Unemployment to rise to 2.5% by year-end The continued tightness of the labour market is reducing the pressure on the Bank of Japan to provide additional stimulus but we expect unemployment to rise over the coming months. Both the labour force and the …
1st October 2019
Oil output cuts drag growth down GDP growth in Saudi Arabia slowed further to 0.5% y/y in Q2 and, in quarter-on-quarter terms, the economy officially entered recession. The slowdown reflected a greater drag from oil output cuts, which more than offset …
30th September 2019
Households are healthy while the government lends a hand The revised GDP figures suggest the response to Brexit uncertainty since the referendum has been larger than previously thought. While headline GDP growth was little changed in recent years, …
The rise in net lending unlikely to last August’s solid rise in net lending is unlikely to be sustained. Indeed, with capital values set to decline further in the months ahead, we expect that demand for credit will fall from its current levels this year. …
Labour market cooling Euro-zone employment growth looks set to slow over the rest of this year, and remain subdued in 2020. So we expect wage growth to weaken too, eventually prompting the ECB to loosen policy again. The decline in the euro-zone’s …
Approvals down despite strong price competition Mortgage approvals for house purchase fell in August, more than reversing the gains seen in June and July. Looking ahead, despite evidence of strong price competition among mortgage lenders, we think a …
Strong PMIs likely a false dawn China’s manufacturing PMIs jumped this month, indicating that activity got a break from the ongoing slowdown. But this is unlikely to mark the start of a turnaround. There are signs of a slowdown in construction activity, …
Consumption to fall sharply in Q4 The surge in retail sales in August underlines that a last-minute spending in spree ahead of the sales tax hike is still possible. That means that consumption may fall by more than the 1.3% q/q drop we’ve pencilled in for …
Consumption growth slowing; equipment investment stagnant The modest rise in personal spending in August suggests that third-quarter consumption growth was weaker than we had previously anticipated, while the durable goods data indicate that business …
27th September 2019
Sentiment deteriorating again The renewed fall in the euro-zone Economic Sentiment Indicator (ESI) adds to the evidence that the region’s economy slowed further in Q3. For now, the weakness is concentrated in the manufacturing sector, and led by Germany …
Growth holding steady in Q3 The European Commission’s batch of Economic Sentiment Indicators (ESIs) for September suggest that growth held steady at 4.0% y/y in Q3. But with the industrial surveys deeply negative and signs that services sentiment is …
Consumers cautiously more confident September’s small rise in consumer confidence probably reflects the falling chances of a no deal Brexit rather than an improvement in the underlying economy. And it still leaves confidence at a pretty low level. That …
August uptick to prove a flash in the pan An upturn in Chinese output lifted global steel production growth out of the doldrums in August. But with environmental cuts being stepped up, and construction activity set to falter, we doubt this will last. As …
26th September 2019
Fall in US crude exports may prove temporary US crude stocks rose on the back of higher US production and a fall in crude inputs to refineries. Stocks could ease back again in the month ahead if the loss of Saudi oil lifts demand for US crude exports . …
25th September 2019
New home sales bounce back from weak July The volatility in new home sales continued into August, with a rise of 7.7% m/m not quite reversing the fall recorded in July. Flat demand for home purchase mortgages over the past couple of weeks argues against …
Physical demand unlikely to recover this year Gold imports in China and India remained extremely weak in August. With local currency prices likely to stay elevated, and growth in China set to slow, a turnaround in demand is unlikely anytime soon . Data …
House purchase mortgage approvals set to stay subdued August’s fall in house purchase mortgage approvals more than reversed July’s rise. And while price competition among mortgage lenders remains fierce, this has largely not translated into higher lending …
House price growth stabilises The gradual slowdown in house price growth seen over the past year came to a halt in July. Case-Shiller reported annual growth was unchanged at 3.2%, and the FHFA recorded a slight acceleration to 5.0%. Lower mortgage …
24th September 2019
Inflation below target, and set to remain low The Brazilian mid-month inflation figure of 3.2% y/y in September leaves the door open to further monetary easing over the coming months. Beyond that, the large output is likely to keep inflation below target …
Signs that price pressures are building Saudi Arabian consumer price figures showed that deflation eased to -1.1% y/y in August and we expect it to return to positive territory in annual terms at the start of next year. Saudi Arabian inflation rose from …
Softer inflation adds to argument for another cut Mexican inflation eased very slightly over the first half of September, supporting our view that policymakers at the central bank will cut their key rate from 8.00% to 7.75% on Thursday. Figures released …
Student loans and spending pledges leave the fiscal target dead in the water High government spending in the early months of 2019/20 and the change to how student loans are counted in August’s public finances data, combined with the spending increases …
Ifo still consistent with German recession The small increase in the headline Ifo Business Climate Index for September leaves it at a very low level and does not alter the fact that Germany seems to have entered recession in Q3. Moreover, the expectations …
PMIs suggest that growth has slowed in Q3 September’s fall in the euro-zone Composite PMI supports our view that economic growth in the currency union has slowed in Q3. And with no sign that core inflation is rising, and the ECB’s latest action unlikely …
23rd September 2019
Sales volumes remain stagnant Retail sales values increased by 0.4% m/m in July, but were unchanged in volumes terms, which supports our view that, after a brief surge in the second quarter, third-quarter GDP growth will drop back to between 1.0% and …
20th September 2019
Supply continues to stutter, but not by enough to boost prices Global aluminium production fell again in August, and we think this contraction could deepen in the months ahead. Despite this, we forecast that the price of aluminium will fall a little …
Slowdown in growth starting to look more pronounced The relatively weak batch of Polish activity data for August suggest that euro-zone weakness is taking an increasing toll on the Polish economy. Our GDP Tracker points to growth slowing from 4.4% y/y in …
Slowdown in inflation has further to run The slowdown in headline inflation in August has further to run once the sales tax hike leads to weaker price pressures. We think that inflation will eventually fall which will raise the clamour for monetary …
Homes sales surprise on the upside Existing home sales increased for the second consecutive month in August, to reach an 18-month high. But a number of factors argue against a sustained rise in activity. Demand for home purchase mortgages has seen only a …
19th September 2019
House price inflation set to rise further House price inflation picked up for the first time in nine months in August and the improvement in the sales-to-new listing ratio this year suggests that it will rise further. The 0.4% m/m rise in the Teranet …
Sales solid despite fading online boost Following two consecutive monthly gains, a fall in sales in August was always likely. In the event, sales fell by 0.2% m/m (consensus 0.0%, Capital Economics -0.5%) which dragged annual sales growth to an three …
Higher unemployment rate puts pressure on RBA The unemployment rate rose to 5.3% in August and we think a slowing in employment growth should drive the unemployment rate even higher, to 5.4% by the end of the year. Employment rose by a solid 34,700 in …
Growth to remain soft in 2019 Following the slowing in annual GDP growth in Q2, we suspect that economic activity will remain subdued throughout 2019 as soft business conditions and weak global growth weigh on growth. Production GDP growth eased to 0.5% …
Weaker refinery activity to boost stocks US crude stocks rose last week largely owing to a decline in refinery inputs. Relatively high stocks will continue to reassure the market that there are ample supplies to cover outages in Saudi Arabia . The EIA’s …
18th September 2019
Low mortgage interest rates give starts a boost Even ignoring the surge in volatile multifamily starts, August was a good month for homebuilding. Single-family starts and permits both saw decent gains, as low mortgage interest rates, a solid labour market …
Economy struggling to gain momentum The batch of Russian activity data for August suggest that the economy maintained a steady, if not inspiring, pace of growth in Q3. With growth unlikely to pick up markedly over the rest of the year, this provides …
Inflation set to fall further After edging down to 1.9% in August, headline inflation looks set to decline by another couple of percentage points in the next few months. Admittedly, base effects will push inflation back towards 2% for a few months around …
Inflation defies rising pay It is possible to put a lot of the fall in inflation in August down to clothing and computer game prices, which are volatile. But there’s no denying that overall inflation is strikingly weak given high wage growth. The fall in …
Inflation still weak, rate cut likely tomorrow South African inflation remained below the target midpoint in August, which we think will allow policymakers to cut their key rate from 6.50% to 6.25% at their meeting tomorrow. Figures released this morning …
Drag from net trade to ease in Q3 The fall in exports in August still leaves open the possibility of a rebound across the third quarter which means that the previous drag that net trade had on growth may have eased. The big picture though, is that exports …
Manufacturing not out of the woods yet The stronger-than-expected 0.6% m/m rebound in industrial production in August, which was driven by manufacturing, suggests that the drag on US producers from weaker global demand may be starting to fade. But the …
17th September 2019
More evidence of manufacturing malaise July’s fall in manufacturing sales volumes implies that GDP in the sector declined for the second month running. As Markit’s manufacturing PMI dropped below 50 again in August, the sector looks set to weigh further …
Inflation eases again, rate cut on the way Inflation remained above the central bank’s target in August, but the fact that core inflation slowed has strengthened our view that policymakers will cut their key interest rate in November. Figures released …
Rate cut almost certain as WPI inflation remains weak Wholesale price inflation is not the preferred measure of inflation for India’s policymakers but even so, the continued weakness in the headline rate in August increases the likelihood of another rate …
16th September 2019
Activity weakens further After worsening across the board in July, growth in industrial production, capital spending and retail sales fell even further last month. And with a strong rebound unlikely any time soon, we anticipate that more policy easing …
Underlying sales growth slows to more sustainable pace The 0.4% m/m increase in retail sales in August, which was well above the consensus expectation at 0.2% m/m, was helped by a suspicious looking 1.8% m/m increase in motor vehicle sales. Otherwise, …
13th September 2019
Labour cost growth still likely to slow in coming quarters The increase in nominal hourly labour cost growth to 2.7% in Q2 masks significant differences between countries and is partly due to a reduction in hours worked, rather than higher wages. We …
Industry rebounds, current account continues to improve The chunky 4.3% m/m rise in Turkish industrial production in July confirms that June’s dip in output was a blip. Meanwhile, the current account position has continued to improve. But efforts to …
Core inflation hits 11-year high even before impact of latest tariffs The further rise in core CPI inflation to an 11-year high of 2.4% in August won’t stop the Fed from cutting interest rates again next week, but it does provide further reason to believe …
12th September 2019
Another rate cut likely with inflation holding steady Headline consumer price inflation held steady in August and remained comfortably below the RBI’s target of 4.0%. This is the last set of CPI data that will be released before the MPC next meets in …
