Sentiment up, price pressures coming off the boil but still strong The improvement in economic sentiment in January is consistent with the picture painted by other surveys. But the high level of firms’ selling price expectations shows that the ECB’s …
30th January 2023
Sharp slowdown in Q4, but sentiment improves further in January Economic sentiment in Central and Eastern Europe picked up again in most countries in January and our regional-weighted measure hit a four-month high. We still think that GDP in most …
Recession not off the table yet The fall in German GDP in Q4 shows that the energy crisis started to dent activity at the end of last year. This pours cold water on the recent optimism about the prospects for the euro-zone and suggests that a technical …
A Q4 fall in GDP The 4.9% increase in Polish GDP over 2022 as a whole is consistent with a slowdown in growth to around 1.6% y/y in Q4 and a small quarterly decline in output of around 0.5% q/q, confirming that the economy slumped towards the end of the …
Recession began in Q4 after all Data published today show that the economy contracted by 0.6% q/q in Q4 as the resilience previously reported towards the end of last year has been revised away. With the more timely data for December and January still …
GDP up in Q4, but still struggling to reach past peaks Spain’s GDP increased in Q4 and is performing better than we expected only a couple of months ago. But Spain is still a laggard in Europe, with the economy smaller than it was before Covid. We think …
27th January 2023
Balanced risks to our 2023 inflation view Tokyo inflation rose to 4.4% in January as fresh food and services inflation rose. But with the boost from the weaker yen fading and lower commodity prices due to feedthrough, inflation should fall this year. …
Resilient new home sales set for gradual recovery The small rise in new home sales in December confirmed that the new build sector is holding up better than the wider market. This likely reflects builders offering generous incentives to attract buyers as …
26th January 2023
Market sentiment declined further in Q4 as the outlook deteriorated The latest RICS Survey conveyed a further decline in confidence following a turning point in the previous quarter. Comments from surveyors point to high interest rates as the main …
Underlying pace of growth weakens The 2.9% annualised rise in fourth-quarter GDP was a little stronger than we had expected, but the mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on. We …
Occupier demand contracts further as the economy slows The slowing economy led to a further fall in occupier demand in Q4, with retail seeing the largest contraction. So far, the fall in rental expectations has been relatively modest and surveyors expect …
Growth slowed in Q4 and we expect the economy to weaken further over the coming quarters against a backdrop of weak global demand, high interest rates and elevated inflation. According to the advanced estimate published today, GDP rose by 2.4% q/q in Q4 …
Economic output fell in the final quarter of 2022, and we think the economy will continue to struggle over the coming year as high interest rates and weak overseas demand weigh on prospects. Our 2023 growth forecasts are well below the consensus. …
Sharper markdowns mean worst quarter for total returns since Q2 2009 The 4.45% hit to all-property capital values in Q4 was more substantial than our end-2022 forecasts implied, although recent news of bigger valuation markdowns in December made this less …
25th January 2023
Clear signs of weakening product demand Even though the recovery in refinery activity stalled last week, petroleum product stocks rose amid weakening demand, which we expect to persist for a bit longer as the US economy slows further. The EIA’s weekly US …
Recession might be avoided, but outlook still poor The further increase in the Ifo Business Climate Index in January confirms that the recovery in German business sentiment that started at the end of 2022 has continued this year. But the fall in its …
Stubbornly high inflation will prompt further RBA rate hikes Inflation rose further last quarter and remains far too high for the RBA’s liking. Accordingly, we’re sticking to our non-consensus forecast that the Bank will lift the cash rate to 3.85% by …
Some nuggets of comfort for the RBNZ The Q4 CPI data revealed a smaller rise in non-tradeable prices than the RBNZ had expected but, with those prices still rising at a worrying pace, it is not clear that this alone will be enough for the Bank to drop …
24th January 2023
Persistent price pressures may prompt more tightening from Banxico The small rise in Mexico’s headline inflation rate, to 7.9% y/y, in the first two weeks of January means that there is a growing risk that Banxico delivers a bit more tightening beyond the …
Recession on the cards for 2023 The renewed fall in the flash UK composite PMI in January suggests that some of the resilience in economic activity towards the back end of 2022 petered out in early 2023. That supports our view that the economy is …
Further improvement in activity amid high prices pressures The increase in the flash euro-zone Composite PMI for January left it consistent with the economy roughly stagnating. With employment intentions and price pressures still high, there is nothing …
Big Budget giveaways will have to wait until March 2024 December’s worse-than-expected public finances figures suggest the Chancellor will wait until closer to the next election before announcing any significant tax cuts and/or spending rises. Public …
Industry resilient, but retail sales hit by high inflation Polish industrial production remained resilient in December but high inflation weighed heavily on real incomes and took its toll on retail sales. On balance, we think that Poland’s economy is …
23rd January 2023
Sales continue to fall, but end is in sight The modest fall in existing home sales in December suggests the impact of the spike in mortgage rates last year has largely washed through. The recent fall in mortgage rates has helped to lift homebuyer …
20th January 2023
Retail sales appear to have ended 2022 with a bang Retail sales edged down in November but the preliminary estimate of a 0.5% m/m rise in December, despite the double-digit fall in gasoline prices, implies that sales volumes rose sharply at the end of …
Aluminium production growth to struggle in 2023 Global aluminium production growth slowed to 2% in 2022 from 2.7% in 2021. We forecast that weaker output growth in China and another difficult year in Europe will lead to even softer growth this year. …
Disappointing end to a difficult year The 1.0% m/m fall in retail sales volumes in December was much worse than both we and the consensus (+0.5% m/m) had expected. That meant sales volumes fell 1.3% q/q in Q4 and were a disappointing 5.4% below their …
Inflation will fall below 2% by mid-2023 Inflation hit 4% in December but due to the government’s energy subsidies we expect it to fall below the Bank of Japan’s 2.0% target by mid-year. The increase in inflation from 3.8% to 4.0% in December was in line …
Commercial crude stocks will continue marching upward Commercial crude stocks unexpectedly increased this week. Weak refining activity and stable production helped stocks build. We expect that slower US economic activity over the next six months will …
19th January 2023
Starts hold up better than expected Single-family housing starts surprised on the upside in December. But it is too soon to call the bottom of the market. Indeed, another substantial fall in permits means we think starts are set to resume their downward …
Demand for mortgages collapses due to spike in mortgage rates The Q4 2022 Credit Conditions Survey shows that while lenders tightened lending criteria in the aftermath of the “mini” budget, the main constraint on lending volumes was a collapse in demand …
Prices and activity continue to plummet There was little to cheer in the December RICS survey, with prices continuing to drop and sales volumes falling further from November’s already-subdued levels. The past prices balance of the RICS Residential Survey …
Unemployment rate will soon start to rise in earnest The labour market struggled in December and the unemployment rate has started to rise. With economy activity set to slow sharply, t won’t be long before unemployment increases in earnest . The 14,600 …
Exports heading into 2023 on the backfoot While the trade deficit narrowed further in December, most of that reflects falling import prices. Export volumes likely fell slightly and with the global downturn weighing on external demand, export growth will …
Manufacturing output slumps to 14-month low The manufacturing sector appears to be in recession and, even if China’s emergence from its Covid restrictions provide some boost later this year, the deterioration in the survey evidence suggests the …
18th January 2023
Consumers buckle under higher rates The 1.1% m/m fall in retail sales in December, which followed a downwardly-revised 1.0% fall in November, adds to the evidence from the surveys that the economy was losing momentum towards the end of last year. …
Industrial weakness offsetting retail strength November’s hard activity figures out of South Africa were a mixed bag, but we think that weakness in industrial sectors will increasingly dwarf any strength elsewhere especially as power cuts and softening …
Underlying price pressures still strong The euro-zone has probably passed peak inflation as sharp declines in food and energy inflation are set to drag down the headline rate. But December’s final HICP data showed that underlying inflation remained …
Taiwan’s economy unexpectedly contracted in Q4, driven by a sharp fall in exports. We expect the economy to remain weak over the coming quarters as exports struggle amid a global recession and higher interest rates weigh on domestic demand. According to …
End of monetary tightening not far away as inflation falls Inflation in South Africa came in softer than expected, at 7.2% y/y, in December, and with core inflation ticking down as well, we think that a slowdown in the tightening cycle is nailed on. We …
Inflation may be falling, but services inflation is still too strong for comfort The small drop in CPI inflation from 10.7% in November to 10.5% in December (consensus forecast 10.5%) and the unchanged core rate of 6.3% (consensus 6.2%) suggest the …
Business investment likely ended 2022 with a whimper “Core” machinery orders fell to their lowest level since February 2022 in November, pointing to a contraction in spending on machinery and transport equipment in Q4 from Q3. The upshot is we now have …
Encouraging signs despite elevated core inflation Although the annual rates of core inflation remain elevated, the three-month annualised rates of CPI-trim and CPI-median dropped back to 2.5% in December. Elevated inflation expectations mean that the …
17th January 2023
Outlook improving, but high interest rates will keep economy weak Economic sentiment in Germany improved further at the start of 2023 adding to the signs that the economy will hold up better than we feared. But with underlying price pressures still …
Strong wage growth adds pressure on the Bank of England to raise rates Consistent with the economy proving to be more resilient than expected, November’s labour market data showed that conditions remained tight and wage growth stayed strong. This will …
A smaller-than-expected hit from reopening China’s statistics bureau claims that GDP was unchanged q/q in Q4. That is implausible, even accounting for December data showing surprising economic resilience in the face of the reopening wave of infections. …
Wage and price inflation expectations still too strong for comfort The Bank of Canada’s latest quarterly surveys leave no doubt that higher interest rates are weighing on demand, but still don’t show a convincing moderation in wage and inflation …
16th January 2023
Lending activity still strong in December On the surface, net lending to real estate in December looks to have reached its highest since October 2008. However, this apparent spike in lending was almost entirely due to the addition of a recently-converted …
Dip in inflation to turn CBN’s hawks into minority December inflation data out of Nigeria, at 21.3% y/y, came in below expectations, and provided a first sign that inflation passed its peak. Policymakers are likely to latch onto the fall in inflation and …
Surge in motor vehicle sales fails to offset weakness elsewhere The easing of supply shortages provided a big boost to motor vehicle shipments in November, but this failed to offset falls elsewhere. While there is scope for transportation equipment …
