Net lending falls for first time in five months The decline in net lending in July is consistent with our view that net lending will be subdued over the rest of the year, as Brexit-related uncertainty and falling capital values weigh on credit demand. …
30th August 2019
Gentle rise in mortgage lending House purchase mortgage approvals saw a gentle recovery in July. But with uncertainty set to intensify in the coming months, the rise in lending probably won’t be sustained. According to the Bank of England, there were …
GDP growth in Finland and Denmark set to slow in H2 Although today’s release of GDP data for Finland and Denmark shows that both economies grew solidly in Q2, we suspect that quarterly growth will slow in both in the coming quarters. Meanwhile, the Swiss …
Market still sluggish in August House price growth was sluggish in August. With Brexit-related uncertainty set to continue over the next few months, a recovery in house price growth this year is unlikely. The Nationwide recorded no monthly change in …
Labour market has reached a turning point The weakness in retail sales in July underlines that consumers have yet to bring forward spending ahead of October’s sales tax hike. That suggests that consumption won’t fall off a cliff once the tax has been …
Investment supported Q2 recovery The surprisingly strong 0.4% q/q rise in Brazilian GDP in Q2 confirms that the extremely weak activity recorded earlier this year was a blip rather than the start of a renewed downturn. But the economy is still soft and …
29th August 2019
Sentiment amongst businesses and consumers weakens August’s EC survey of UK business and consumer confidence raises concern that the consumer sector may soon succumb to the malaise that has taken hold in the manufacturing sector. But with real wage growth …
Slight rise in ESI not enough to stop ECB rate cut next month August’s small increase in the euro-zone Economic Sentiment Indicator (ESI) doesn’t change the big picture of a bleak outlook for the euro-zone economy, and nor does it alter our view that the …
Growth remained solid in Q3 The European Commission’s batch of Economic Sentiment Indicators (ESIs) for August suggest that regional growth remained strong in Q3 at a little under 4% y/y. The ESIs rose in six of the ten Central and Eastern European (CEE) …
Q2 GDP growth may be as good as it gets for Norway This morning’s release of Q2 GDP data from Norway confirms that the economy remains a bright spot in the Nordics. But given that oil prices are now in line with our end-year forecast of $60pb, we think …
Outlook for capital spending improves The rebound in machinery and equipment investment won’t be enough to offset a slump in construction activity and private investment probably fell the most since 2016 in the second quarter. However, firms have become …
Whopping drawdown lifts some demand gloom The huge weekly drawdown in US crude stocks clearly soothed some of the near-term fears surrounding softer demand, as evidenced by today’s gain in prices. But our forecast for a slowdown in the US economy suggests …
28th August 2019
Deflation eases further Saudi consumer prices continued to fall in July, by -1.3% y/y, but a closer look at the data suggests that underlying price pressures are starting to build. The headline rate is likely to return to positive territory by early next …
Ailing demand means steel production slump will continue July’s slowdown in steel production was probably a sign of things to come given environmental restrictions, squeezed margins and soft demand in China. Nonetheless, steel prices look set to fall …
27th August 2019
Annual house price growth continues to ease Both the FHFA and Case-Shiller reported a further slowdown in annual house price growth in June. But with mortgage interest rates falling to near three-year lows and inventory tight, we doubt growth on the …
Mortgage approvals edge up The rise in mortgage approvals published by UK Finance should be interpreted with care. It probably reflects lenders competing for market share, rather than a market-wide recovery in lending. According to UK Finance, among the …
New home sales volatile over the summer The substantial drop in new home sales in July is not as bad it looks, as a large upward revision to the previous month’s estimate meant that decline came from a 12-year high. A slowing economy rules out a strong …
23rd August 2019
Sales volumes growth gradually picking up June’s 0.4% m/m rise helped support the first quarterly expansion in retail sales volumes since the middle of last year. While growth was still subdued, the recent rise in consumer confidence and signs of renewed …
Rise in underlying inflation won’t last Headline inflation fell in July despite a rise in underlying inflation. Allowing for the impact of policy moves, we think that underlying inflation will fall towards zero before long. Headline consumer price …
Soft inflation increases likelihood of 50bp cut The weaker-than-expected Brazilian inflation figure, of 3.2% y/y, raises the likelihood that Copom will cut the Selic rate by 50bp (rather than 25bp) when it next meets on 18 th September. The mid-month …
22nd August 2019
Chunky fall in inflation to give Banxico room for another rate cut The larger-than-expected fall in Mexican inflation in the first half of this month, to 3.3% y/y, strengthens the case for Banxico to follow up this month’s 25bp interest rate cut with …
Uptick in Composite PMI won’t stop ECB easing next month The trivial increase in the euro-zone Composite PMI in August still leaves it consistent with feeble GDP growth this quarter and won’t put the ECB off easing policy next month. The rise in the …
Growth remained solid at start of Q3 The batch of Polish activity data for July suggest that strong domestic demand is offsetting weakness in export-led sectors. Our GDP Tracker suggests that growth edged just below 4% y/y at the start of Q3. July’s …
US petroleum demand shows few signs of slowing While most of last week’s draw in US commercial crude stocks was down to a drop in net imports, the latest figures showed another strong week for both inputs to refineries and gasoline demand. But looking …
21st August 2019
Inventory falls to a 15-month low Existing home sales managed their first year-on-year rise for 17-months in July, but that is not the start of a sustained upward trend. Home purchase mortgage demand has not received much of a boost from lower interest …
Stronger-than-expected inflation to keep Bank on hold next month As headline inflation and the Bank of Canada’s three core measures remained close to target in July, there seems to be little chance of the Bank springing a surprise by cutting interest …
Surplus not enough to put government finances back on track The small surplus in July’s public finances wasn’t enough to make up for the jump in borrowing since the start of the financial year and suggests that borrowing will overshoot the OBR’s forecast …
Inflation falls below target, rate cut likely in September South African inflation slipped to just 4.0% y/y in July, supporting our view that policymakers will cut their policy rate from 6.50% to 6.25% in September. This is a strongly non-consensus view. …
Manufacturing sector likely to weaken further Manufacturing sales volumes declined by 0.2% m/m in June and the sharp drop in inventories implies that manufacturing GDP fell by 1.0%. The business surveys suggest that the sector will continue to weigh on …
20th August 2019
Prospect of H2 rebound has diminished Global aluminium production remained in the doldrums in July. We had previously expected smelter ramp-ups and lower input costs to spur a recovery in China’s output in the second half of 2019. But this now looks less …
Economy hits a bump in the road July’s Russia activity data suggest that, after recovering slightly in Q2, the economy may have lost a bit of momentum at the start of Q3. This, combined with easing inflationary pressures, will leave the door open for more …
19th August 2019
Recovery to continue as policy is loosened The pick-up in Chilean GDP growth from 1.6% y/y in Q1 to 1.9% y/y in Q2, is likely to mark the beginning of a sustained economic recovery. While GDP growth over this year as a whole is likely to be just 2%, our …
Weak growth to continue GDP figures released today for the second quarter show that growth in Thailand slowed sharply to an almost five-year low. With weak global demand and a downturn in the tourism sector likely to drag on growth prospects over the …
Drag from net trade to persist Today’s external trade figures show that the slump in export volumes is abating. But with imports set to soar ahead of the sales tax hike, net trade will probably remain a drag on GDP growth in Q3. The 1.6% y/y fall in …
Single-family starts continue their slow recovery Single-family starts and building permits both increased in July, as lower interest rates, a tight existing home market and the decline in the backlog of previously authorised homes have encouraged …
16th August 2019
Industry collapses, although surveys point to better Q3 The 3.7% m/m fall in Turkish industrial production in June adds to the evidence that GDP growth in Q2 was much weaker than in Q1. Leading indicators suggest that the scale of the fall in output was …
Weakness to follow after resilient first half GDP growth in Malaysia picked up in Q2, but we doubt this is the start of a sustained rebound. We are forecasting a renewed slowdown in the second half of this year, driven by weaker consumer spending and a …
Growth likely to slow from here Colombian GDP growth remained strong in Q2 at 3.0% y/y, and we’ve revised up our forecast for 2019 from 2.0% to 2.8%. But we still think that the consensus forecasts are too optimistic. The Q2 outturn was stronger than our …
15th August 2019
Recession still confined to manufacturing The soft July industrial production data show that the manufacturing recession continued into the third quarter. But the latest surveys provide some reason for optimism and, as the retail sales data released …
US consumer rides to the rescue (again) With the rest of the world sliding into the abyss, the July retail sales figures show a resurgent US consumer riding to the rescue once again . Even though the surge in retail sales in July was flattered by Amazon …
Reasonable start to Q3 The rise in retail sales in July was fairly encouraging and supports our view that the economy has picked up in Q3 after contracting by 0.2% q/q in Q2. Indeed, July’s 0.2% m/m rise in retail sales volumes beat the consensus forecast …
Labour market to deteriorate further this year The strong rise in employment in July failed to make any inroads into the pool of unemployed workers. Employment growth is set to falter, pushing up the unemployment rate further before long. The 41,100 …
Another surprise build for crude stocks Lower demand from refineries is the primary reason for another unexpected rise in commercial crude stocks. This exaggerated today’s fall in prices, which had already been dragged down by weak economic data. Looking …
14th August 2019
Prospects for German economy and euro-zone industry still grim The decline in German GDP in Q2 and sharp fall in euro-zone industrial production in June provide further evidence of the severity of the slowdown in Europe. What’s more, a deteriorating …
Back above the 2% target July’s inflation figures may dampen speculation that the Bank of England will follow in the Fed’s footsteps and cut interest rates. With stronger pay growth and the fall in the pound likely to ensure that inflation is above target …
Growth likely to slow from here The strength of the Q2 GDP data for Central and Eastern Europe suggests that domestic demand continued to offset the impact of euro-zone weakness. However, there are signs that soft external demand is set to take a bigger …
Weaker inflation to support dovish shift by the Riksbank The fall in Swedish inflation in July provides further confirmation, if it were needed, that the Riksbank will have to revise down its forecasts for the repo rate at its next meeting, on 5 th …
Rebound in WPI inflation still on the cards Wholesale price inflation is not the preferred measure of inflation for India’s policymakers but even so, the weakness in the headline rate in July increases the likelihood of another rate cut at the RBI’s next …
The slowdown resumes After improving in June, economic conditions worsened across the board last month as growth in industrial production, capital spending and retail sales all dropped back. We see more weakness on the horizon. Growth in industrial …
Wage growth will fall to 2% next year Wage growth treaded water in the second quarter and the recent loosening of the labour market suggests it will fall to 2% before long. The 0.6% q/q rise in the wage price index in Q2 was a touch stronger than the …
