Manufacturing recession takes a turn for the worse The sharp drop in production in October was driven by a slump in auto production and suggests that, far from bottoming out, Germany’s industrial contraction may even be getting worse. The economy narrowly …
6th December 2019
Wage growth unlikely to accelerate much further Wage growth remained relatively strong in October but with the labour market loosening, we think earnings growth will settle around 0.5%. Meanwhile, the plunge in “core” household spending in October points …
Exports probably slumped in November Following the modest rise in October, exports almost certainly slumped in November due to the disruption to the Keystone pipeline as well as the CN Rail strike. That will cause a further slowdown in GDP growth in the …
5th December 2019
Net trade to boost fourth quarter GDP The sharp narrowing of the trade deficit, to a 16-month low in October, was distorted by a GM-strike related fall in auto imports and a big drop back in consumer goods imports, as the stockpiling ahead of the …
Growth likely to remain subdued The third estimate of euro-zone GDP in Q3 confirmed that the economy remained sluggish, with net trade continuing to weigh on growth. And we doubt that things will get any better in the coming quarters. As expected, …
Net trade the bright spot as consumption set to remain subdued The stagnation in retail sales in October suggests that consumption growth remained sluggish in the fourth quarter. And while net exports should continue to support GDP growth, the weakness in …
Surprise drawdown a false dawn US crude stocks fell last week on the back of increased refinery throughput. However, with stocks well above their historical average, and with the US economy set to slow, this latest report doesn’t alter our view that US …
4th December 2019
Concerns around rising interest rates drive up home purchase demand Concerns that a jump in the 10-year Treasury yield would herald a rise in mortgage rates look to have persuaded some buyers to bring forward a home purchase application, with demand …
A good start to Q4 The 0.8% m/m rise in Brazilian industrial production in October provides early evidence that GDP growth in Q4 is shaping up to be a bit stronger than Q3’s 0.6% q/q. The industrial production figure was a touch weaker the Bloomberg …
PMIs suggest economy struggling to grow at all The softening in the all-sector PMI in November suggests that GDP growth has slowed sharply in Q4 from Q3’s 0.3% q/q rise and has perhaps even turned negative. But we think that the PMIs are overstating the …
France and Spain still outperforming November’s final euro-zone PMI is consistent with very anaemic GDP growth in Q4 and the national indices point to continued weakness in both Germany and Italy, while France and Spain remain relative bright spots. The …
Growth will continue to disappoint GDP growth fell short of expectations in the third quarter and we think it will remain much weaker than most anticipate. As such, we reiterate our view that the RBA will cut interest rates in February and April and …
A slow recovery The slightly better-than-expected Brazilian Q3 GDP growth figure of 0.6% q/q adds to the evidence that the recovery is gaining some momentum. But growth remains soft, and the central bank is still almost certain to lower the Selic rate by …
3rd December 2019
Construction falls for seventh consecutive month November’s headline construction PMI increased from last month, which pointed towards the slowest decline in construction output since July. Nevertheless, it continues to point to a deterioration. The …
Saudi non-oil sector picks up, Egyptian price pressures continue to ease November’s whole economy PMIs suggested that activity in Saudi Arabia’s non-oil sector has continued to strengthen, but with fiscal policy set to be tightened, this strength is …
Inflation jump won’t prevent rate cuts, for now The rise in Turkish inflation in November is likely to mark the start of a steady upward trend over the next couple of years. This won’t prevent the central bank from cutting interest rates further at the …
Manufacturing still not out of the woods The small decline in the ISM manufacturing index to 48.1 in November, from 48.3, left it close to the decade-low reached in September. Despite the improvement some of the alternative manufacturing surveys and the …
2nd December 2019
Stuck in a rut The falls in the Swiss and Swedish manufacturing PMIs in November dash any hopes that the manufacturing sectors have gathered momentum in Q4. With the manufacturing recession in Germany set to rumble on, industrial output in Switzerland and …
PMI points to continued weakness South Africa’s manufacturing PMI slipped again in November, adding to the evidence that the economy remained weak in Q4. Figures released earlier today showed that South Africa’s manufacturing PMI fell from 48.1 in October …
Central Europe remains weak, Turkey continues to recover November’s batch of manufacturing PMIs for Central Europe showed a slight improvement on October’s figures but nonetheless remain consistent with a further slowdown in industrial output over the …
Economy continues to recover, strong growth likely in Q4 Turkey’s economy grew by a weaker-than-expected 0.4% q/q in Q3 but the lagged effects of policy loosening mean that the recovery is likely to gather pace over the next few quarters. The authorities’ …
Rise in manufacturing PMI an early signal of a recovery We wouldn’t read too much into the rebound in India’s manufacturing PMI in November but, with policy stimulus already in the pipeline, we think that the prospects for local manufacturers will improve …
Pressure on manufacturing appears to have eased The survey data improved across the board last month, hinting at a pick-up in growth momentum. But we doubt this marks the start of a decisive rebound in activity. The Caixin manufacturing PMI defied …
Industry remains weak, but some signs of improvement PMIs for Emerging Asia (ex. China) were slightly more positive in November, suggesting that while industry remains weak it is starting to recover. The continued improvement in PMIs for China provides …
Weak Q3 GDP growth set to be confirmed Today’s capital spending data suggest that business investment last quarter was in line with what was initially reported. Therefore, we don’t expect a major revision to GDP growth in next week’s second estimate. …
House price growth to ease in 2020 Our sales to new listings ratio suggests that house price growth will moderate before long . Even so given the sharp increase in recent months, we now expect prices to rise by around 7% in 2020 and 5% in 2021. The 2.0% …
Export figures point to continued weakness in external demand Korean export growth in November was much weaker than expectations and suggests that external demand remains in the doldrums. Headline inflation was also weaker than expected last month. Korean …
Total returns outlook for next year weakens The November’s IPF Consensus survey highlighted a weakening in the property outlook in the next year, though compensated by some improvement in 2021. Despite this, we think they are still too upbeat about …
29th November 2019
Domestic demand growth accelerates GDP growth slowed sharply to just 1.3% annualised in the third quarter, but the expenditure breakdown was more encouraging than we had expected. The acceleration in domestic demand growth reduces the case for adding more …
Weak economic growth guarantees a rate cut India’s economy slowed further in Q3 and, with a strong rebound in the near term looking unlikely, there is a rising chance that the rate cut that is almost certain next week will be followed by another in …
Net lending expected to slow Net lending to property was relatively weak in October. And we don’t expect much of an improvement over the coming months as all-property capital values continue to decline and interest rates look likely to increase. Net …
Drop in mortgage approvals House purchase mortgage approvals fell sharply in October. Looking ahead, even if uncertainty were to lift at the start of next year, the housing market fundamentals do not support a pick-up in activity. We think growth in …
Core inflation unlikely to keep rising November’s jump in inflation is unlikely to be the beginning of a sustained upward trend in price pressures. With employment growth slowing and slack in the labour market increasing, wage growth seems likely to level …
Stronger growth in Sweden not likely to last The pick-up in Swedish GDP growth in Q3 means that a rate hike by the Riksbank at its next meeting is now pretty much a done deal. But if, as we expect, the economy slows next year, we think the Bank will have …
Economy to contract sharply this quarter The sharp fall in industrial production in October suggests the economy might have been hit harder by the sales tax hike than we were expecting. And while the unemployment rate remained unchanged in October, we …
Growth remains strong in Q4 The European Commission’s batch of Economic Sentiment Indicators (ESIs) for November suggest that, after slowing to a three-year low of 3.6% y/y in Q3, regional GDP growth picked up to 4.0% y/y at the start of Q4. The ESIs rose …
28th November 2019
Economic sentiment shouldn’t pull the rug out from under the Conservatives In contrast to the flash PMI’s for November which pointed to GDP growth slowing further, the European Commission’s Economic Sentiment Indictor (ESI) points to a stabilisation. And …
Sentiment still pointing to weak GDP growth Despite November’s small increase in the euro-zone Economic Sentiment Indicator (ESI), the index suggests that the economy is unlikely to have gained pace in Q4. The slight rise in the ESI, from 100.8 in October …
Positive surprise but economy is not out of the woods, yet The stronger-than-expected rise in quarterly Swiss GDP growth in Q3 was a bit of a relief and poses upside risks to our near-term forecast. But the outcome was skewed by weather-related effects …
House price growth accelerates in November We wouldn’t read too much into November’s pick-up in house price growth. Indeed, the big picture is that, even if the economic and political uncertainty eases next year, house price growth will pick up only a …
Private investment to fall further The renewed decline in machinery and equipment investment in the third quarter is consistent with the sharpest quarterly fall in private investment in three years. And we expect private investment to remain a drag on …
Plunge in sales after consumption tax hike not as bad as it seems Retail sales values fell more sharply in October than after previous sales tax hikes, but that largely reflects the smaller rise in prices this time around. Given that households brought …
Crude stocks will continue to climb US commercial crude stocks rose last week, largely on the back of an outflow from the government’s strategic reserve. Over the coming months, we expect slowing economic growth and faltering crude demand to lead to …
27th November 2019
Economic growth slowing less than feared The rise in durable goods orders last month was driven by a surge in orders for underlying capital goods, suggesting that business equipment investment is holding up better than anticipated . Together with the …
House prices benefit from lower mortgage rates Both the FHFA and Case-Shiller reported a rise in annual house price growth in September, as low mortgage interest rates and tight existing home inventory supported values. But inventory is healthier in the …
26th November 2019
Sluggish demand is being reflected in falling supply Global steel production continued to contract y/y in October, and we think it will remain weak in the coming months given subdued economic growth in key consuming regions . The World Steel Association …
Governor keeps faith with unconventional policy Nigerian policymakers left their key rate unchanged today, preferring to use unconventional policy rather than rate cuts to boost the economy. We suspect that most of these measures will fail, prompting a …
Mortgage approvals edge down in October Given the political and economic uncertainty, October’s drop in house purchase mortgage approvals came as little surprise. And even if uncertainty were to clear in the coming months, high house prices will keep …
Few signs of a rebound in imports around the corner Gold imports by China and India remained at historically low levels in October. Our view is that the gold price rally is now behind us, and that ongoing weakness in consumer demand will be one of the …
25th November 2019
