Strong rebound from sizeable Omicron hit The February flash PMIs suggest that the Omicron wave has dealt a significant blow to economic activity. But with that wave now having broken, we think Japan’s economy is set for a rebound stronger than the …
21st February 2022
Strong rebound in GDP supports case for “higher for longer” interest rates The 4.7% expansion in Russian GDP in 2021 is consistent with a marked acceleration in growth in Q4. We expect the recovery to slow this year but the backdrop of a large and …
18th February 2022
Home sales surge as buyers rush to lock in low financing costs Existing home sales jumped 6.7% m/m in January, but that gain is likely to prove short-lived. Strong activity over the turn of the year is due to households rushing to buy to lock in a low …
Weak December, but strong start to 2022 Retail sales fell in December as the Omicron wave took hold but, rather oddly, the preliminary estimate suggests that decline was more than revered in January, even as coronavirus restrictions were reimposed. The …
Hand of the hawkish triumvirate strengthened The increase in Swedish CPIF excluding energy was significantly higher than expected and pushed the core rate above the Riksbank’s 2.0% target for the first time in nearly three years. While we expect headline …
Omicron recovery underway, but cost of living crisis beginning to bite A solid rebound in retail sales in January suggests the hit to activity from Omicron was smaller and shorter than previously thought. Even so, the cost of living crisis will restrain …
Inflation will break past 1% in April Inflation slowed in January but that was entirely down to the base effects boost from the Go To Travel campaign disappearing. While underlying inflation is unlikely to reach 1% until later in the year, we think …
Single-family starts set for another, albeit more modest, rise in 2022 Single-family starts fell for the second month in a row in January, but a rise in building permits to a one-year high means they will soon resume their upward trend. New home sales …
17th February 2022
Growth unlikely to remain strong for much longer Nigeria’s GDP growth was unchanged at 4.0% y/y in Q4 as a slightly smaller drag from the oil sector was offset by a weaker performance in the non-oil economy. But we think that growth will drop back over …
Unemployment rate to resume its descent before long The further rise in Australian employment despite the Omicron outbreak in January highlights the resilience of the Australian labour market and supports our forecast that the RBA will hike rates in June. …
Exports to be a tailwind to recovery Exports were broadly unchanged in January despite Omicron surges at home and abroad. We think they’ll rebound further this year as external demand for capital goods rises further and motor vehicle exports resume their …
Omicron is likely to prove only a small stumbling block on the road to recovery after the strong growth of late 2021. We still expect GDP to return to its pre-pandemic trend later this year. The second estimate of Q4 GDP shows that output grew at a rapid …
Stocks in Cushing likely to build in the coming weeks Commercial stocks in the US rose last week as refinery inputs fell and net imports increased. However, stocks in the WTI storage hub of Cushing, Oklahoma, dwindled further, causing WTI prices to rise. …
16th February 2022
Further evidence of limited Omicron impact The 1.4% m/m rebound in industrial production in January appears to confirm that the Omicron wave has had surprisingly little impact on the economy. That said, the weakening global backdrop suggests manufacturing …
Rebound after December seasonal problems The strong 3.8% rebound in retail sales in January is not quite as good as it looks, since it is mainly a recovery from the revised 2.5% drop in December. But with the modest decline in food and drink services …
Peak in inflation yet to come Consumer price inflation rose by more than expected at the start of 2022 and the breakdown suggests that inflationary pressures are broadening, which adds to the pressure for the Bank of Canada to begin tightening policy next …
Rapid acceleration bolsters case for interest rate hike Israel’s economic recovery unexpectedly accelerated at the end of last year, with the 16.6% annualised rise in GDP in Q4 pushing it far above its pre-pandemic trend. Alongside the rise in inflation …
Economy shrugs off Omicron December’s hard activity data show that South Africa’s economy held up well in the face of the Omicron virus wave. GDP probably expanded by around 0.9% q/q in Q4, implying growth of 4.6% over 2021 as a whole. But growing …
Input shortages remain severe The rise in euro-zone industrial production in December took it above its pre-pandemic level and timelier evidence points to a small increase at the start of this year. But input shortages remain severe and the continued …
Inflation past its peak South Africa’s headline inflation rate edged down to 5.7% y/y in January, and with soft core inflation and a bumpy economic recovery, the monetary tightening cycle is likely to be more gradual than most expect. Figures released …
CPI inflation may rise to a peak of nearly 8.0% in April The rise in CPI inflation in January from 5.4% to a new 30-year high of 5.5%, the latest rise in oil prices and the new item weights mean that we now think CPI inflation will rise to a peak of 7.9% …
Inflation still not a concern in China Chinese inflation continued to drop back last month. Although there are some signs of supply disruption, we think these will be temporary. Factory-gate inflation should moderate further while consumer price inflation …
Strong end to 2021 but headwinds building The stronger-than-expected 4.3% q/q surge in Colombia’s GDP in Q4 took output back to its pre-pandemic trend, confirming the recovery has been one of the quickest in the region. Although we still think growth will …
15th February 2022
Inflation moving sideways Inflation in Nigeria was unchanged at 15.6% y/y in January and the headline rate will probably soften only gradually. At this point, however, policymakers are unlikely to hike interest rates in response. Figures released today …
Recovery to resume and labour market to tighten further The small increase in euro-zone GDP in Q4 confirms that the region’s economy was struggling at the end of 2021. But with Omicron under control and restrictions being eased, we expect the recovery to …
Strong end to Q4 but headwinds will put the brakes on recoveries Q4 GDP data for Central and Eastern Europe (CEE) were generally stronger-than-expected as policymakers responded to virus outbreaks with only light-touch restrictions and easing supply …
Inflation to drift upwards Saudi inflation stabilised at 1.2% y/y in January and, while we think it will increase over the coming months, it is likely to hover around 1.0-1.5% over the rest of 2022 and 2023. Data released this morning showed that Saudi …
A recipe for further interest rate hikes Employment has recouped the falls after the furlough scheme, the unemployment rate has fallen to pre-COVID levels, job vacancies are at a record high and wage growth is rising. That’s a recipe for more interest …
Economy to bounce back fast from Omicron hit While Omicron will cause Japan’s economy to do little more than tread water this quarter following a rebound in Q4, output should soon resume its recovery and get back on its pre-virus trend by the end of the …
Inflation likely to breach the RBI’s target soon Indian consumer price inflation reached the 6% ceiling of the RBI’s target range in January and, in contrast to the central bank, we think it will rise a bit further over the coming months. That will …
14th February 2022
Commercial property debt growth strong again, but lower than recent months Commercial real estate debt growth slowed in January, although that still left it at a decent level. . At this stage it is difficult to be sure whether slowing growth indicates a …
Solid end to 2021 but bumpy road ahead The solid 1.2% m/m rise in Mexico’s industrial production in December was partly driven by a strong rise in auto production as global supply shortages eased. However, Omicron-related disruption will probably cause …
11th February 2022
Core inflation to stay well above 2% this year The upside surprise to Germany’s headline inflation rate in January was mostly due to higher energy prices rather than rising underlying inflation. Nonetheless, core inflation of 2.9% is well above the …
Swiss inflation at a 13-year high but will head down from here Inflation was stronger than expected in Switzerland in January, although the upward surprise was not in the same league as that seen in the euro-zone and Swiss inflation is still consistent …
Shrugging off Omicron, but big squeeze in real incomes lies ahead When combined with the CPI inflation rate of 5.4%, the 0.2% m/m fall in GDP in December meant that the economy experienced a taste of stagflation at the end of last year. As it was driven …
Consumer-led sectors drive downturn at end of 2021 Turkey’s latest activity figures suggest that easing supply constraints and the boost to competitiveness from a weak lira supported industry in December, but household spending suffered as the currency’s …
Recovery to continue after strong Q4, but policy rate hikes still unlikely Malaysia’s economy rebounded strongly last quarter and, despite headwinds from Omicron, should continue to recover throughout 2022. The 6.6% q/q expansion in Q4 more than reversed …
Core inflation showing few signs of slowing The 0.6% m/m rise in consumer prices in January was slightly stronger than we had expected and illustrates that, even as the earlier upward pressure from rising energy prices and goods shortages fades, …
10th February 2022
Credit growth hits 6-month high Broad credit growth accelerated for the third consecutive month in January as policy support continued to feed through. With more easing on the horizon we expect this trend to continue for a while. But a sharp pick-up in …
Saudi ends the year on a strong note; Egyptian inflation jumps Saudi Arabia’s economy grew by a stronger-than-expected 1.6% q/q in the final quarter of 2021 and we think rising oil production will drive above-consensus growth this year. Elsewhere, Egypt’s …
Fall in CPI-ATE unlikely to deter the Norges Bank Given the backdrop of a tightening labour market, the fall in CPI-ATE is likely to be a one-off. We think that once the latest wave dissipates, the core inflation rate will pick up again and may rise above …
Housing market remained exceedingly tight at the start of 2022 The largest rise in new buyer enquiries for nine months and a reversal of the December dip in sales volumes confirmed that the housing market remained extremely tight at the start of the year. …
US demand growth to falter later in the year Crude oil and product stocks fell last week, reflecting robust US demand. However, we think growth in product demand will slow over the course of this year in tandem with slower growth in the US economy . The …
9th February 2022
Inflation continues to rise, another large rate hike incoming The latest data show that Russia’s economy grew strongly in December and that consumer price inflation rose to 8.7% y/y in January. The inflation reading was weaker than expected, but inflation …
Rising core inflation to prompt another 50bp hike from Banxico The fall in Mexican inflation to 7.1% y/y suggests that the headline rate has peaked, but the central bank will remain concerned about rising core inflation. As such, we expect another 50bp …
Goods trade to move back into surplus in January Goods trade moved into a modest deficit in December but, with oil prices rising sharply since then, it should return to surplus in January. A 3.7% m/m rise in imports and a 0.9% decline in exports resulted …
8th February 2022
Exports and imports set for continued strong growth The solid gains in both exports and imports in December are a signal that global supply chain problems are easing, although the further widening in the trade deficit suggests that net trade will be a …
Wage growth will bounce back Wage growth turned negative in December due to another fall in end-of-year bonus payments, but it should soon bounce back above 1% y/y this year as the labour market tightens and strong corporate profits feed into a recovery …
Slowdown unlikely to signal cooling market yet The smaller gain in house prices in January reported by Halifax is unlikely to mark the start of a sharp deceleration in house price growth. With the supply of homes for sale still very limited and mortgage …
7th February 2022
Disappointing end to a terrible year The small decline in production in December was not quite as bad as it looks because it was largely due to a fall in construction activity, but 2021 was still a terrible year for German manufacturers as supply chain …
