Slowing activity growth will keep the Fed cutting The 1.9% annualised increase in third-quarter GDP, down only marginally from the 2.0% gain in the second, was a little stronger than we had expected. But it still pushed the economy’s annual growth rate …
30th October 2019
Weak recovery to spur further rate cuts The meagre 0.1% q/q rise in Mexican GDP in Q3 makes another interest rate cut at the next central bank meeting in November almost certain. The data release increases the likelihood of a larger 50bp cut. The 0.1% q/q …
ESI consistent with anaemic GDP growth The decline in the euro-zone Economic Sentiment Indicator (ESI) in October adds to the evidence that the economy started Q4 on weak footing. The fall in the ESI, from 101.7 in September to a 57-month low of 100.8 in …
Early signs of a Q4 slowdown The European Commission’s Economic Sentiment Indicators (ESIs) for October provided firmer evidence that weakness in manufacturing sectors in Central and Eastern Europe is now spreading to consumer-focused sectors. Overall, …
Rebound in sentiment still consistent with weak GDP growth October’s rise in the Swiss KOF Economic Barometer was not enough to offset the previous month’s drop and the series still suggests that activity will remain subdued into 2020. Given the …
Underlying inflation to ease further below RBA’s target While inflation edged up in Q3 we think the weakness in economic activity will cause it to fall again before long, prompting further easing by the RBA. Consumer prices increased by 0.5% q/q in Q3, in …
Private consumption will fall sharply in the fourth quarter The surge in retail sales ahead of the sales tax hike on 1 st October was as large as the one seen before 1997’s sales tax hike. We’ve pencilled in a 1.7% q/q slump in consumption in the fourth …
Annual house price growth stable The rise in month-on-month house price growth in August largely reflects issues with the seasonal-adjustment of the Case-Shiller index, rather than a sign that growth is once again accelerating. Annual gains were stable, …
29th October 2019
Lending struggles to grow in September Mortgage approvals for house purchase and remortgaging rose in September, but annual growth in both were still weak. Looking ahead, the outlook is subdued. Even if a Brexit deal is agreed soon, house purchase …
Upward trend in net lending not likely to continue We don’t expect the recent strength of net lending to property to be sustained as demand for credit is likely to be held back by falling all-property capital values and higher lending costs. Following an …
House prices continue to stagnate House prices saw subdued growth in October. And while in wage-adjusted terms, prices are on a gradual downward trajectory, any meaningful downward adjustment will take time. Looking ahead, we expect house price inflation …
Output to pick up from here, but not by much Temporary shutdowns in China and Japan caused annual growth in global steel production growth to contract in September. We expect production to bounce back a little as these temporary factors fade, though …
25th October 2019
Ifo adds to evidence that German services sector has lost steam The Ifo Business Climate Index (BCI) held steady at a very low level in October and, in line with the message from other surveys, showed that the German economy remained weak at the start of …
New home sales unchanged in September New home sales more-or-less held their ground in September, leaving them close to 12-year highs. Healthy levels of inventory will help sales make further progress over the next year or so but, given overall flat …
24th October 2019
GM strike plays only minor role in orders weakness The 1.1% m/m decline in durable goods orders in September was only partly due to the GM strike, with an unexpected decline in commercial aircraft orders and weakness in underlying orders also contributing …
Inflation remains soft, rate cuts ahead Mexican inflation remained at 3.0% y/y October, which supports our view that policymakers will cut their key rate from 7.75% to 7.25% by the end of this year. Figures released today showed that Mexican inflation …
Mortgage lending weakens Mortgage approvals among the high street banks slipped in September. And while annual growth on the UK Finance measure has stayed strong, that reflects a shift in market share towards the main high street banks. The big picture is …
PMIs suggest that the euro-zone economy is stagnating October’s marginal rise in the euro-zone Composite PMI is fairly disappointing after September’s large fall and reinforces our view that economic growth in the currency union is at a virtual …
Headwinds to manufacturing sector persist The decline in the manufacturing PMI to a three-year low in October is consistent with continued falls in industrial output. But a slump in inventories could be a sign that firms have underestimated the resilience …
Slow recovery next year GDP growth was sluggish in Q3, but looser fiscal and monetary policy should help the economy to regain some momentum in the quarters ahead. With external headwinds set to remain, the rebound in growth is only likely to be gradual. …
Surprise drawdown is cold comfort US crude stocks fell last week on the back of strong demand for both distillates and gasoline. But with stocks still comfortably above the five-year average, and the US economy set to slow further, this reading doesn’t …
23rd October 2019
House price growth resumes its downward trend Annual house price growth on the FHFA measure resumed its downward trend in August, slowing to a five-year low of 4.6%. Lower mortgage interest rates should help price growth stabilise over the remainder of …
Inflation slips again, but will soon pick up South African inflation edged down to 4.1% in September, but we expect that increasing fuel price pressures will cause the headline rate to rise later this year, preventing monetary easing. Figures released …
Homes sales drop back due to lack of inventory Following two months of gains, existing home sales dropped back in September. Given mortgage applications for home purchase have been more-or-less flat over the past few months, that decline in activity was …
22nd October 2019
50bp cut almost certain now The fall in Brazilian inflation to 2.7% y/y in the middle of October, one of its lowest rates on record, means policymakers will (barring any hiccups in the final vote on pension reform later today) almost certainly cut the …
Survey consistent with continued sluggish GDP growth The latest ECB Bank Lending Survey shows that firms’ demand for credit is softening, adding to evidence that the euro-zone economy will remain sluggish and in need of further policy support. In Q3, …
Looser fiscal policy on the way, unless Brexit is delayed September’s better-than-expected public finances figures do not change this year’s overarching themes of higher spending and borrowing. Nonetheless, there is a high chance that the Chancellor will …
Getting close to the trough Global aluminium output contracted again in September. But with a recovery in Chinese and Canadian production likely in the coming months, global aluminium supply may now be close to bottoming out . According to the …
21st October 2019
Slowdown continues in Q3 The batch of Polish activity data for September suggest that GDP growth slowed from 4.5% y/y in Q2 to 3.8-4.0% y/y in Q3. There was a marked improvement in the industrial sector last month . Industrial production rose by 5.6% y/y …
Deflation continues to ease Saudi consumer prices fell at their slowest pace so far this year in September and we expect the headline rate to return to positive territory at the start of 2020. Data just released showed that the headline inflation rate …
Export growth to weaken again before long Export volumes probably rebounded in the third quarter which should provide some relief for the Bank of Japan. But as external demand is set to weaken further, we think export volumes will fall at a faster rate …
House price inflation picks up – with even Vancouver enjoying a rebound House price inflation edged up to a four-month high of 0.7% y/y in September, from 0.6%, and the strength of the recent rebound in sales points to a further rally, which should extend …
18th October 2019
A stronger end to a weak quarter An uptick in activity in September didn’t avert a slowdown last quarter. And policy support is unlikely to prevent cooling external demand and slowing construction from resulting in more weakness ahead. GDP growth slowed …
Underlying inflation should fall towards zero next year The fall in inflation to a two-year low in September has further to run, increasing the pressure on the Bank of Japan to provide additional stimulus. The inflation data released today were all in …
Strong distillate demand is here to stay US crude stocks surged last week in part because of a decline in refinery throughput. We expect further builds in stocks over the next few months as the US economy slows, which will curb gasoline demand . The EIA’s …
17th October 2019
Economy struggling for momentum The soft Russian activity data for September suggest that GDP growth over Q3 as a whole was in line with Q2’s sluggish outturn of 0.9% y/y. Coming alongside low inflation, another 25bp interest rate cut at next week’s …
Output dragged down by GM strike The 0.4% m/m decline in industrial production in September was principally due to the GM strike, which dragged down autos production, and the unseasonably warm weather, which depressed utilities output. Nevertheless, aside …
Single-family starts make steady upward progress Strong new home sales have helped boost homebuilder confidence to a 20-month high, and single-family building permits and starts both recorded a small rise in September. The lack of existing home inventory …
Sales probably dropped back in September The rise in sales volumes suggests that, following July’s 0.1% fall, manufacturing GDP rose by 0.5% m/m in August. But as the General Motors strike in the US weighed on auto production in Canada in September, …
Lenders continue to tighten credit A weaker economic outlook and stronger risk aversion among lenders led banks to tighten credit availability in Q3. What’s more, lending to commercial property was also reined in. According the Bank of England’s Credit …
Disappointing end to Q3 September’s retail sales figures were perhaps a bit of a relief given the intense Brexit uncertainty, but were hardly a picture of strength. However, if a Brexit deal is indeed agreed soon, household spending growth should regain …
Unemployment set to rise again before long The RBA will breathe a sigh of relief after the unemployment rate declined in September. But we think it won’t be long before unemployment starts to rise again, forcing the RBA to provide additional stimulus. The …
Underlying consumption growth slowing The drop back in retail sales in September was driven partly by a price-related drop in gasoline sales, but the fact that underlying control group retail sales were unchanged provides another clear sign that …
16th October 2019
Inflation to fall to 1.5% by early 2020 Headline inflation was unchanged at 1.9% in September but, as some of the temporary factors that have been boosting inflation fade, we expect it to fall over the next six months. While core inflation will remain …
Inflation surprisingly subdued in September Unchanged CPI inflation of 1.7% in September was softer than either we or the consensus (1.8%) expected which might delay interest rate hikes following a Brexit deal and increase the chances of rate cuts if …
Easing headline inflation not yet a concern for the RBNZ The decline in headline inflation from 1.7% in Q2 to 1.5% in Q3 is unlikely to concern the RBNZ as it was still above their forecast in August. But we think subdued activity will mean that …
Above-target inflation won’t stop policy loosening Inflation in Nigeria picked up to 11.2% y/y in September, but we still expect that policymakers will cut their key rate in November. If policymakers opt to leave the rate on hold, they will probably try …
15th October 2019
Stimulus still underwhelming Credit growth failed to pick up in September despite recent policy easing. And while we expect policymakers to take more aggressive action before long, the impact of any easing on credit growth and economic activity will …
Deeper cracks appearing in the labour market The drop in employment and tick down in wage growth in August is further evidence that deeper fissures are starting to appear in the labour market. However, the unemployment rate is still low and wage growth …
