Further stimulus needed Monetary easing is failing to lift bank loan growth, while fiscal constraints are weighing on broader credit expansion. This should increase pressure on the PBOC to loosen policy more decisively. Chinese banks extended RMB 661bn in …
11th November 2019
Norwegian core inflation holds steady While we expect the Norges Bank to leave its key policy interest rate on hold at 1.50% into 2022, the persistence of above-target core inflation in Norway will ensure that it maintains a comparatively hawkish bias …
Business investment to slow after tax hike The continued fall in machinery orders suggests that the recent strength in capital goods shipments won’t last. While we expect the preliminary estimate of GDP due on Thursday to show a 1.0% q/q rise in …
Cracks appearing in Canada’s labour market The details of October’s Labour Force Survey were worse than the modest fall in employment first suggested. Full-time and private sector positions fell, while the rise in public sector and part-time positions was …
8th November 2019
Shipments improve amid trade deal optimism The contraction in both exports and imports eased more than expected last month. But even if the “Phase One” US-China trade deal crosses the finish line, it is unlikely to alleviate the main headwinds facing …
Consumer spending probably slumped in Q4 The surge in household spending in September adds to the evidence of a last-minute spending spree ahead of October’s sales tax hike. While that raises the chances of a deep slump in the following months, we feel …
Lower inflation keeps door open to easing The fall in Brazilian inflation to 2.5% in October, one of the lowest rates on record, makes another 50bp cut in the Selic rate at December’s Copom meeting almost certain. That said, policymakers have given a …
7th November 2019
Car troubles send manufacturing into reverse Manufacturing output fell further than expected in September, adding to the evidence that South Africa’s economy contracted over Q3. And a key business survey pointed to continued weakness in early Q4. Figures …
Concern over prolonged Brexit uncertainty The deterioration in workload expectations is consistent with the fact that, with Brexit uncertainty prolonged and commercial property values expected to fall, a strong increase in the construction activity is …
Annual house price growth slips below 1% Slowing house price growth on the Halifax index brought it closer to the other main price measures. With house prices high compared to incomes and interest rates close to their floor, we don’t expect a pick-up in …
Easing capital outflows keep PBOC on the side-lines The official foreign exchange reserves figures suggest that the PBOC continued to refrain from direct FX intervention last month as renminbi depreciation pressure subsided. This points to a decline in …
Manufacturing recession to continue The decline in industrial production in September confirms that German manufacturers are still firmly in a recession. We expect this to continue well into next year, causing the economy as a whole to contract. The 0.6% …
Growth jumps, but this is not the start of a sustained rebound The jump in growth in Q3 was mainly driven by temporary factors relating to the delayed 2019 budget. Once this distortion drops out, we expect growth to settle at around 6.0% as a tough …
Net trade should support trade over coming quarters Net trade probably didn’t bolster GDP growth in the third quarter which adds to the evidence that GDP growth slowed in Q3. And weaker capital goods imports suggest that the slump in business investment …
US commercial stocks to increase US commercial crude stocks rose on the back of higher net imports and a fall in inputs to refineries. We expect a slowdown in the US economy to lead to further builds in inventories in the coming weeks . The EIA’s weekly …
6th November 2019
Applications for home purchase drop back as economy slows Despite stable interest rates, demand for home purchase mortgages dropped back in October, and had reached a two-month low by the end of the month. Concerns around the economic outlook, a shortage …
Below-target inflation to keep easing cycle going The decline in Russian inflation to 3.8% y/y in October is likely to be followed by further falls in the coming months, providing scope for the central bank’s easing cycle to run a little further. We …
Heading towards a weak end to the year September’s euro-zone retail sales data suggest household consumption made a positive contribution to GDP growth in Q3. Meanwhile, the upward revision to October’s euro-zone Composite PMI still leaves it pointing to …
Rise in the unemployment rate not a big deal for the RBNZ The rise in the unemployment rate to 4.2% in Q3 only reverses the decline in Q2 so we doubt the RBNZ will be too worried at this stage. The 0.2% q/q increase in employment was lower than the …
5th November 2019
Trade to remain a drag on growth The narrowing in the trade deficit to $52.5bn in September, from $55.0bn, confirms that net trade was broadly neutral for third-quarter GDP growth, although we expect it to become a renewed drag in the fourth quarter. The …
Export weakness to weigh on GDP growth September’s slump in export volumes means net trade almost certainly weighed on GDP growth in the third quarter. With new export orders falling in October, we expect GDP growth to slow further. September’s 1.7% m/m …
PMIs recover, but from a very low level The recovery in the services PMI in October will allay fears that the largest sector of the economy is slipping into recession. Nonetheless, the survey suggests that the risks to our forecast that GDP growth will …
Saudi non-oil sector keeps up momentum, but UAE’s slump continues October’s whole economy PMIs suggest that the upturn in fortunes for Saudi Arabia’s non-oil sector continued at the start of Q4. In contrast, the recent slump in the UAE appears to be more …
Official figures overstate health of economy GDP growth in Indonesia has been suspiciously stable at around 5% over the past five years, and it was no surprise that it recorded another quarter of growth at this rate in the third quarter. Our Indonesia …
First increase in four months, but no recovery in sight October’s headline construction PMI increased for the first time in four months. But it continues to point to a deterioration in construction activity. Further, with Brexit-uncertainty prolonged, a …
4th November 2019
Further drop in inflation, easing cycle isn’t over just yet The drop in Turkish inflation last month probably marks the trough and inflation is likely to rise over the coming months. Pressure from President Erdogan and recent sanguine inflation forecasts …
Consumption to remain subdued The decline in real retail sales in the third quarter suggests that consumption growth remained subdued. And with the bulk of the tax refunds already paid, the outlook for the fourth quarter isn’t great either. The 0.2% m/m …
Manufacturers still struggling The muted rebound in the ISM manufacturing index to 48.3 in October, which left it only slightly higher than September’s decade low of 47.8, takes some of the shine off the better-than-expected payrolls data released earlier …
1st November 2019
Underlying pace of payroll gains rebounding The solid 128,000 gain in non-farm payrolls was more impressive than it looked given it was depressed by the GM strike and a census-related drop in Federal employment. Together with upward revisions to previous …
A bumpy recovery The weaker-than-expected 0.3% m/m rise in Brazilian industrial production in September serves as a reminder that, while the economy is now strengthening, it will be a weak and bumpy recovery. The outturn was in line with our forecast but …
Consistent with manufacturing recession While the manufacturing PMI recovered in October from September’s extremely weak level, it is still consistent with a recession in the manufacturing sector. The PMI reading of 49.6 (up from 48.3 in September) …
More evidence of weakness South Africa’s manufacturing PMI came in at 48.1 in October, which wasn’t as bad as most analysts had feared. But the measure still suggests that the economy has remained weak in recent months. Figures released earlier today …
Return of deflation to ring alarm bells at the SNB The confirmation this morning that Swiss inflation fell back into negative territory in October for the first time since November 2016 will reignite deflationary fears at the SNB and strengthen its …
Russia & Czech weak, but Turkey likely to improve The weak Russian and Czech manufacturing PMIs for October provide reason to expect the country’s industrial sectors to continue to struggle. Meanwhile, even though the Turkish PMI fell last month, it is …
Drop in manufacturing PMI should reverse soon The drop in the manufacturing PMI in October to a two-year low is a worrying sign that business conditions have further deteriorated. But with fiscal policy being loosened and further monetary easing still on …
The survey data offer conflicting signals A divergence in the official and unofficial PMIs makes it unusually difficult to gauge how the economy performed at the start of Q4. On balance, growth appears to have picked up last month but activity is unlikely …
Industry remains weak, but some hope for an improvement PMIs for Emerging Asia (ex. China) softened slightly last month and continue to suggest that industry remains weak. The PMIs for China gave mixed signals, but on balance provide some hope for a …
Sharp drop in exports not as bad as it seems Korean exports fell sharply again in y/y terms last month, but the sector is in better health than the headline data suggest. Meanwhile, Korea exited deflation in October and inflation should continue to rise …
House price growth to ease in 2020 Our sales to new listings ratio suggests that house prices will continue to surge in the coming months before moderating in the new year . We expect prices to rise by 5% in 2020 and 2021. The 1.2% rise in CoreLogic’s new …
Unemployment rate will keep rising The jump in the unemployment rate in September has further to run as new job offers are drying up. That increases the chances that the Bank of Japan will eventually have to cut interest rates. The labour force edged up …
Surveys suggest growth will remain subdued The smaller-than-expected 0.1% m/m rise in GDP in August partly reflected temporary factors. While the unwinding of those factors may have given GDP a small boost in September, the latest business surveys point …
31st October 2019
Italian stagnation to continue Italy’s economy eked out only a small expansion in Q3, and it looks set to continue performing very poorly over the coming years. We think that it will fail to grow at all in 2020. The 0.1% q/q increase in Italy’s GDP in Q3 …
Economy to continue slowing The slightly better-than-expected euro-zone Q3 GDP figure does not alter the fact that the region is expanding at only a very modest pace. What’s more, forward-looking indicators, along with the deteriorating global backdrop, …
Activity weighed down by uncertainty and retail weakness The RICS survey adds to the picture that weakness in the retail sector and Brexit-related uncertainty will continue to weigh on all-property rental values over coming quarters. The RICS Commercial …
Recession to extend into Q4 Hong Kong’s first recession in a decade is shaping up to be deeper than anticipated. And while last quarter will probably mark the trough in q/q growth, the city’s economy will continue to struggle. The city’s GDP contracted …
Outperformance to continue Taiwan’s economy continued to perform strongly last quarter, thanks mainly to an acceleration in government spending and strong export growth. The outperformance of the economy is the main reason why we think the central bank …
A weaker start to Q4 The official PMIs fell by more than expected this month, reinforcing our view that the improvement at the end of Q3 didn’t mark the start of a sustained recovery . The official manufacturing PMI declined from 49.8 in September to an …
Manufacturing sector to remain under pressure While industrial production contracted in the third quarter, robust business investment, a boost from net trade and soaring consumer spending should have ensured a strong rise in Q3 GDP. However, the outlook …
Strong gasoline demand, for now US commercial crude stocks surged last week owing to a jump in net imports. Over the coming months, we expect a slowdown in the US economy to lead to further builds in inventories . The EIA’s weekly US Petroleum Report, …
30th October 2019
