union. The small …
Wage growth to accelerate further Japanese wage growth strengthened in February and we think it will accelerate further over the coming months as overtime and bonus pay continue to recover. However, as the post-Omicron rebound wears off wage growth should …
Long-run inflation expectations remain well-anchored The Bank of Canada’s latest quarterly surveys suggest that firms’ and consumers’ long-run inflation expectations remain well anchored, which the Bank could use to justify a slower tightening cycle than …
4th April 2022
Inflation leaps above 60% Turkey’s headline inflation rate recorded another sharp rise to reach 61.1% y/y in March and it is likely to rise a bit further over the coming months. But there is still little sign that the central bank and, crucially, …
Higher commodity prices beginning to take a toll India’s manufacturing PMI dropped back in March as high commodity prices caused by the war in Ukraine began to take a toll on the sector. Given that fuel and gas prices have only climbed higher since the …
Global manufacturing slowdown will spread to US soon The unexpected decline in the ISM manufacturing index to 57.1 in March, from 58.6, still leaves it at a healthy level and, with other US manufacturing surveys strengthening last month. Nevertheless, the …
1st April 2022
America is going back to work The 431,000 rise in non-farm payrolls is another sign that the real economy has plenty of momentum, though with those gains now being helped by a stronger rebound in the labour force, there are signs that wage growth may have …
Industry still a weak point in the recovery The better-than-expected 0.7% m/m rise in Brazilian industrial production in February was supported by a rebound in mining, which is likely to prove temporary. And surveys point to renewed weakness last month. …
Solid recovery in Q1 will add to SARB’s hawkishness The further rise in South Africa’s manufacturing PMI in March to a record high provides further evidence that the economy has rebounded strongly from the Omicron-driven dip in activity at the end of last …
Inflation overshoot will soon prompt ECB into action With euro-zone inflation rising even further above the ECB’s forecast, and likely to remain very high for the rest of the year, we think it won’t be long before the Bank starts raising interest rates. …
War in Ukraine takes its first toll on the region’s industry Manufacturing PMIs declined across the region in March amid the war in Ukraine, and with supply chain disruptions and price pressures set to intensify, industry looks set to contract in the …
Swiss inflation to remain above 2% for much of this year Swiss inflation rose further above the SNB’s definition of price stability in March, and higher commodity prices and continued supply problems will keep it there for most of this year. Given the …
Largest hit to industrial activity in two years The Caixin manufacturing index published today fell under 50 last month as measures to contain the latest virus outbreak weighed heavily on industry and, taken together with the official survey published …
House prices to fall in 2023 We continue to expect house prices to begin falling across the eight capital cities in 2023. But the price declines in Sydney and Melbourne in March suggest that the downturn could be starting sooner than we had anticipated. …
Tough times ahead for Asia’s export-focussed industry While Korean trade data show exports remained buoyant, regional Manufacturing PMIs point to lost momentum. With headwinds to export-focussed industry mounting, there are tougher times ahead. March PMIs …
Economy will shake off Omicron hit The fall in the Q1 Tankan suggests that GDP almost certainly contracted last quarter. However, non-manufacturing sentiment held up better-than-expected during the Omicron wave and the labour market continued to tighten. …
Solid January followed by strong February Following the moderate gain in GDP in January, the preliminary estimate of a further 0.8% m/m surge in activity in February will fuel speculation that the Bank of Canada will hike its policy rate by a bigger 50bp …
31st March 2022
Industrial recovery faces new headwinds Output from India’s core infrastructure industries picked up in February as the Omicron wave subsided. But the surge in commodity prices as a result of the war in Ukraine is likely to squeeze profit margins and …
Labour market very tight prior to Ukraine war The euro-zone unemployment rate edged down yet again in February, to a record low of 6.8%. There is little sign yet that this is feeding through to higher wages. But labour market conditions are set to remain …
Households using savings to offset the fall in real incomes The leap in inflation was behind the fall in real household disposable incomes in Q4 of last year. But it is encouraging that households appear willing to reduce their saving rate in order to …
House price growth hits 18-year high, but slowdown expected The acceleration in house price growth to an 18-year high of 14.3% will add to concerns that the pandemic housing market boom is getting out of hand. With mortgage rates rising, house price …
The biggest hit since Wuhan The surveys add to growing evidence of a large blow to service sector activity amid the latest virus surge. The hit to industry looks to have been much more modest. But even so, the economy is in the midst of its most abrupt …
Supply shortages will continue to hold back output Industrial production was broadly unchanged in February after two monthly falls that still left output well below its pre-supply shortages peak. The 0.1% m/m rise in industrial output was weaker than the …
High prices hitting demand; don’t rule out shale sector just yet Crude stocks fell again last week, as healthy profit margins appear to be driving an upturn in refinery activity. That said, high product prices are also taking their toll on consumer …
30th March 2022
Ouch! German inflation hits 40-year high After a further huge jump in March, German inflation is likely to average at least 7% this year, and there are plenty of upside risks, not least the threat of power shortages. With price pressures remaining very …
Chances of a manufacturing recession increasing The European Commission business and consumer survey for March is consistent with our view that economic growth will be slower than most anticipate this year while inflation will overshoot expectations. The …
War in Ukraine punctures economic sentiment The EC’s Economic Sentiment Indicators unsurprisingly fell in most countries in March amid the fallout from the war in Ukraine and there were further large increases in price pressures on the back of rising …
Consumer spending to recover strongly Retail sales dropped again in February, making it almost certain that consumer spending fell across Q1. Looking into Q2 though, private consumption is well set for a strong, booster-boosted rebound. The 0.8% fall in …
House price growth starts 2022 on a strong note, but will slow this year The rebound in house price inflation seen at the end of last year continued into 2022, with annual growth on the Case-Shiller measure moving back above 19%. But housing market …
29th March 2022
Modest net lending set to continue Net lending to property eased further in February, though it remained in positive territory. We expect lending trends to remain fairly subdued as both economic and sector specific challenges loom over the coming months. …
Households still happy to spend The leap in credit card borrowing in February and smaller increase in household savings could suggest that the cost of living crisis is already starting to bite. But we think it is more likely that households had the …
Decline provides an early sign that demand has begun to wane Higher than usual home moving activity ensured that mortgage approvals remained substantially above pre-virus levels in February. But the decline compared to January could be an early sign that …
Economy resilient but headwinds growing Vietnam’s economy recorded solid growth in the first quarter of the year as the economy brushed off the impact of the Omicron wave, but while we expect the recovery to continue over the coming months, new headwinds …
Consumption rose strongly in Q1 The further rise in retail sales in February still leaves them a touch below their November peak but is consistent with our forecast of a solid rise in consumption in Q1. The 1.8% m/m rise in retail sales values in February …
Employment to rebound strongly Employment was unchanged in February after January’s sizeable fall. But with all domestic restrictions since lifted and activity resuming its recovery, employment is set for a strong rebound over the coming months which …
Inflation set to jump, Copom to continue hiking The stronger-than-expected Brazilian inflation reading for the first half of March, of 10.8% y/y, will be followed by a jump to 11.5-12.0% in the near term as recent fuel price hikes filter through. While …
25th March 2022
Manufacturing contraction looming March’s Ifo business survey provides further evidence that Germany is heading for a sharp slowdown as the war in Ukraine and sky-high energy prices cause manufacturing output to contract. However, we still think a …
Small fall a sign of things to come The small fall in retail sales in February probably had more to do with the shift back towards non-retail spending and the impact of Storm Eunice than it did the cost of living crisis. But, with further rises in …
Equipment investment still set for stronger Q1 The February durable goods orders data were weaker than we had expected, even controlling for the slump in commercial aircraft orders, but the details are still consistent with first-quarter business …
24th March 2022
Core inflation continues to march higher While Mexico’s headline inflation stabilised at 7.3% y/y in the first half of March, the further rise in the core rate to 6.6% y/y suggests that the central bank is still struggling to keep a lid on price …
War impact on activity small so far, but inflation risks intensify The surprisingly small fall in the composite activity PMI in March suggests that the war in Ukraine didn’t take that much steam out of the economy at the end of the first quarter. That …
Slower growth, higher inflation March’s euro-zone PMI survey is consistent with our view that the economy will grow more slowly than most anticipate this year, while inflation will overshoot expectations. The small fall in the Composite PMI, from 55.5 in …
War in Ukraine intensifying price pressures on firms The March flash manufacturing PMI suggests that the war in Ukraine has intensified supply chain disruption for firms. By contrast, activity in the services sector bounced back and should continue to …
Record high fuel prices to constrain US oil demand US commercial crude oil stocks fell last week, driven by a decrease in net imports and greater refinery inputs. Demand also inched higher, but we suspect high prices will limit further gains . In its …
23rd March 2022
Outlook for consumption darkened by war in Ukraine The huge fall in consumer confidence in March suggests that consumption may have contracted as the war in Ukraine and higher energy prices reduced households’ willingness and ability to spend. In turn, …
Decline in new home sales not the start of a downward trend New home sales fell for the second month in a row in February, as builders limited them to catch-up with the backlog of homes under construction. Higher mortgage rates will act to cool overall …
Inflation unchanged, but SARB to press ahead with tightening South Africa’s headline inflation rate was unchanged at 5.7% y/y in February but, with the war in Ukraine increasing upside inflation risks and signs that the economic recovery has been robust …
High inflation means both the Chancellor and BoE have more work to do The further rise in CPI inflation from 5.5% in January to a new 30-year high of 6.2% in February adds to the pressure on the Chancellor to offset more of the cost of living crisis in …
