Trade data less upbeat than meets the eye Headline trade growth surged in December. But this is more a reflection of base and price effects than of current strength. And while the outlook for exports is improving, domestic demand will remain subdued. …
14th January 2020
Surge in headline inflation to five-year high brings easing cycle to an end The jump in headline CPI inflation to its highest since 2014 almost guarantees that the RBI will leave policy rates on hold at its next meeting in early February. And with core …
13th January 2020
GDP data make rate cut a close call The sharp decline in GDP in November is partly due to some activity being brought forward before the 31 st October Brexit deadline. Nonetheless it leaves the economy on course to stagnate or contract by 0.1% q/q in Q4 …
Labour market conditions remain solid The slowdown in payroll growth to a solid 145,000 last month shows that the economy is still creating more than enough jobs to keep pace with population growth. With economic growth bottoming out and likely to …
10th January 2020
Slump in employment partly due to temporary factors December’s partial rebound in employment shows that the bottom isn’t dropping out of the labour market, but the slump in wage growth underscores our forecast that core inflation is likely to decline in …
Industrial downturn has probably run its course The sharper-than-expected turnaround in industrial production growth in November is a breath of fresh air for India’s economy and supports our view that the economic slowdown has probably bottomed out. We …
Brazil’s inflation jump takes further easing off the table Strong Brazilian inflation – which jumped to 4.3% y/y last month – and signs that the economy is on a firmer footing, suggest that the further interest rate cuts some still expect in early 2020 …
Drop in core Norwegian inflation not the start of a trend We doubt that December’s decline in underlying inflation in Norway is the start of a trend. Given our view that the economy will regain momentum before long, the balance of risks is skewed towards …
Surge in retail sales unlikely to herald spending spree The strongest rise in retail sales in two years could be a sign that tax refunds and interest rate cuts are finally boosting spending. But with consumer confidence falling to fresh lows, we doubt it …
Inflation eases, industrial production slips Mexican inflation eased again in December, supporting our view that policymakers will continue to cut rates this year. Elsewhere, the larger-than-expected 1.2% m/m fall in Brazilian industrial production in …
9th January 2020
Industrial recession has not yet ended While the increase in industrial production in November comes as a bit of a relief, it merely reversed the decline in the previous month and still means that output is likely to have fallen again in Q4 as a whole. We …
Central bank to look though inflation jump and cut rates The jump in Egyptian inflation last month to 7.1% y/y was largely due to the unwinding of favourable base effects but it means that next week’s interest rate decision will be a much closer call than …
Pressure on food prices ease Moderating food price inflation took the pressure off consumer price inflation while producer price deflation eased thanks to base effects and an increase in energy prices. The big picture is that demand-side pressures remain …
Trade should provide a much-needed boost to growth in Q4 The sharp rise in the trade balance in November is consistent with the contribution from net exports to GDP growth rising sharply in the fourth quarter but the weakness in imports suggests domestic …
Slump in crude exports not a cause for concern The surprise build in US crude stocks last week was mostly the result of a plunge in exports. At the same time, while product stocks increased again, we expect this trend to reverse through the course of the …
8th January 2020
Demand for home purchase mortgages unchanged over 2019 A 1.9% m/m drop in mortgage applications for home purchase in December left demand at the end of 2019 unchanged from the start of the year. The boost to demand from lower mortgage interest rates was …
Spike in inflation will be temporary, rate cuts likely by end year The rise in Chilean inflation to 3.0% y/y in December is likely to be followed by a further increase to around 4.0% y/y over the first half of this year. That said, this period of …
ESI still pointing to feeble end to 2019 Although the euro-zone Economic Sentiment Indicator (ESI) edged up again in December, the index still suggests that economic growth in the region was very weak at the end of last year. The small rise in the ESI …
Growth comes off the boil at the end of 2019 The European Commission’s batch of Economic Sentiment Indicators (ESIs) fell sharply in December, although they remain consistent with regional GDP growth holding steady at around 3.6% y/y in Q4. Robust …
PMI suggests weakness continued in December South Africa’s manufacturing PMI edged lower in December, adding to the evidence that the economy remained weak in Q4 and raising the prospect of another technical recession. Figures released earlier today …
Second jump in house prices The Halifax index recorded another jump in house prices in December. This could signal a Boris bounce, but with price gains on the other main indices much weaker, today’s data probably overstate the strength of the market. …
Rebound in consumer spending to continue Consumer confidence edged up in December and suggests that consumption continues to recover from the slump after October’s sales tax hike . The headline index climbed from 38.7 to 39.1 and has risen by 3.5 point …
Mini loosening in labour market to weigh on wage growth Overall wage growth was the weakest it has been in six months in November and the increase in the unemployment rate we are anticipating should ensure it will remain soft over the coming months. We …
Trade weakness mainly due to temporary factors November’s sharp falls in export and import volumes point to another weak month for activity and suggest that GDP stagnated in the fourth quarter. But given that the trade weakness in November was mainly due …
7th January 2020
Net trade provides big boost to Q4 GDP growth The sharp narrowing in the trade deficit to $43.1bn in November, from $46.9bn, was driven by another fall in imports that will be reversed in the coming months. Nevertheless, net trade appears to have provided …
ECB still more likely to loosen policy than tighten in 2020 December’s inflation data will provide some relief to policymakers at the ECB, but we are still sceptical that core inflation is about to start on a sustained upward trend. In our view, the …
Outflows shrink as trade tensions ease The official foreign exchange reserves figures suggest that the PBOC continued to refrain from direct FX intervention last month on the back of easing trade tensions. With outflows moderating – and pressure on the …
Small pick-up in Swiss inflation not a game changer Having seen inflation fall into negative territory in the previous two months, the increase in Swiss CPI back into positive territory in December will be welcomed by policymakers. Nonetheless, with core …
PMIs suggest post-election bounce is in the works Clearly Q4 was very weak, but the decisive result of the General Election appears to have given the services PMI a bit of a boost. That jump in confidence may start to come through in other data in Q1, …
6th January 2020
Gulf non-oil sectors soften, Egyptian price pressures remain subdued Whole economy PMIs for December suggested that activity in Saudi Arabia’s non-oil sector slowed at the end of last year, a sign that fresh fiscal austerity is already starting to take …
Sluggish end to the year, with Germany and Italy particularly weak The euro-zone’s Composite PMI for December was revised up slightly, but taken together with the other available evidence, this still suggests that the economy grew by only 0.2% q/q in Q4. …
Surging exports to continue to weigh on US stocks US commercial crude stocks fell sharply last week as exports soared and there was a step-up in refinery activity. We expect exports to remain high given constrained OPEC+ output. In contrast, product …
3rd January 2020
Terrible ISM figures at odds with broader improvement in the data The further decline in the ISM manufacturing index in December, to its lowest level since June 2009, at face value suggests the US economy is teetering on the brink of recession. But it’s …
Slowing net lending to property expected to continue As expected, net lending to property was relatively weak in November in the run up to UK election. Despite a decisive result in the poll, we don’t think there will be much of an improvement in the …
Construction ends 2019 on a weak note The headline construction PMI numbers ended 2019 with a whimper, as November’s improvement was reversed. The survey pointed to falling output for most of last year and, despite a post-election easing of uncertainty, …
House purchase lending edges up in November November saw a marginal rise in house purchase mortgage approvals, suggesting that pre-election uncertainty had little effect on housing market activity. Looking ahead, given high house prices, a lack of homes …
House prices rose by 1.4% in 2019 Annual house price growth accelerated in December, ending the year a little faster than expected. But that pick-up largely reflected base effects. Looking ahead, with house prices still very high and mortgage interest …
CBRT to shrug off higher inflation and cut interest rates this month The stronger-than-expected rise in Turkish inflation in December means that this month’s interest rate decision will be a close call. For now, we think that the central bank will cave …
Surveys for Central Europe still point to weakness ahead December’s batch of manufacturing PMIs for Central Europe remain consistent with a further slowdown in industrial production growth over the coming months, although there are tentative signs that …
2nd January 2020
PMI show further signs of improvement PMIs for Emerging Asia (ex. China) improved slightly in December, which is consistent with our view that while regional growth remains weak, it has at least bottomed out. PMIs for December were released today for …
Jump in manufacturing PMI reduces chance of further rate cuts The jump in India’s manufacturing PMI in December suggests that the manufacturing sector has recovered from its weakness last year and supports our view that the recent economic slowdown has …
House price growth to remain strong for now With home sales climbing to a fresh high, our sales to listings ratio now suggests that house prices will soon be rising by around 10% per annum. House price growth across the eight capital cities slowed from …
External demand recovering but construction cooling The manufacturing PMIs ended 2019 higher than where they started the year but we doubt this means the worst is over for China’s economy. While it does appear that export growth is bottoming out, downside …
New home sales well-placed for another strong year The rise in new home sales in November came from a downwardly revised October reading but, looking through the volatility, sales have had a good year. Low mortgage rates, an increase in the supply of …
23rd December 2019
Canadian economy hitting soft patch The 0.1% m/m decline in October’s monthly GDP was partly due to disruption in the motor vehicle sector caused by the GM strike south of the border, but retail and wholesale GDP also contracted . We expect November’s GDP …
Weak orders suggest business equipment investment stagnant The unexpected 2.0% m/m decline in November’s durable goods orders was largely due to a massive slump in defence aircraft, alongside a small dip in commercial aircraft orders. Nevertheless, …
Inflation soft but limited rate cuts ahead The fall in Mexican inflation to 2.6% y/y in the first two weeks of December, from 3.0% in the full month of November, will pave the way for Banxico to continue its easing cycle in the coming months. That said, …
Slump in sales points to drop in GDP October’s sharp decline in retail sales suggests that GDP fell at the start of the fourth quarter. While that raises the possibility of the Bank of Canada cutting interest rates in the new year, we continue to think …
20th December 2019
Weaker demand and output cuts to further weigh on production Global steel output dropped in m/m terms in November, led by China. We think that global production will remain weak in the coming months due to softer demand growth and pre-announced output …
Global output to bounce back in 2020 Global aluminium production continued to falter in November, largely due to another sharp fall in Chinese output. But additions to China’s capacity coupled with a resumption of shuttered smelters should lay the …
