Payrolls boosted by mild weather; revisions not as bad as feared The 225,000 increase in non-farm payrolls in January suggests that employment benefitted from the unseasonably mild weather (it was the fifth warmest January on record), with the …
7th February 2020
Inflation up in Mexico, down in Brazil The rise in Mexican inflation from 2.8% y/y in December to 3.2% y/y in January supports our view that, while the central bank will cut interest rates further, the easing cycle won’t go as far as markets are pricing …
PBOC leans against renminbi depreciation The PBOC doesn’t appear to have deployed its FX reserves last month to limit renminbi depreciation triggered by the coronavirus outbreak. But there are signs that it has intervened in other ways. The value of the …
No signs of acceleration in January Annual house price growth was broadly flat in January according to the Halifax index, suggesting that the surge in prices around the election may be short lived. Indeed, with house prices still high relative to incomes, …
Industrial recession has not yet ended The 3.5% slump in industrial production in December flies in the face of the widely-held view that Germany’s manufacturing sector was on the mend at the end of last year. And even before the coronavirus appeared, …
Wage growth set to remain sluggish this year With the unemployment rate set to rise, we expect the softness of wage growth in December to continue into 2020. We are forecasting a disappointing 0.2% increase in labour cash earnings this year. According to …
Drop in inflation to prompt rate cut tomorrow The larger-than-expected drop in Russian inflation to just 2.4% y/y in January primarily reflected the unwinding impact of last year’s VAT hike. But it will probably be enough to prompt the central bank to cut …
6th February 2020
GDP growth in Q1 probably remained subdued The pick-up in real retail sales provides some hope that consumption growth may have turned a corner. Even so, we still think GDP growth remained subdued at the end of 2019. Retail sales values fell by 0.5% m/m …
Few surprises to be found US crude stocks rose again last week in line with the seasonal norm. While small falls in US product stocks suggest demand is holding up, it would take a surge in US consumption to even go some of the way to offset the slump in …
5th February 2020
Trade deficit widens; ADP boosted by weather The trade deficit widened to $48.9bn in December, from $43.7bn, as imports rebounded by 2.7% m/m, outpacing a 0.8% m/m gain in exports. The rebound in imports partly reflected the unwinding of disruptions in …
Refinance demand surges as mortgage rates hit three-year low A rush to safe-haven assets helped drive the 30-year mortgage rate to a three-year low by the end of January. That triggered a surge in mortgage applications for refinance, and a decent rise in …
Export rebound sets up stronger first quarter The jump in exports should drive a larger monthly rise in GDP in December. That will provide a strong hand-over to the first quarter and supports our forecast for growth to rebound to near 2% annualised. The …
Growth to stay weak even if no impact from coronavirus December’s euro-zone retail sales data suggest that household consumption growth slowed sharply in Q4. Meanwhile, the upward revision to January’s euro-zone Composite PMI implies that the coronavirus …
Survey reaffirms post-election rebound January’s all-sector PMI provides the clearest sign yet that the economy has turned a corner and supports our view that the next move in interest rates may actually be up, albeit not until 2021. The upward revision …
Lower unemployment rate should keep RBNZ on hold The decline in the unemployment rate to 4.0% in New Zealand all but ensures that the RBNZ will keep rates on hold in February. And given that we forecast employment growth to rise in 2020 , we think the …
4th February 2020
Industry stumbling in Q4 The larger-than-expected 0.7% m/m fall in Brazilian industrial production in December provides further evidence that the economic recovery was stumbling at the end of last year. This reinforces our view that Copom will opt for a …
Construction output falls at slower pace The IHS Markit/CIPS Construction PMI pointed towards a slower decline in construction in January 2020. Improved balances in commercial property, civil engineering and housing signalled a post-election bounce, but …
Gulf non-oil sectors start the year on soft note, Egypt price pressures rise January’s batch of whole economy PMIs suggested that activity in non-oil sectors in the Gulf slowed at the start of the year. Meanwhile, underlying price pressures seem to be …
Further evidence economy is turning a corner The sharp rebound in the ISM manufacturing index to a six-month high of 50.9 in January, from 47.8, echoes the message from the other surveys that the prospects for factory sector activity are starting to …
3rd February 2020
Evidence of recovery in late 2019 The Russian full-year GDP growth figure of 1.3% in 2019 was well below 2018’s outturn of 2.5%, but the figures suggest that growth accelerated a little further in the final quarter of last year, to 1.8% y/y. The breakdown …
Weakness in Central Europe, but Turkey’s recovery gathering pace January’s manufacturing PMIs for Central Europe remain consistent with a further slowdown in industrial sectors over the coming months. Elsewhere, the jump in Turkey’s PMI to a 22-month high …
PMI suggests weakness continued in the New Year South Africa’s manufacturing PMI dropped further in January, adding to the evidence that the economy remained very weak at the start of 2020. Figures released earlier today showed that South Africa’s …
Mixed messages from the PMIs The mixed set of manufacturing PMIs from January adds to signs that conditions in the Swedish industrial sector have turned the corner but indicate that activity in Switzerland remains stuck in a rut. The jump in the headline …
Coronavirus to exacerbate ongoing recession Hong Kong’s economy continued to contract last quarter and the Coronavirus outbreak will probably keep the city in recession for a while longer. The city’s GDP contracted 0.4% q/q in Q4 in seasonally adjusted …
Rising inflation won’t deter CBRT from further rate cuts The rise in Turkish inflation in January is unlikely to sway the central bank (CBRT) away from another interest rate cut this month as policymakers cave into pressure from President Erdogan. But …
Manufacturing PMI has probably peaked India’s manufacturing PMI surged in January to an eight-year high and defied the trend across the rest of Asia. Though the reading may fall back as fears over the coronavirus dents sentiment, the big picture is that …
Survey fails to capture Coronavirus shock While the Caixin manufacturing PMI edged down last month, the survey was conducted too early to tell us much about the extent of the economic damage from the Coronavirus outbreak. The February survey data will …
Timely data too early to show impact from coronavirus PMIs for Emerging Asia (ex. China) and Korean trade data were mostly unchanged in January, but neither give a good indication of how the coronavirus has hit the regional economy most recently. With the …
House price growth may be approaching a peak House prices continued to surge in January. But our sales to new listings ratio suggests that price growth may be approaching a peak. That’s consistent with our forecast for price growth to moderate this year. …
Growth to accelerate further after November’s unexpected gain The 0.1% m/m rise in GDP in November was better than expected and reinforces our view that the Bank of Canada’s latest forecasts are too weak. We think that an even stronger monthly gain in GDP …
31st January 2020
Net lending to property falls for first time since January 2019 A large fall in development lending weighed on net lending in December. We expect net lending will remain weak this year as all-property capital values continue to decline and uncertainty …
House purchase lending recovers in December Improving sentiment pushed house purchase mortgage approvals to a 29-month high in December. But Boris Johnson’s election win has done nothing to improve the housing market fundamentals. With house prices very …
Weak Q4 provides low base for 2020 The Q4 GDP and January consumer prices data published today support our view that euro-zone growth and inflation will be weaker this year than most expect. This underlies our forecast that the ECB will eventually be …
Overtaken by the coronavirus The official PMIs show that manufacturing activity weakened, and non-manufacturing strengthened, in the lead-up to the Coronavirus outbreak. The following months’ PMIs will give insight into how damaging the virus is. The PMIs …
Positive end to 2019 but consumption remains soft While consumer spending remained subdued in December following October’s sales tax hike, the continued resilience of the labour market suggests that this has yet to discourage firms from hiring new …
Inflation likely to remain subdued The increase in Germany’s headline HICP inflation rate to 1.6% in January was a little smaller than most had expected and was driven by higher energy inflation. Underlying inflation seems to have fallen in January, and …
30th January 2020
Growth holds steady despite weakness in private domestic sales The 2.1% annualised gain in fourth-quarter GDP was not quite as solid as it looked, with consumption growth slowing and business investment contracting for a third consecutive quarter. …
No sign of the retail downturn easing The RICS survey showed that occupier demand and investment enquiries remained negative in 2019 Q4, though there was a slight improvement on Q3, outside of retail at least. The outlook for both rents and capital values …
Euro-zone ESI points to still-weak growth at the start of 2020 Despite increasing in January, the euro-zone Economic Sentiment Indicator suggests that the economy is unlikely to have gained much momentum in Q1. Meanwhile, the unemployment rate, which fell …
Sentiment slumps at the start of 2020 January’s batch of Economic Sentiment Indicators (ESIs) for Central and Eastern Europe point to regional GDP growth slowing to a fresh three-year low of 3.2% y/y in Q1. With signs that weak external demand is …
Further signs the economy has turned a corner The European Commission’s Economic Sentiment Indicator (ESI) confirmed the message from the flash PMIs last week that sentiment in the services sector improved markedly after the election, but that the …
A positive start to the year The surge in the Swiss KOF Economic Barometer in January may yet prove to be a bit of a rogue reading. Nonetheless, it adds to signs from elsewhere in Europe that conditions for industrial firms have stabilised at the start of …
Stocks may remain elevated for a while yet US crude stocks rose last week owing in large part to lower refinery activity. Crude stocks may remain high for some time in light of high gasoline inventories, but we expect them to ease back later in the year …
29th January 2020
Partial recovery in housing starts Housing starts rose in Q3, but construction is still down sharply on an annual basis. Looking ahead however, improving sentiment suggest that further falls in construction will be limited. There were 39,500 housing …
Investment dragged down growth last year The weaker-than-expected 2019 Polish GDP growth figure of 4.0% suggests that the economy slowed sharply in the final quarter of last year. Softer activity reinforces our view that the MPC will look through the …
Further signs of a Boris bounce January’s house price data show further evidence of a Boris bounce. But while faster price growth reflects improved sentiment, the election did nothing to lower house prices, boost incomes or loosen credit constraints. So, …
Consumer spending set to disappoint this year Consumer confidence was unchanged in January, suggesting households are still reluctant to spend in the wake of the sales tax hike. We think consumer spending will remain soft, which should contribute to a …
Underlying inflation should fall further below target in 2020 The pick-up in headline inflation in Q4 should be the final nail in the coffin for hopes of a February rate cut. Even so, weak economic activity should force the bank to cut rates again before …
Annual house price growth ticks up Low mortgage interest rates and tight supply helped annual house price growth on the Case-Shiller measure increase for the second month in a row in November. But stretched valuations, and tightening mortgage lending …
28th January 2020
