A disappointing start to Q3 July’s small fall in euro-zone industrial production marked a soft start to Q3 and the surveys suggest that the downturn will continue, encouraging the ECB that it is right to loosen policy later today. The 0.4% m/m fall in …
12th September 2019
Housing demand stagnates once more Having seen a small improvement across June and July, housing demand lost all upward momentum in August. Looking ahead, given the high level of house prices and ongoing political uncertainty, a recovery in house price …
Business investment to slump after tax hike The drop in machinery orders in July didn’t reverse the jump in June and we still think that business investment rose at a strong pace in Q3. However, a renewed fall after October’s sales tax hike is likely . …
US product demand appears to be losing steam Another sharp fall in US stocks suggests crude demand is holding up well, despite some signs of deterioration in economic activity data. However, we suspect that crude stocks will soon start to build as …
11th September 2019
Industry remains in the doldrums The 0.4% m/m fall in Mexican industrial production in July adds to our view that economic activity remains subdued and Banxico will cut interest rates later this month. The decline in industrial production in July was …
Credit growth holds steady Monetary easing has so far failed to generate much of a pick-up in credit growth, which remained unchanged last month. This should push policymakers to take further action. Chinese banks extended RMB1,210bn in net new local …
Losing some shine July’s figures showed that the labour market has remained remarkably resilient despite the underlying weakness of economic growth, but some small cracks are starting to appear. The most striking aspect of the latest figures was the rise …
10th September 2019
Mortgage price war is making its mark Price cuts from lenders have helped to push up the share of high LTV loans and fixed-rate deals, suggesting that the mortgage price war is increasingly making its mark. But there is little sign that lenders have …
Weak inflation further undermines the Riksbank’s hawkish stance The weakness of Swedish inflation in August pours even more cold water over the Riksbank’s forecasts for an interest rate hike over the next six months. We are sticking to our view that …
Further decline in inflation opens door for more rate cuts The decline in Egyptian inflation in August to a six-year low of 7.5% y/y makes it is almost certain that the central bank will follow up last month’s 150bp interest rate cut with further easing. …
Factory-gate deflation deepens Weakening demand dragged producer price inflation further into negative territory last month while surging pork prices kept consumer price inflation elevated. With demand-side pressures on prices increasingly subdued, we …
Falling inflation seals the deal for September rate cut The sharp drop in Mexican inflation from 3.8% y/y in July to 3.2% y/y in August is likely to be followed by further falls over the rest of the year. That should pave the way for more monetary easing …
9th September 2019
Political chaos, yes. Economic chaos, no. While Parliament seems to be falling apart, the economy is holding up reasonably well. July’s surprisingly strong rise in GDP suggests that it has not fallen into a recession. Even if the +0.3% m/m and 0.0% 3m/3m …
Export growth turned negative again Exports fell last month as global demand softened and US tariffs continued to take their toll. Imports improved thanks to strong infrastructure spending but remain consistent with a further economic slowdown. Meanwhile, …
Brexit heightens uncertainty, but retail remains the main drag The IPF Consensus forecast downgraded its forecasts for all-property total returns this year to 0.9% p.a.. Although the outcome of Brexit is likely to be an important driver of commercial …
6th September 2019
Sharp slowdown in private job growth partly offset by temporary census hiring The 130,000 gain in non-farm payroll employment in August was flattered by the hiring of 25,000 temporary workers to help prepare for next year’s census. More generally, there …
Labour market shrugs off global concerns August’s broad-based 81,000 jump in employment shows that the economy continues to shrug off global headwinds. But with the employment surveys weakening in recent months, we are doubtful that this strong …
Low inflation opens door for further rate cuts The small rise in Brazilian inflation (to 3.4%y/y in August) is unlikely to trouble policymakers at the central bank. With the headline rate below target and the economy struggling, we expect a 50bp cut in …
Growth likely to remain subdued The third estimate of euro-zone GDP in Q2 confirmed that the economy slowed, with both consumption and net exports contributing to this deceleration. With household income set to lose pace and global economic growth remain …
Renewed Halifax Index broadly in line with other measures While the revamped Halifax House Price Index pointed to slightly faster annual house price growth in August, it is a far cry from the unusually strong rates shown by the old series. Nonetheless, …
Wage growth should settle around 1% The drop in labour cash earnings in July was driven by volatile bonus payments whereas regular earnings accelerated. While we expect the unemployment rate to rise again before long, wage growth should settle around 1%. …
US commercial crude stocks slump again, but not for much longer! US commercial crude stocks plunged again last week as net imports surged. Looking ahead, we expect higher US oil production and refineries going into scheduled maintenance to lead to …
5th September 2019
Falling inflation to keep monetary easing cycle going The fall in Russian inflation to a weaker-than-expected 4.3% y/y last month strengthens our view that the central bank will lower its policy rate by 25bp when it meets tomorrow. Soft underlying price …
Activity set to slow further in the second half of the year The fact that the Swiss economy grew slightly faster than we had expected in Q2 is of limited solace given the sizeable downward revisions to the back data. The risks to our GDP forecast this …
Trade won’t provide a large boost in Q3 The narrowing in the trade surplus in July was probably driven by a decline in export volumes so we doubt that net trade provided much of a boost to GDP growth in Q3. The trade balance eased from a downward revised …
Net trade likely to remain a drag on GDP growth The small narrowing in the trade deficit in July was driven by a rise in exports and leaves net trade on track to be nothing worse than a small drag on GDP growth in the third quarter. But that drag is …
4th September 2019
Falling energy prices pull trade balance back into deficit July’s trade data show that non-energy exports are holding up better than the business surveys might suggest, while the weakness in key import components suggests domestic demand growth remains …
Home purchase demand drops despite further fall in mortgage rates August’s rebound in overall mortgage applications was driven by buoyant refinancing activity, while home purchase applications fell. A further drop in the 10-year Treasury yield means that …
Services PMI showing cracks but unlikely to break The small drop back in the services PMI in August could indicate that the weakness in some parts of the economy is starting to feed through into the services sector. However, the services PMI is still at a …
PMIs suggest Italy’s troubles rumbling on The small upward revision to August’s euro-zone PMI leaves it still pointing to slow GDP growth at the start of H2. And the fall in retail sales in July suggests that consumption started Q3 on weak footing. The …
Growth to remain subdued The solid rise in GDP in the second quarter shows that Australia’s economy has come through the housing downturn with cuts and bruises but hasn’t faltered. Even so, we only expect a sluggish recovery . The 0.5% quarterly rise in …
Survey weakness will reinforce Fed’s trade war fears The fall in the ISM manufacturing index to 49.1 in August, from 51.2, left the index at its lowest level since January 2016 and points to another 25bp rate cut at the Fed’s meeting later this month. The …
3rd September 2019
A bad start to Q3 The surprising 0.3% m/m drop in Brazilian industrial production in July probably seals the deal on a 50bp interest rate cut at the next central bank meeting on 18 th September. July’s outturn was not as bad as the 0.7% m/m contraction …
Plunge in UAE PMI raises concerns over outlook August’s whole economy PMIs from the Gulf suggest that the pick-up in growth in non-oil sectors seen in the first half of the year has topped out. If oil prices stay low and fiscal policy becomes less …
Construction continues to contract The decline in the headline construction PMI in August provides further evidence that construction activity has failed to recover so far in Q3. With firms cautious about the outlook, commercial property construction …
Persistent subdued inflation keeps the pressure on the SNB This morning’s release of Swiss inflation data for August confirmed that price pressures there remain almost entirely absent. It’s still a question of when, rather than whether, the SNB eases …
Inflation drop means another aggressive rate cut next week The steeper-than-expected fall in Turkish inflation in August leaves the door wide open for the central bank to cut interest rates aggressively again when the MPC meets next week. We have …
Consumption growth should pick up in the second half of the year The weakness in retail sales isn’t too concerning as most households wouldn’t have received their tax refunds by the end of July. We therefore still expect that GDP growth bottomed out in …
Manufacturing is slipping into recession The fall in the manufacturing PMI in August to its lowest level since July 2012 suggests the industrial sector has continued to contract. But we doubt that manufacturing will pull the overall economy into …
2nd September 2019
After strong July, PMI tumbles South Africa’s manufacturing PMI fell to 45.7 in August, adding to the evidence that – despite the rebound in Q2 – the underlying pace of economic growth remains weak. Figures released earlier today showed that South …
Surveys still consistent with industrial slowdown in Central Europe The batch of August PMIs released for Central Europe were a reassuring improvement following the plunge in July but remain consistent with a further slowdown in industrial output over the …
August PMIs are no game changers The manufacturing PMIs from August indicate that the Swiss industrial sector is still feeling the pinch from the deep downturn in its German counterpart and the stronger franc, and add to the evidence that the Swedish …
Economy rebounding strongly from recession The stronger-than-expected 1.2% q/q rise in Turkish GDP in Q2 has prompted us to revise up our 2019 GDP forecast to -0.8% (previously -1.8%). But there’s a growing risk that policymakers’ efforts to turbo-charge …
PMI readings paint healthier picture for manufacturing than GDP data Despite dropping in August, the recent manufacturing PMI readings paint a healthier picture of the sector than the Q2 GDP data released last week. That said, they won’t provide a hurdle …
Few signs of green shoots so far in Q3 Weak trade data for Korea and the weakness of regional manufacturing PMIs in August suggest that economic conditions failed to improve in the middle of this quarter. While we suspect that regional GDP growth has …
Fiscal stimulus taking effect The latest survey data suggest that exports have continued to struggle but that factory activity was propped up by stronger infrastructure spending. The Caixin manufacturing PMI jumped from 49.9 in July to a five-month high …
House prices will keep rising, and fast The 0.8% m/m rise in house prices in August means the housing market is now in full rebound. We expect prices to rise by 5% from their trough this year, and by 10% in 2020 supported by low interest rates and easing …
Growth to slow after strong second quarter Temporary factors helped to support the better-than-expected 3.7% annualised gain in GDP in the second quarter and we expect growth to slow to just 1.5% in the third quarter. Given the downside risks to the …
30th August 2019
More weakness in Q2 Another unexpectedly weak quarter of growth in India strengthens the case for further easing of fiscal and monetary policy. We expect both over the rest of this year. GDP growth slowed from 5.8% y/y in Q1 to 5.0% in Q2. This was the …
Unchanged inflation supports case for more ECB loosening With headline and core inflation unchanged in August, at 1.0% and 0.9% respectively, and unemployment also unchanged at 7.5% in July, the scene is set for the ECB to loosen policy further. After …
