Surveys suggest underlying orders will start to improve soon The December durable goods data suggest that business equipment investment fell again in the fourth quarter. But the recent improvement in the survey evidence suggests it should soon start to …
28th January 2020
Economy loses momentum at the end of Q4 December’s batch of Russian activity data suggests that GDP growth in Q4 was broadly unchanged from Q3’s 1.7% y/y, but the economy appears to have lost steam at the end of the quarter. That strengthens the case for …
Little joy in store for steel production in 2020 China continued to diverge from the rest of the world in December, with steel output rising sharply. In contrast, other major producers continue to feel the pain of weak demand and oversupply. However, we …
27th January 2020
Disappointing end to the year, but new home sales set for a strong 2020 New home sales ended 2019 on a weak note, declining in each of the final three months of the year. But a high traffic of prospective buyers in January points to a swift recovery in …
Mortgage approvals rise in December The UK Finance mortgage approvals data provides further tentative evidence that demand picked up at the end of 2019. But with Brexit-related uncertainty set to intensify later this year and with the housing fundamentals …
Ifo sounds a note of caution The decline in the Ifo Business Climate Index (BCI) for January comes as a bit of a surprise, following good news from other surveys recently, but is consistent with our own view that economic growth will remain very weak in …
Some relief for the Bank The 0.9% m/m rise in retail sales will come as a relief to the Bank of Canada and supports our view that it will leave interest rates unchanged this year. The increase was over twice as large as the consensus estimate, but close …
24th January 2020
Turnaround in the economy will probably prevent a rate cut The large rebound in January’s flash activity PMIs will probably be enough to prevent the Monetary Policy Committee from cutting interest rates at next Thursday’s meeting. After all, it’s the …
Slow start to 2020 The unchanged reading for the euro-zone’s Composite PMI in January leaves it still consistent with fairly slow GDP growth. We think that the economy will continue to grow at a meagre pace in 2020. At 50.9, the Composite PMI was a touch …
Gloom lifting from manufacturing sector January’s flash manufacturing PMI showed activity in the sector has finally started to rebound. That’s consistent with recent signs of recovery in domestic and global demand. However, we think any improvement in …
Underlying inflation to moderate this year While headline inflation rose sharply again in December, we expect it to settle at around 0.5% this year. Higher energy inflation is likely to be offset by weaker underlying price pressures caused by easing …
Strong inflation should mark the end of the RBNZ’s easing cycle The strong rise in headline inflation from 1.5% in Q3 to 1.9% in Q4 should be enough to prevent the RBNZ cutting rates in February. And given that we now expect a strengthening in economic …
23rd January 2020
Recovery in US economic growth to push down stocks this year US crude stocks declined last week despite a drop in exports and refining activity. We think that crude inventories will begin to fall more rapidly later this year as economic growth recovers …
Inflation ticking up The above-target Brazilian inflation reading for the middle of January reduces the chance of an interest rate cut next month. Mexican inflation also rose, supporting our expectation of a short easing cycle. Brazil’s mid-month …
Improved optimism, but development expected to remain weak Despite an improvement in sentiment in 2019 Q4, with commercial property values predicted to fall this year and lending conditions tight, a strong rebound in construction activity is unlikely. The …
Economy slowed further in Q4 The batch of Polish activity data for December suggest that GDP growth weakened from 3.9% y/y in Q3 to a three-year low of 3.5% y/y in Q4. The slowdown in growth reinforces our view that the central bank will look through …
Pick-up in growth unlikely to be sustained this year GDP growth picked up pace again in the final quarter of last year, but with the big boost from government spending likely to fade this year, we think this will be as good as it gets. Data published …
Net trade boosted GDP growth last quarter We estimate that net trade boosted GDP growth by around 0.4 percentage points in Q4. However, much of that reflects soft domestic demand following October’s sales tax hike. We expect the external sector to drag on …
Fall in unemployment gives RBA breathing space The fall in the unemployment rate to a nine-month low shows that monetary and fiscal stimulus is starting to work and reduces the pressure on the RBA to cut interest rates. The 28,900 rise in employment was …
Record low inventory means existing home sales will hold steady in 2020 The inventory of existing homes dropped to another record low in December, which means the solid rise in sales seen over the month is unlikely to be the start of an upward trend. Even …
22nd January 2020
Headline and core inflation to drop back in 2020 Headline inflation and an average of the three core measures were unchanged at slightly above 2% at the end of 2019, but we expect both to decline toward 1.5% by the second half of 2020. The unchanged …
Less chance of a rate cut, but looser fiscal policy still on the way The rebound in the main balances of the CBI Industrial Trends Survey in January offers further evidence that sentiment has taken an upward turn after the general election. This should …
Inflation picked up, easing cycle will be short South African inflation strengthened in December, and we expect that it will continue to do so in Q1, bringing the current monetary easing cycle to an end after just one more 25bp rate cut. Figures released …
Gradual recovery to follow rebound in Q4 GDP growth rebounded more strongly than expected at the end of last year, and the economy should continue to stage a recovery over the coming quarters. The strong outturn in Q4 means we no longer think that the …
Sales to rebound in December November’s fall in manufacturing sales was mainly due to the disruption caused by the CN Rail strike. As that was resolved before the end of November, the sector is likely to have ended 2019 on a higher note. The 0.6% m/m drop …
21st January 2020
Solid employment may nudge the MPC away from rate cuts The larger-than-expected rise in employment in November suggests the labour market has turned a corner after the weakness in Q3. That could help to convince the Monetary Policy Committee to hold off …
Survey points to continued sluggish GDP growth The latest ECB Bank Lending Survey suggests that while consumer spending growth will maintain a steady pace, investment growth will weaken. It also implies that future TLTRO-III operations will be a little …
GDP growth in Taiwan continues to buck the regional trend Taiwan’s economy picked up steam again last quarter, and with the economy continuing to benefit from the trade war, we expect growth to remain strong throughout 2020. Data published today show that …
Kingdom pulls out of deflation Saudi Arabia emerged from deflation in December, recording a positive inflation reading for the first time in a year. We expect underlying price pressures to stay weak over the course of this year, but higher local fuel …
House price inflation to rise more meaningfully in 2020 House price inflation gained further momentum at the end of 2019, reaching an 11-month high of 2%. Given constrained supply, we expect house price inflation to accelerate to 7.5% in the next six …
20th January 2020
Signs of hope heading into 2020 Global aluminium production for December rounded off a dismal 2019, but we think the prospects for output in 2020 are a bit brighter. The main positive contributions are likely to come from China, the GCC and Russia, which …
Tentative manufacturing recovery has further to run The 0.3% fall in industrial production in December was entirely due to a weather-related slump in utilities output. The latest surveys suggest that the tentative recovery in manufacturing output is a …
17th January 2020
Single-family starts reach 1 million annualised for first time since 2007 The surge in housing starts in December in part reflects a jump in the volatile multifamily sector and favourable weather conditions. But single-family starts are well-placed for …
Shoppers shun Christmas spending December’s outright fall in retail sales, despite a boost from the lateness of Black Friday, does not bode well for GDP growth in December and could nudge the MPC yet closer still to cutting rates at the end of the month. …
Economic activity finishes 2019 on a stronger note Economic activity picked up last month, helping to avert a further slowdown last quarter. But despite the recent uptick in activity, we think it is premature to call the bottom of the current economic …
December sales surge undone by downward revisions to earlier months Retail sales increased by a moderate 0.3% m/m in December, as a price-related 2.8% m/m surge in the value of gasoline station sales helped to offset a 1.3% m/m drop back in motor vehicle …
16th January 2020
Commercial and residential credit availability diverges Mortgage availability rose in Q4, as competition between lenders picked up. But with banks competing on price, rather than lowering their credit standards, we think the housing market fundamentals …
Monetary easing still insufficient to lift credit growth Growth in outstanding broad credit was unchanged last month as a slowdown in bank lending and direct financing was offset by an easing contraction in shadow credit. With credit growth less …
Strong end to 2019 according to RICS Despite the RICS data pointing to a jump in active demand and supply in December, we doubt that will translate into a substantive increase in either transactions or house price growth this year. Indeed, with the …
Business investment will probably fall this year The surge in “core” machinery orders in November was largely due to a spike in transport and postal activities and we still expect non-residential investment to fall this year. Orders of manufacturing …
Crude and product stocks to fall back later this year US commercial crude stocks fell, mainly because of a drop in net imports. We expect crude inventories to decline further through the course of the year as US exports creep higher and the economy …
15th January 2020
Rise in industrial output won’t prevent a poor Q4 The small rise in euro-zone industrial production in November was nowhere near enough to reverse the previous month’s decline, so Q4 is likely to have been yet another weak quarter for the region’s …
Fall in inflation pushes the MPC closer to a rate cut December’s consumer price figures showed that after a brief pause in November, inflation is back on a downward trend. This is likely to push the Monetary Policy Committee even closer towards a rate …
German economy likely to tread water this year News that the German economy expanded by 0.6% last year, down from 1.5% in 2018, suggests that it narrowly avoided another contraction in Q4. Nonetheless, we think that GDP is unlikely to expand significantly …
Inflation set to moderate in 2020 The fact that Swedish inflation was unchanged in December came as a surprise to nobody. But given our view that underlying price pressures will continue to moderate, we are sticking to our non-consensus forecast that …
Stable inflation to keep the Fed on prolonged hold The more muted 0.1% rise in core consumer prices in December suggests that the trend in underlying inflation is still close to 2%. With wage growth also moderating in recent months, there will be little …
14th January 2020
Economic recovery gathers pace in Q4 The Turkish industrial production and retail sales figures for November were a mixed bag but, on balance, suggest that the economy gathered pace in Q4. Looser policy means that we think the economy will record faster …
Headline WPI jumps to highest in seven months The RBI doesn’t put much weight on the wholesale price measure of inflation, but the fact that it accelerated to a seven-month high in December nevertheless supports our view that the rate-cutting cycle is now …
Consumer spending to remain subdued this year The small improvement in the Economy Watchers Survey (EWS) in December suggests household spending was slow to recover from October’s sales tax hike. Both household-related activity and employment conditions …
