House price inflation reaches 15-year high The gain in house prices reported by Halifax for February pushed the annual rate to 10.8%, its highest since June 2007. With new supply limited and mortgage rates still relatively low, we suspect that house price …
7th March 2022
Trade surplus won’t stay at record levels for long Trade volumes remained strong last month but are likely to soften over the coming quarters as China’s import-intensive construction sector cools further and rising inflation dampens demand for consumer …
Strong payrolls keep planned Fed tightening on track The stronger than expected 678,000 gain in non-farm payrolls in February and upward revisions to previous months gains is another sign that the real economy has considerable momentum, with the Omicron …
4th March 2022
Q4 strength unlikely to last The stronger-than-expected 0.5% q/q rise in Brazilian GDP in Q4 was mainly a result of turnaround in the agricultural sector, which is unlikely to be sustained. And in the meantime, high-frequency indicators for the services …
PMI rises further as housing activity accelerates The construction PMI rose to its highest level in eleven months in February. Although encouraging, supply constraints remain a major impediment and input costs high, which we think will limit growth in the …
Outlook for retail sales darkened by war in Ukraine The small rise in retail sales in January, after a steep fall in December, suggests that Omicron remained a drag on consumption. Although spending will have rebounded in February, higher energy prices …
Omicron impact proves short-lived The rebound in India’s February PMIs suggests that activity is bouncing back as the Omicron outbreak subsides. And we think that there’s still significant scope for the economy to grow rapidly over the coming quarters. …
Employment to shake off Omicron Employment fell back yet again in January after a strong rebound in December. But while employment might have fallen a bit further in February due to the Omicron wave, it should soon bounce back fast and push the …
Non-hydrocarbon sector recoveries get back on track February’s batch of whole economy PMIs showed that activity in non-hydrocarbon sectors in the Gulf rebounded after the short-lived disruption from the Omicron variant. Meanwhile, the Gulf economies are …
3rd March 2022
Inflation smashes through 50% Turkey’s headline inflation rate leapt again to reach 54.4% y/y in February due to the combination of the lira’s collapse in late-2021 as well as higher domestic energy prices and a large minimum wage hike at the start of …
US strategic oil reserves to fall further due to IEA-coordinated release US commercial oil stocks fell last week on the back of higher exports, lower imports and greater refinery use of crude oil. Strategic reserves also fell to their lowest since August …
2nd March 2022
Mortgage demand drops, but mortgage rates now set to fall back Mortgage rates rose further in February, reaching their highest since May 2019. That weighed on mortgage demand, with applications for home purchase falling to their lowest level since the …
Inflation to breach 6% in the coming months After February’s surprisingly strong inflation outturn and with energy prices surging, euro-zone inflation is very likely to rise above 6% in the coming months. It then looks set to remain well above the ECB’s …
House prices not headed for a bust following pandemic boom The further substantial rise in house prices in February took the increase since the pandemic began to a round 20% and begs the question whether house prices are getting too high. While we do …
High commodity prices clouds outlook India’s manufacturing PMI rebounded in February as the Omicron outbreak subsided and containment measures were scaled back. But the threat of a continued rise in commodity prices as a result of the war in Ukraine is a …
Output will return to pre-virus trend by middle of the year Q4’s jump in GDP brought output closer to its pre-virus trend and we think it will get there next quarter already. But with tighter monetary policy looming on the horizon, growth is set to slow …
Demand strong, supply constraints easing gradually The rise in the ISM manufacturing index to 58.6 in February, from 57.6, is another sign that demand remains strong, with the small rise in supplier delivery times and modest decline in the prices paid …
1st March 2022
GDP growth continues to surpass expectations GDP rose by more than expected in the fourth quarter and the preliminary estimate suggests that, despite the Omicron outbreak, GDP rose further in January. This continued strength supports our view that the …
Inflation rising, but ECB will pledge not to tighten prematurely The increase in inflation in Germany and much bigger jumps elsewhere mean that euro-zone inflation for February will come in well above expectations. However, the ECB has bigger concerns at …
Weaker borrowing likely to persist The muted rise in consumer credit in January suggests that the Omicron wave was still prompting households to exercise caution at the start of this year. With interest rates rising and the cost of living crisis only set …
More evidence that home movers remain active A third consecutive monthly rise in mortgage approvals suggests that housing market activity will remain higher than usual in the coming months as households continue to adjust to remote working. The rise in …
Net lending starts year on softer note Net lending to property fell back in January, after reaching its highest level in 18 months in December. But overall net lending remained in positive territory, though we expect a number of challenges to limit any …
Manufacturing recovery gathers speed The rise in South Africa’s manufacturing PMI in February suggests that the rebound in the sector picked up pace. But headwinds facing the industry and the wider economy mean this strength is unlikely to last. Figures …
Industry faring well as price pressures ease Manufacturing PMIs in February generally pointed to strong manufacturing conditions in the region, but the escalation of conflict in Ukraine adds to the clear downside risks to industry over the coming months. …
Another lacklustre showing The surveys suggest that the pace of economic growth edged up slightly in February. But it remains weak amid continued supply shortages, higher imported inflation, and persistent disruption to services activity. After declining …
Strong industry looks set to offset some of the Omicron hit February Manufacturing PMIs and Korean trade data show that regional industry had another strong month. This should offset some of the Omicron-related weakness in service sectors this quarter. …
House prices probably won’t start falling just yet Leading indicators remain consistent with solid house price growth, but if the recent moderation turns into an outright slump, the RBA will not hike rates as aggressively as we anticipate. The 0.1% m/m …
Economy slowed at end of 2021 but strong growth likely this year Indian GDP data for Q4 (Q3 of FY21/22) show that economic growth was slowing before the Omicron wave hit. That outbreak will have caused activity to weaken further in the early stages of Q1. …
28th February 2022
Robust performance, but downturn likely at start of 2022 Turkey’s economy weathered the initial fallout from the currency crisis well, with GDP rising by 1.5% q/q in Q4 of last year, but a downturn is likely at the start of this year. The Russia-Ukraine …
Consumption kept rising throughout Omicron wave The rebound in retail sales in January suggests that the Omicron wave had a much smaller impact than many had feared and consumption will probably keep rising this quarte r. The 1.8% m/m rise in retail sales …
Consumer spending will fall this quarter The falls in both retail sales and industrial production in January confirm that the Omicron surge has knocked back the recovery. We think consumer spending will fall across this quarter, but it should rebound …
Industrial steers better outlook for 2022 returns The latest IPF Consensus Survey suggests that commercial property will have a better year than initially thought. Our total returns forecast for 2022 is in line with that of consensus, but beyond this year …
25th February 2022
Real economy in good health The real economy appears to be in good health, suggesting that the Fed will push on with planned rate hikes starting in March, although the Ukraine conflict makes a 50bp hike less likely. The 1.5% m/m gain in real consumption …
Sentiment high before escalation in Russia-Ukraine conflict February’s increase in the EC Economic Sentiment Indicator showed that confidence was high before the recent news about the conflict in Ukraine. It also showed that supply shortages remained …
Rising US crude stocks won’t halt rise in oil prices US crude stocks rose by more than the consensus expected last week, but this was never going to halt the ongoing surge in oil prices. With all eyes now on the potential fallout from a Russian invasion …
24th February 2022
New home sales dip, but lack of existing home inventory will support demand After two strong months new home sales edged back in January and may dip further early in the year as the surge in borrowers who sought to buy prior to further interest rate rises …
Rising inflation means Banxico has more work to do The small rise in Mexico’s headline inflation rate to 7.2% y/y over the first half of February was driven by a jump in core inflation to 6.5% y/y, suggesting the central bank is struggling in its battle …
Investment to rebound in earnest in the years ahead We estimate that private investment rose by a modest 0.7% q/q in Q4, but firms’ expectations of future capital expenditure suggest investment will strengthen before long. The private capital expenditure …
Rising inflation suggests more rate hikes to come The stronger-than-expected rise in Brazil’s inflation to 10.8% y/y over the first half of February is likely to mean that the central bank’s tightening cycle has much further to run. We expect a cumulative …
23rd February 2022
Upside risks to inflation have risen Core inflation looks set to keep rising as the effects of global demand-supply imbalances persist. And the Ukraine crisis means that the risks to our above-consensus headline inflation forecasts lie to the upside. Data …
Wage growth to approach 3% by year-end The Q4 wage data won’t alter the RBA’s view that inflation isn’t sustainably within its 2-3% target band yet, but we still expect the Bank to start hiking in June as inflation surprises to the upside. The 0.7% q/q …
House price growth records strong end to 2021 Annual house price growth held steady in December, with prices up 18.8% over 2021. But with mortgage rates now at their highest since July 2019, affordability constraints will soon cut the amount potential …
22nd February 2022
Steel output starts the year on a weaker footing Global steel production fell in y/y terms in January, driven by a double-digit contraction in China. It appears that subdued demand in China is acting as a constraint on output. Our expectation of softer …
Economic conditions continue to improve The rise in the Ifo Business Climate Index (BCI) in February strengthens our view that conditions in the German economy continued to improve during Q1. While the latest escalation of Russia-Ukraine tensions will …
Borrowing in the black, but inflation still a burden Public sector net borrowing was in surplus in January as the figures were flattered by the usual bump from higher income tax receipts. Nonetheless, it was a smaller surplus than the Office for Budget …
Global aluminium output off to a slow start Global aluminium output fell by 4.5% y/y in the first month of 2022. A combination of high power prices in Europe and the New Year festival in China dragged down refined aluminium production. Looking ahead, we …
21st February 2022
Omicron just a blip, more signs of supply shortages easing February’s punchy flash PMIs provide even more evidence that the economy has rebounded swiftly after the hit from Omicron. And beneath the headline numbers, there are tentative but encouraging …
Activity rebounding The surge in the euro-zone flash Composite PMI in February suggests that activity is recovering well and supports our view that GDP will rise by around 0.5% q/q in Q1. There are tentative signs that supply chain problems are fading – …
Economic activity continued to thrive in January Poland’s economic recovery continued to motor along at the start of this year as industrial production and retail sales growth picked up sharply in January. This came alongside further signs of an …
After a strong rebound in Q4, the pace of Thailand’s economic recovery over the coming year will largely depend on how quickly tourists return. While we expect a sustained recovery in the tourism sector to get underway this year, arrivals will still be …
