Slower growth ahead The 0.2% m/m rise in GDP in May puts the economy on track to beat the Bank of Canada’s expectations for growth in the second quarter. While that will increase speculation that the Bank will stay on the side-lines as central banks …
31st July 2019
Growth probably slowed in Q2 While industrial production rebounded in the second quarter, we still expect GDP growth to slow. Meanwhile, we think that the labour market won’t remain as tight as it is now as subdued economic activity takes its toll on …
Mexico (maybe) dodged recession, but rate cut coming next month Preliminary GDP data suggesting that Mexico escaped a technical recession by the skin of its teeth in Q2 don’t change the bigger picture that the economy remains very weak. This supports our …
Case for package of ECB stimulus measures in September strengthens The raft of weak economic data published this morning strengthens the case for the ECB to announce a package of stimulus measures at its next meeting in September. The slowdown in …
Trade war trumps the protests, for now Hong Kong’s economy lost momentum last quarter. Slower trade flows are more to blame for this than the recent protests, adding to downbeat signs on the health of the global economy. Hong Kong’s GDP growth held steady …
Q2 unlikely to mark the start of a strong recovery GDP growth in Taiwan rebounded strongly last quarter, thanks mainly to a surprise acceleration in export growth. But with headwinds to the economy mounting, we don’t expect the recovery to last. Figures …
No sign of a recovery in house price growth There was no sign of a recovery in house price growth in July, and we expect the market to stay that way in 2019, regardless of the Brexit outcome. Data released this morning by the Nationwide showed the average …
Confidence strengthens, but unlikely to rise further over next few months Consumer confidence recovered a little in July, but rising concerns about a no deal Brexit could mean that sentiment soon returns to its recent lows. The composite GfK/NOP measure …
Underlying inflation to fall further below RBA’s target Underlying inflation remained subdued in the second quarter and we think increasing spare capacity in the Australian economy means it will fall further below the RBA’s 2-3% target over the next year. …
The soft data still point to a slowdown The latest surveys remain consistent with a renewed slowdown in growth. Downward pressure on factory activity eased this month, but momentum in services and construction weakened. The official manufacturing PMI rose …
Subdued demand leads to further slowdown in house price growth Annual house price growth edged back once again in May, with subdued demand and lender caution taking some of the heat out of the market. That slowdown is set to continue as the economy …
30th July 2019
Another weak survey supports the case for an ECB rate cut in September July’s decline in the euro-zone Economic Sentiment Indicator (ESI) is consistent with our view that, after probably slowing to 0.2% q/q in Q2, GDP growth in the currency union will …
Holding up at the start of Q3 The European Commission’s Economic Sentiment Indicators for July suggest that growth across Central and Eastern Europe held steady at a decent 3.5% y/y or so at the start of Q3. Strength in consumer-facing sectors is, for …
Net lending to slow over rest of 2019 The rise in net lending to real estate during June was unexpectedly strong. But with uncertainty high and capital values expected to fall further, we don’t expect the recent vigour to be maintained over the rest of …
29th July 2019
No rebound in mortgage lending While there is evidence of lenders successfully taking market share, overall growth in house purchase mortgage lending is muted. Looking ahead, with Brexit uncertainty likely to pick up again later this year, lending is more …
Private consumption to remain strong ahead of tax hike Retail sales values were flat in June but broader measures of consumer spending still suggest that private consumption picked up in the second quarter. Some of that strength in Q2 was probably due to …
Steel production growth starting to tumble Faltering demand from the Chinese construction sector should mean that the recent downturn in global steel output growth should gather pace in the months ahead . The World Steel Association reported that growth …
26th July 2019
Slowdown limited by boost from consumption and government Second-quarter GDP growth slowed to 2.1% annualised, from 3.1% in the first, but that drop off would have been even bigger if not for a surprisingly strong gain in government expenditure. In short, …
Stronger business investment offset by bigger drag from inventories The surge in durable goods orders in June suggests that business equipment investment is holding up a bit better than we anticipated. But with the incoming global data still deteriorating …
25th July 2019
Occupier conditions decline for fifth consecutive quarter Weakness in the retail sector is expected to weigh on all-property rental values this year. However, surveyors do not expect the commercial property sector to experience a hard landing. The RICS …
Fall in Ifo adds to evidence of prolonged economic weakness July’s decline in the Ifo Business Climate Index is consistent with the message from the PMI that the German economy made a very slow start to Q3. We still suspect that the ECB will wait until …
Growth unlikely to carry on climbing after Q2’s rebound The strength of growth in Q2 more than offset the contraction in Q1, but with the economy still likely to face large external headwinds in the second half of this year, a sustained upturn is …
Hurricane Barry still distorting the figures A fall in production in the Gulf of Mexico due to Hurricane Barry largely explains last week’s huge decline in US commercial crude stocks. However, although these output outages will only be temporary, we still …
24th July 2019
New home sales recover some lost ground New home sales rose by a solid 7.0% m/m in June, making up some of the ground they lost over April and May. A healthy new home inventory will continue to support sales, but the dip in mortgage applications for home …
Further fall in inflation strengthens case for August rate cut The further fall in Mexican inflation in the first half of this month, to 3.8% y/y, makes an interest rate cut at the central bank’s next policy meeting on 15 th August increasingly likely. …
Small rise in mortgage approvals According to UK Finance, house purchase mortgage approvals saw a small increase in June. But even assuming a Brexit deal is agreed, we don’t expect to see a sustained recovery in mortgage approvals until 2020. There were …
Decline in PMI bolsters case for looser monetary policy July’s euro-zone PMI survey points to continued weak GDP growth and declining price pressures, bolstering the case for the ECB to loosen policy at tomorrow’s meeting. The fall in the headline …
Inflation remains at target, rate cut likely in September South African inflation remained at the 4.5% mid-point of the target range in June, which strengthens our view that policymakers will follow up this month’s 25bp rate cut with another one in …
Lower interest rates fail to boost existing home sales A steady fall in mortgage interest rates has not given a boost to existing home sales, which dropped back in June and have now recorded year-on-year declines for the past 16-months. A slowing economy …
23rd July 2019
Deflation continues to ease Deflation in Saudi Arabia continued to ease last month as the pick-up in activity in the non-oil sector fed through into stronger price pressures. If oil prices stay low, as we expect, the government is likely to push ahead …
Inflation falls, rate cuts coming The fall in Brazilian inflation to 3.3% y/y in the middle of July surely seals the deal on a rate cut at the Copom meeting next week. Moreover, with underlying price pressures weak, policymakers are likely to be able to …
Survey won’t change the ECB’s mind about loosening policy The latest ECB Bank Lending Survey adds to the evidence that the euro-zone economy will remain sluggish. The euro-zone does not seem to be on the brink of recession, but continued slow growth …
Weak Chinese production clouds an otherwise brighter picture Global aluminium output slumped in June, as a sharp fall in Chinese output outweighed increases elsewhere. But putting this month’s reading to one side, there are now clear signs that global …
22nd July 2019
Retail sales weakness partly weather-related The late arrival of the warmer weather this year helps to explain the weakness of retail sales in May. The jump in consumer confidence in June appears to bode well, but we doubt retail sales will surge. The …
19th July 2019
Heading off track June’s public finances figures continued the underlying deterioration in the fiscal position evident since the beginning of the financial year and provided a timely reminder that the next Prime Minister won’t get a free “fiscal lunch” in …
Growth loses momentum at the end of Q2 June’s weak batch of activity data came after two strong months and suggests that after growing by an impressive 4.7% y/y in Q1, the economy maintained a similar pace in Q2. The biggest disappointment was in the …
Underlying inflation may fall to zero by early next year Inflation was unchanged in June and while the consumption tax and the introduction of free childcare will muddy the waters, we expect underlying inflation to fall towards zero in 2020. The 0.7% rise …
House price inflation drops to fresh decade low The sales-to-new listing ratio suggests that house price inflation will accelerate from June’s decade low of 0.5%, but further falls in house price inflation in Vancouver are likely to prevent a material …
18th July 2019
Surveyors more positive about the outlook Although the improvement in workload expectations was encouraging, with Brexit uncertainty prolonged and commercial property values expected to fall, a strong increase in the development pipeline is unlikely. The …
Signs of life after a soft patch The rebound in retail sales in June was a big relief as it shows that there is some life in household spending yet and suggests that the overall economy may have avoided a contraction in Q2. The 1.0% m/m rise in retail …
Credit availability eases in Q2 Lenders reported a drop in mortgage availability in Q2. And while that decline is expected to reverse in Q3, we doubt that will translate into a rebound in mortgage lending. Meanwhile, credit conditions for commercial real …
Labour market to deteriorate further this year We think the slowdown in employment growth has further to run and suspect that the deterioration in the labour market will cause the unemployment rate to rise before the year is out. Employment was almost …
Drag from net trade to persist The sharp narrowing of the trade deficit in June isn’t indicative of developments in trade volumes across the second quarter as import volumes outpaced export volumes. We expect the resulting drag from net exports on GDP …
Hurricane Barry clouds the picture Last week’s draw in commercial crude stocks can largely be put down to a drop in production in the Gulf of Mexico linked to Hurricane Barry, rather than stronger demand for crude. While the picture is blurred by the …
17th July 2019
Economy continues to struggle in Q2 June’s activity data suggest that following a weak Q1, Russian GDP growth slowed in Q2. This, combined with soft inflationary pressures, supports our view that the central bank will cut rates next week. Russian monthly …
Inflation drops back; sales boosted by motor vehicle rebound The 1.7% m/m rise in manufacturing volumes in May suggests that the economy had a stronger second-quarter performance than the Bank of Canada was expecting. Nevertheless, an average of the …
Rise in single-family starts to continue The volatile multifamily sector was responsible for the overall decline in both housing starts and building permits in June. Single-family starts and permits both edged out a small gain and, with new home sales set …
Few signs of a rise in inflationary pressure There is little pressure for the MPC to adjust interest rates in either direction with CPI inflation remaining at the Bank of England’s 2% target for a second consecutive month in June. The continued absence of …
Bounce in manufacturing output likely to be short-lived Industrial production was unchanged in June, as a weather-related drop in utilities output offset a 0.4% m/m rise in manufacturing output. But with global demand still weak, we doubt the latter …
16th July 2019
Underlying sales post strongest quarterly gain since 2005 The 0.7% m/m surge in underlying retail sales in June, along with upward revisions to previous months’ gains, suggests that real consumption growth accelerated to 4.0% annualised in the second …
