Rebound in WPI inflation likely to be temporary Following the weaker-than-expected consumer price inflation data for August released yesterday, headline wholesale price inflation data released today surprised to the upside. But it should resume dropping …
14th September 2021
Labour market still tightening despite unwinding of the furlough scheme The latest data brought more signs that labour market slack is declining fast and that labour shortages are contributing to faster underlying pay growth. We suspect that beyond the …
Drop in India’s inflation still has further to run The drop in India’s consumer price inflation in August was driven by a continued fall in food inflation. We expect a broader easing in price pressures to bring headline inflation further below the 6% …
13th September 2021
Weak start for Turkey’s economy in Q3 Turkey’s industrial production and retail sales figures for July suggest that, after putting in a better-than-expected performance in Q2, the economy made a soft start to Q3. Industrial production contracted by 4.2% …
Signs point to further strong lending volumes in the coming months All real estate sectors saw growth in outstanding debt for the second consecutive month in August. What’s more, the third consecutive monthly increase in commercial real estate debt of …
10th September 2021
Employment rises but hours worked little changed The easing of coronavirus restrictions helped drive a 90,000 increase in employment in August, but the unchanged level of hours worked is further evidence that third-quarter GDP growth is likely to be …
Gloomy prospects for Mexican industry despite July uptick The stronger-than-expected 1.1% m/m rise in Mexico’s industrial production in July provides some encouragement that the economy fared well despite the onset of a third virus wave earlier this …
Credit growth at its slowest in 32 months Credit growth dropped in August to its slowest pace since December 2018. With the PBOC now shifting gears to a slightly more supportive stance, credit growth may level off in the coming quarters. But the usual …
Weak core inflation will not prevent tightening cycle start The fact that the Norges Bank’s target measure of inflation fell for the fifth month in a row in August, and is likely to remain steady at about half the Bank’s target rate over the next six …
Virus cases and shortages stall the recovery The rise in COVID-19 cases and the product/labour shortages are probably behind the stalling in the UK’s economic recovery in July. With next week’s CPI release set to reveal a jump in inflation from 2.0% to …
Hurricane Ida to blur the stocks picture for a few weeks yet There was a small draw in crude stocks last week, despite a dramatic drop in refinery utilisation as many refineries closed ahead of the Hurricane Ida. Notwithstanding, US gasoline demand …
9th September 2021
Strong price pressures across the board The rise in Brazil’s headline inflation rate to 9.7% y/y last month was driven by a broad-based strengthening of price pressures. With the economy re-opening and electricity tariffs hiked this month, the headline …
Unrest and virus restrictions hit economy hard in July South Africa’s manufacturing sector suffered a larger-than-expected fall in output in July and, while more timely data point to a rebound in activity, the weakness in July has increased the chances …
Falling inflation unlikely to prevent further rate hikes The drop in Mexico’s headline inflation rate to 5.6% y/y in August masks a further rise in core inflation, to 4.8% y/y, which will be a concern for the central bank. This suggests that its gradual …
CBE to keep rates on hold as inflation rises further Egypt’s headline inflation rate rose to 5.7% y/y in August, the fastest pace recorded since April last year, and looks set to increase further over then next couple of months. Against this backdrop, we …
Prices and transactions expected to remain buoyant While demand continued to soften in August limited stock on the market points to house price inflation remaining high in the near term. And despite the end of the stamp duty holiday, surveyors expect …
Factory-gate inflation hits a 13-year high Producer price inflation reached its highest since August 2008 last month due to the rally in global commodity prices. But the breakdown suggests that upward pressure on the factory-gate prices of consumer goods …
Inflation hits fresh five-year high, tightening cycle not over Russian inflation rose to a fresh five-year high of 6.7% y/y in August and, while there are some tentative signs that price pressures have started to soften recently, we think the central …
8th September 2021
Above-target inflation to keep the central bank in a hawkish mood The further rise in Chile’s inflation to 4.8% y/y in August suggests that the central bank’s tightening cycle has a lot further to run. We expect a further 100bp of rate hikes, to 2.50%, by …
Economy put in robust performance in Q2, but key headwinds remain South Africa’s economy grew by a better-than-expected 1.2% q/q in Q2 as strong growth in exports made up for weak domestic demand. Tighter virus restrictions and violent unrest weighed on …
7th September 2021
Economy and labour market recovering strongly With revised data showing that the euro-zone economy performed even better than previously thought in Q2, the ECB is sure to revise up its GDP forecasts on Thursday. That said, even if it reduces the pace of …
Shrugging off the stamp duty holiday taper While annual house price inflation cooled from 7.6% to 7.1% in August according to Halifax, the solid gain in house prices on the month confirms that the housing market is weathering the winding down of the stamp …
Auto sector still stuck in low gear The small increase in German industrial production in July merely reversed the fall in June, and left output well below normal. While the rest of the economy is now close to a full recovery, supply chain problems among …
Current strength unlikely to last Exports and imports were much stronger than anticipated last month thanks to buoyant demand, even as the data point to some lingering supply shortages. We continue to think shipments will soften in the coming quarters …
While the spike in August inflation in the Philippines makes the central bank’s (BSP) policy decision this month an even closer call, the worsening outlook for the economy means we are sticking with our non-consensus view of a 25bp cut on 23 rd September. …
Wage growth to bounce back further Wage growth recovered in July and it should strengthen further over the coming months as the labour market tightens and vaccines fuel a further recovery in overtime pay. Meanwhile, the drop in household spending in July …
Materials shortages restrain activity The further easing in the construction PMI in August was due to materials shortages rather than any softening in demand. The drop in the headline construction PMI from 58.7 in July to 55.2 in August suggested that, …
6th September 2021
Consensus could be surprised on the downside beyond 2022 The upgrades to the IPF Consensus views for this year still leaves them below our forecast. However, our more downbeat view on the outlook for offices because of the shift to more remote working …
3rd September 2021
Delta variant weighing on economy The well-below consensus 235,000 gain in non-farm payrolls in August suggests that the Delta variant is beginning to weigh on the economy, with leisure & hospitality employment unchanged on the month. Even allowing for …
Household spending patterns returning to normal The recovery in euro-zone retail sales ended in July as sales fell sharply compared to June. However this does not affect our view that consumption will grow strongly in Q3, not least because we think the …
Inflation jump to delay start of easing cycle The stronger-than-expected Turkish inflation reading of 19.3% y/y in August doesn’t rule out the start of an easing cycle later this year. However, we now only see scope for an interest rate cut at the final …
Recovery going strong, but downside risks remain The sharp rises in India’s services and composite PMI readings in August support our view that the economy has staged a strong rebound in Q3. But downside risks remain significant as the threat of further …
Stronger exports won’t prevent slowdown in GDP growth The narrowing in the trade deficit to $70.1bn in July, from a revised $73.2bn, suggests that the drag on GDP growth from net trade in recent quarters will be partly reversed in the third. The narrowing …
2nd September 2021
Trade balance deteriorates, but remains in surplus The trade surplus was lower than expected in July, although expectations probably shifted following the preliminary GDP estimate released earlier this week, which showed a surprise fall in GDP in July. …
Industry likely to be the weak spot in Q3 The 1.3% m/m fall in Brazilian industrial production in July confirms that the sector continued its weak performance into the start of Q3, and surveys suggest that August will be weak too. That said, with the …
Post-pandemic recovery phase nearly over Data released this morning show that Swiss GDP is on track to re-gain its pre-pandemic level in Q3 and that inflation is creeping higher. Nonetheless, the near-term outlook is not as rosy as it was. Inflation is …
Trade should support growth in Q3 The record trade surplus in July was largely driven by stronger commodity prices which won’t last. But we expect weaker domestic demand to weigh on imports over the coming months which should see trade make a positive …
Employment still 5%-10% below pre-COVID level in six major metros Job growth showed no sign of slowing in July, with gains in the leisure & hospitality sector continuing to drive the recovery. This benefitted Boston, Washington D.C. and New York City …
1st September 2021
Economy starting Q3 on decent footing Russia’s activity data for July show that industrial production has come off the boil, but retail sales continued to expand strongly, and the strength of consumer demand will probably keep the central bank in …
Fallout from Hurricane Ida to lead to higher crude stocks Last week’s sharp fall in US commercial crude stocks is at odds with many of the underlying indicators. In any case, stocks seem likely to rise in the weeks ahead as reports suggest that refinery …
Supply problems & labour shortages still the big constraint The details of the small rise in the headline ISM manufacturing index in August to 59.9, from 59.5, suggest demand remains strong and that, while some of the recent price pressures have faded, …
Economy picking up after a soft Q3 Brazil’s GDP contracted by 0.1% q/q in Q2 but, with virus cases falling sharply, it looks like Q3 will be a lot stronger. We doubt that the fall in output last quarter will have much bearing on the central bank, which is …
Record-low sentiment weighs on demand With the share of households seeing now as a good time to buy at a record low, home purchase mortgage applications fell for the fifth consecutive month in August, leaving them down 25% from January’s 11-year high. But …
Further decline in measured joblessness The fall in euro-zone unemployment in July appears to be down to a decline in the overall labour force rather than an increase in employment, highlighting that the labour market recovery still has a long way to go. …
Manufacturing sector bouncing back from July slump South Africa’s manufacturing PMI bounced back last month following a sharp drop in activity in July on the back of violent unrest and tighter virus containment measures. But persistent headwinds will …
Manufacturing conditions normalise as supply disruptions ease The PMIs for August suggest that manufacturing conditions have softened in Q3 as output and new orders fell further from their recent highs. More than anything, it looks like conditions are …
Economy shrugs off lockdown and expands in Q2 A strong rebound from May’s three-week lockdown meant that Turkey’s economy managed to expand by 0.9% q/q over Q2 as a whole and the early signs are that it carried this momentum into Q3. Robust growth and …
Surprise August rise highlights resilience to end of stamp duty holiday The unexpectedly large rise in house prices in August is yet another reason to think that house price growth will shrug off the end of the stamp duty holiday. It also suggests our …
Manufacturing recovery starting to ease off The drop in India’s manufacturing PMI in August is probably just a sign of activity normalising following the strong pace of recovery in recent months. But the threat of further virus waves remains a significant …
Exports pushing upwards again but fresh surge unlikely Having flattened off in previous months, exports saw a renewed rise in August. While this is unlikely to mark the start of another surge, we still expect exports to remain elevated over the coming …
