Inflation jump takes further easing off the table The sharp rise in Brazilian inflation, to 3.9% y/y in the first half of December, from 2.7% a month earlier rules out another interest rate cut at the next central bank meeting in February. The mid-month …
20th December 2019
GDP revised up in Q3 but economy still lacking momentum Christmas has come early with the ONS revising up GDP growth in Q3 from 0.3% to 0.4% in its annual data deluge before the festive break. But the festive cheer will probably be short-lived seeing as …
Pick up in core inflation unlikely to last Headline inflation rose sharply in November but we think it will moderate over the coming months as capacity shortages diminish. But we are not convinced that the Bank of Japan will respond by cutting interest …
Record low inventory constrains home sales The inventory of existing homes for sale dropped to a record low in November, which helps explain why home sales declined. We doubt that supply picture will improve over the next year and, coupled with tighter …
19th December 2019
Not as bad as they look At face value, November’s further drop in retail sales volumes is pretty concerning. But the picture is clouded by the late timing of Black Friday this year, which probably means November’s figures look worse than they really are …
Unemployment rate to rise further The renewed drop in the unemployment rate in November reduces the pressure on the RBA to cut interest rates but we still expect the labour market to soften furthe r. The 39,900 jump in employment in November was stronger …
Rebound in growth unlikely to last The rebound in GDP growth in New Zealand in the third quarter is unlikely to be sustained as soft consumer and business confidence limit the pick-up in growth. Production GDP growth surged from a downwardly revised 0.1% …
November’s decade high probably marks peak for core inflation While the fresh decade high for core inflation in November should mark the peak, it is another reason to think that, despite a further deterioration in the activity data, the Bank of Canada …
18th December 2019
Steady inflation may persuade the MPC to remain on hold on Thursday November’s inflation figures will probably mean that the Monetary Policy Committee (MPC) will be content to sit on its hands at its meeting tomorrow. But unless the tone of the economic …
Germany to continue struggling in early 2020 December’s Ifo Business Climate Index was a bit better than expected, but it still suggests that the German economy is struggling to grow. We expect GDP growth to remain very weak at the start of next year. The …
Net trade probably boosted GDP growth in Q4 Import volumes probably fell more sharply than export volumes in Q4 so net trade should have provided a boost to GDP growth. That’s hardly a cause for optimism though as the weakness in imports reflects the …
Surge in manufacturing output not just a GM story The 1.1% surge in manufacturing output last month reflected both a rebound in autos output following the end of the GM strike and a healthy gain in underlying production . Boeing’s decision to halt …
17th December 2019
Sales hit by strike-related disruption The 0.7% m/m decline in manufacturing sales in October was entirely due to a further decline in motor vehicle sales, which reflects the impact of the strike by GM workers south of the border. As a result, we …
Single-family starts set for another strong year Single-family building permits increased for the seventh month in a row in November. And, with homebuilder confidence hitting a 20-year high in December, starts are set for another year of steady growth. …
Deflation eases, energy subsidy cuts seem to be on the agenda Deflation in Saudi Arabia continued to ease in November and we think that the headline rate will return to positive territory in the New Year. Reports that the government is reviewing energy …
Stabilisation in employment may keep the MPC away from rate cuts The larger-than-expected rise in employment in October suggests the labour market has stabilised, so the Monetary Policy Committee will probably hold off cutting interest rates at Thursday’s …
Inflation on the rise, rates to remain on hold Nigerian inflation picked up again in November, driven mostly by rising food inflation. We think that the headline rate will continue to climb over the coming months and that policymakers will leave their key …
Weak Q4 confirmed but green shoots may soon emerge The weak flash PMIs for the UK are another piece of evidence that suggests growth flat-lined in Q4. And if there isn’t a pick-up in the surveys in the next few months, then the MPC may respond by cutting …
16th December 2019
Poor end to a disappointing year The flash PMIs for December will disappoint those looking forward to a happier New Year. Indeed, they point to euro-zone GDP being almost flat in Q4 and a continued industrial recession. Looking beyond the holiday season, …
Headline WPI inflation rebounds Headline wholesale price inflation rose for the first time in eight months in November. While not the preferred measure of inflation for India’s policymakers, this adds to the impression that the inflation backdrop is …
Strong headline figures only half the story The activity and spending indicators beat expectations. But retail sales and real estate activity are weaker than the headline figures suggest. And we think growth will resume its downward trend before long. …
Manufacturing sector should turn a corner soon December’s flash manufacturing PMI indicates that activity in the sector continues to shrink. However, the rebound in the global manufacturing PMI suggests that the sector will turn a corner soon. According …
Consumption growth likely to pick up again soon The disappointing 0.2% m/m rise in retail sales in November suggests that real consumption growth was a little weaker in the fourth quarter than the 2.0% annualised reading we had pencilled in, but solid …
13th December 2019
Industry stutters at start of Q4, likely to be a blip October’s industrial production figures suggest that Turkey’s economy made a soft start to Q4 but more timely evidence suggest that this will prove a blip. Looser monetary and fiscal policy is likely …
Economy slowing not collapsing The Q4 Tankan was a mixed bag rather than the disaster that many analysts were anticipating. As such, it probably won’t convince the Bank of Japan to ease policy next week. The Tankan’s headline index for large manufacturers …
Surge in headline inflation could leave MPC on hold once more The further surge in headline inflation in November casts doubt on the possibility of further monetary easing. If the headline rate remains high above the central bank’s 4.0% target this month …
12th December 2019
Manufacturing headwinds strengthen The fall in Mexican manufacturing output in October was largely due to the GM strike, but even if this were excluded the latest figures show weakness across key industrial sectors. This strengthens our belief that the …
Industrial production hasn’t bottomed out yet October’s sharp fall in euro-zone industrial production adds to the evidence that the sector’s troubles are far from over. We expect the sector to remain in recession at the start of next year. The 0.5% m/m …
Gloomy month for housing demand November’s survey data support our view that the housing market will struggle to gain any upward momentum next year. After all, with house prices high and mortgage interest rates unable to fall much further, we expect …
Substantial fall in business investment this quarter The sharp fall in “core” machinery orders in October supports our view that there will be a sizeable drop-off in business investment this quarter. We expect a 1.0% q/q fall in non-residential investment …
Gasoline and distillate demand to diverge US commercial crude stocks rose last week, while gasoline inventories surged on the back of a drop in demand. We expect inventories to rise further in the first quarter, as economic growth remains muted . The …
11th December 2019
Muted inflation to keep the Fed on prolonged hold A rise in energy prices pushed headline CPI inflation up to a one-year high last month, but the stability of core inflation suggests that underlying price pressures remain subdued. In that environment, we …
Pick-up in inflation makes Riksbank hike next week a done deal The pick-up in Swedish inflation in November means that a rate hike by the Riksbank next week is all but guaranteed. But with surveys continuing to show that the economy is struggling, and …
Inflation weak, but will pick up in 2020 South African inflation stayed very weak in November, but petrol prices will push up the headline rate in December. Despite a flagging economy, we doubt that the SARB will cut its key policy rate anytime soon. …
High LTV lending hits 11 year high Lower prices have encouraged borrowers to take out higher LTV loans. But lenders have maintained their credit scoring standards and maximum LTI ratios, and that is unlikely to change anytime soon. Combined with the …
10th December 2019
Economy not going anywhere in Q4 The stagnation in GDP in October is unlikely to influence many people’s vote in Thursday’s election, but it could prompt some more MPC members to vote for lower interest rates in the coming months. The 0.0% m/m outcome for …
Monetary easing still failing to lift credit growth Growth in outstanding broad credit was unchanged last month, despite recent monetary loosening by the People’s Bank. This suggests that more aggressive action will be needed to shore up growth. Chinese …
Risks skewed towards tighter policy in Norway While we expect the Norges Bank to leave its key policy interest rate on hold at 1.50% for the foreseeable future, the persistence of core price pressures means that the balance of risks is skewed towards …
Inflation picks up, but rate cuts still lie in store The rise in Egyptian inflation last month to 3.6% y/y still leaves the headline rate well below the central bank’s target paving the way for further interest rate cuts over the next twelve months or. We …
Headline inflation close to a peak Rising pork prices pushed consumer price inflation to its highest level in close to eight years last month. But the pick-up in food inflation will reverse soon and broader demand-side price pressures remain weak, with …
Inflation stable, opening way for 25bp cut next week Mexican inflation remained at a three-year low of 3.0% y/y in November, which strengthens our view that policymakers will cut their key rate from 7.50% to 7.25% next week. Full-month figures released …
9th December 2019
No sign of gloom lifting yet November’s Economy Watchers Survey (EWS) points to a slight rebound in consumer spending last month. However, the deterioration in manufacturing and employment conditions underline that the economy will remain weak over the …
Base effects mask continued weakness in domestic demand Exports continued to languish last month and the pick-up in headline import growth reflects base effects rather than stronger domestic demand. Meanwhile, FX reserves data released over the weekend …
Output set to shrink in 2020 While Japan’s economy expanded more sharply ahead of the sales tax hike than most had anticipated, output probably fell sharply in the fourth quarter. While the consensus expects the economy to keep expanding next year, we …
Slump in employment partly due to temporary factors November’s slump in employment confirms that slowing GDP growth is spreading to the labour market. But with temporary factors exacerbating the fall, we don’t think it will concern policymakers too much. …
6th December 2019
Holidays come early for the labour market The much stronger than expected 266,000 gain in non-farm payrolls in November was flattered by the return of 41,000 striking GM workers but, even allowing for that, it suggests labour market conditions remain …
Falling inflation keeps door open to easing The drop in Russian inflation to just 3.5% y/y in November increases the probability of another 50bp interest rate cut at the central bank’s meeting next Friday although, on balance, we think a 25bp rate cut is …
Inflation rises, but 50bp rate cut still on the cards The slightly larger-than-expected rise in Brazilian inflation in November, to 3.3% y/y, was driven partly by food inflation, but also by a rise in regulated prices. The data are unlikely to prevent …
Inflation set for a temporary spike, rate cuts still to come next year The rise in Chilean inflation to 2.7% y/y in November is likely to be followed by a further increase to around 4.0% y/y early next year. That said, this increase will be temporary. As …
The Halifax index once again an outlier The sharp acceleration in house price growth recorded by the Halifax in November was an outlier, and is unlikely to be repeated in the coming months. Indeed, we expect house price growth to stay at or below 2% y/y …
