Cyclical price pressures rapidly building The more muted 0.2% m/m increase in core consumer prices in September is not as encouraging as it looks, since a temporary Delta-related drop back in the prices of high contact services masked a worrying …
13th October 2021
Economy struggling to overcome July hit South Africa’s hard activity data for August point to a bumpy recovery following a large hit to the economy in July, adding to reasons to think that interest rates are unlikely to be raised imminently. Figures …
Credit growth at its slowest in 15 years Broad credit growth continued to slide in September and is now at its slowest pace since December 2005. We think credit growth will level off in the coming quarters, as PBOC policy turns more supportive in response …
Supply shortages biting The large decline in euro-zone industrial production in August was largely due to supply shortages affecting production, particularly in the German auto sector. While demand is still strong, prolonged supply shortages and high …
Shortages may now be biting harder The 0.4% m/m rise in GDP in August confirms that the rapid gains in output, which in just 16 months lifted GDP from being 25.1% below its February 2020 pre-pandemic peak to 0.8% below, are now behind us. And shortages, …
Strong exports ease power rationing concerns September exports beat even our above-consensus expectations. Coupled with separate data showing that electricity consumption held up well last month, this suggests that the hit from power rationing has largely …
Recovery in business investment to gather pace The fall in machinery orders in August supports our view that the recovery in business investment stalled a little across Q3. But private investment should rebound more strongly in Q4 and into next year …
Drop in headline inflation still has further to run India’s consumer price inflation dropped further below the 6% ceiling of the RBI’s inflation target range in September, and we expect it to remain there for several more months. That’s one reason to …
12th October 2021
Industrial output grinds higher despite auto weakness The stronger-than-expected 0.4% m/m rise in Mexico’s industrial production in August suggests that the economy may have held up better than we had previously anticipated in Q3. But, under the surface, …
Economy bounces back from weak start to Q3 Turkey’s industrial sector bounced back in August following a weak start to the quarter and, while retail sales growth slowed, it looks like the economy recorded another robust increase in GDP in Q3. Industrial …
Tight market may tip MPC towards earlier rate hike The further strengthening of the labour market in August may prompt some members of the Monetary Policy Committee (MPC) to put more weight on the upside risks to inflation rather than the downside risks …
Weak core inflation will not prevent December rate hike There was nothing in today’s release of Norwegian inflation data for September to overly trouble the Norges Bank, or cause it to deviate from its stated intention to raise interest rates again in …
11th October 2021
Wage growth still moderate despite strong employment gain The surprisingly strong gain in September means that employment is now back in line with its pre-pandemic level, but the still elevated unemployment rate and only moderate pace of wage growth …
8th October 2021
Labour shortages are only getting worse The disappointing 194,000 gain in non-farm payrolls in September probably still counts as “decent” enough for the Fed to begin tapering its asset purchases next month. But alongside signs that activity growth is …
Inflation jumps but nearing a peak The jump in Brazilian inflation to 10.2% y/y in September was largely a result of the hike in household electricity tariffs last month and, while the headline rate is at – or very close to – a peak, it will remain at …
High inflation to prompt more aggressive hikes The jump in Chile’s inflation to 5.3% y/y in September suggests that the central bank may once again ramp up the pace of its tightening cycle. We now think it is more likely than not that it will deliver a …
Wage growth to strengthen further Wage growth recovered a touch further in August and it should rise higher over the coming months as the labour market tightens and vaccines allow a full recovery in overtime and bonus payments. Meanwhile, the sharp drop …
Rising inflation to prompt more rate hikes The rise in Mexico’s headline and core inflation to 6.0% y/y and 4.9% y/y in September adds to our view that the central bank’s tightening cycle has much further to run. We expect a further 125bp of rate hikes, …
7th October 2021
Growing fears of a “bottleneck recession” The whopping 4.7% m/m fall in German manufacturing production in August left industrial output 9.0% below its February 2020 level. With conditions having worsened since then, Germany’s manufacturing problems …
Prices jump despite end of tax break The large rise in the Halifax house price index in September suggests that we are right to think that robust demand and limited inventory will mean that prices record further gains after the stamp duty holiday ends. …
Inflation hits a new high, tightening cycle may continue for longer Russian inflation accelerated to a fresh five-year high of 7.4% y/y in September and, while this was mainly driven by a sharp increase in food inflation, the central bank is likely to …
6th October 2021
Mortgage rates start to rise Home purchase applications rose for the first time in six months in September, even as mortgage rates increased to a 14-week high by the end of the month. But we expect a further rise in mortgage rates to around 3.5% by the …
Retail sales levelling off, but consumption strong in Q3 August’s euro-zone retail sales data suggest that consumer spending on goods is flatlining. But overall consumption is still likely to have grown fairly strongly in Q3 as spending on services …
Recovery in construction falters due to shortages The further drop in the construction PMI in September suggested that the recovery in construction has faltered amid a severe lack of materials and staff, spiralling costs, and softening demand. The drop in …
Supply chain woes will continue to weigh on trade We expect that the widening in the trade deficit to $73.3bn in August, from $70.3bn, will soon start to reverse, as exports catch up with imports. But there is a risk over the coming months that worsening …
5th October 2021
Improvement in trade surplus better than expected The large improvement in the trade surplus in August was much better than the consensus estimate of a small deterioration, but we are wary about suggesting that there are upside risks to our third-quarter …
Industry dragged on growth in Q3, weakness to persist in Q4 The larger than expected 0.7% m/m fall in Brazilian industrial production in August suggests that the sector probably knocked 0.1-0.2%-pts off q/q GDP growth in Q3. Persistent shortages of …
Non-oil sector recoveries in Saudi and Qatar surge ahead September’s batch of whole economy PMIs showed that recoveries in non-hydrocarbon private sectors in Saudi Arabia and Qatar gathered pace as domestic activity strengthened on the back of easing …
Recovery continues, but loses momentum The PMIs are consistent with the euro-zone’s economic recovery losing some momentum as GDP approaches its pre-pandemic size and as supply shortages take their toll, especially in manufacturing. The surveys also show …
Recovery going strong, but downside risks remain The buoyant readings in India’s PMI surveys for September add weight to our view that economic output rose back to pre-virus levels in Q3. But the recovery will probably lose momentum over the coming …
Record trade surplus to support growth The record trade surplus in August came despite the plunge in iron ore prices in August. The upshot is that net trade should provide a boost to GDP growth in Q3 as domestic demand weakens. Export values of goods and …
Switzerland didn’t get the “inflation surprise” memo Inflation is a rare beast in Switzerland at the best of times and the lower-than-expected September print means that we now doubt it will even breach 1% this year. Against this backdrop, the stage is …
4th October 2021
Inflation rises, but further rate cuts still on the cards Turkey’s headline inflation rate rose further to 19.6% y/y in September and core inflation partially reversed its recent decline, but political pressure means that the central bank is likely to cut …
Industry coming off the boil, but consumer demand remains strong Russia’s hard activity data for August showed that industry has continued to struggle while loose fiscal policy has supported consumer spending. We think that consumer demand should hold up …
1st October 2021
Supply chain disruptions continue to weigh on production The small rise in the ISM manufacturing index to 61.1 in September, from 59.9, mostly reflects an artificial boost from lengthening supplier delivery times rather than any improvement in demand. …
July better than expected, but Q3 GDP growth set to be relatively weak Despite the smaller-than-expected decline in GDP in July and the strong preliminary estimate for August, third-quarter GDP growth still looks to be much weaker than the Bank of Canada …
Inflation heading to 4% Euro-zone inflation looks set to continue on its upward trend and we think it will soon hit 4%. That makes it more likely that the ECB will scale back its asset purchases substantially in March. But we still expect headline and …
Manufacturing sector rebound fading South Africa’s manufacturing PMI softened last month, pointing to a slowdown in the rebound from the hit to activity in July from tighter virus containment measures and violent unrest. Supply disruptions are also …
Industrial activity so far holding up in face of global constraints The set of manufacturing PMIs from Switzerland and the Nordics for September suggest that industrial activity has so far been pretty resilient in the face of global supply-chain …
Supply constraints continue to weigh on output The manufacturing PMIs for September provide additional signs that supply constraints continued to weigh on output in Central Europe, although it seems that price pressures eased further. The PMIs for Czechia …
Manufacturing recovery likely to lose a bit of steam India’s manufacturing PMI rose in September, but that is likely to prove the high point as the rapid reopening rebound fades and local manufacturers start to feel the pinch from global supply shortages. …
Few signs of disruption to exports Korean export values remained close to an all-time high in September and look to have provided a decent boost to growth over the quarter as a whole. The timely nature of the Korean trade data makes them a good bellwether …
House price growth will ease in 2022 House prices have continued to surge despite the recent lockdowns. But we expect house price growth to slow next year as affordability constraints bite and macroprudential limits are imposed. Across the eight capital …
Some improvements, but Delta disruption still evident While regional PMIs showed that the disruption from large virus waves in the region is easing somewhat, unmet orders continue to pile up, meaning that the resulting shortages further down supply chains …
Services sector to recover, but manufacturing running into supply shortages The latest Tankan survey was stronger than most had anticipated, supporting our view that the economy will recover rapidly as the Delta wave has ebbed. However, there are mounting …
Employment to bounce back strongly While employment fell sharply in August, that was due to the Delta wave and should only prove a temporary setback. We expect the jobless rate to fall further over the coming months as the lifting of virus restrictions …
Pace of industrial recovery has slowed Output from India’s core infrastructure industries only edged slightly higher in August, suggesting that the rapid reopening rebound has faded. The broader industrial recovery remains fragile against a backdrop of …
30th September 2021
Decline in the unemployment rate likely to continue The fall in euro-zone unemployment in August brings the jobless rate back very close to its pre-pandemic level. But employment is still below pre-virus levels, highlighting that the labour market …
Less spare capacity raises risk of rate hike in the coming months Today’s release suggests the economy is closer to its pre-pandemic level than we had previously thought and raises the risk that the Bank of England hikes interest rates sooner than our …
Price growth cools, but only gradually The only small gain in house prices in September suggests that house price growth slowed as the stamp duty holiday was withdrawn. But with inventory limited and demand resilient, we suspect that house price growth …
