Weaker employment growth probably here to stay The further slowdown in employment growth in May looks set to continue over the rest of this year as firms take a breath after the hiring spree in the first quarter. However, the labour market should still …
16th July 2019
Underlying inflation won’t pick up much from here We doubt the strength in inflation in Q2 will be maintained for long and we expect underlying inflation to remain below the mid-point of the RBNZ’s 1-3% target band for the foreseeable future. That’s why …
Inflation eases, rate cut on the way Inflation remained above the central bank’s target in June, but the fact that core inflation slowed has strengthened our view that policymakers will cut their key interest rate next week. Figures released today showed …
15th July 2019
Falling WPI inflation raises likelihood of another rate cut The wholesale price index is not the preferred measure of inflation for India’s policymakers, but the continued decline in the headline rate in June will help the MPC to justify another rate cut …
Growth moderated in Q2 despite June uptick A stronger end to the quarter didn’t prevent growth from slowing in Q2 and we see more weakness on the horizon. Activity held up better than anticipated, but we expect this strength to be temporary. GDP growth …
Inflation still well below target Consumer price inflation in India rose last month but the headline rate remains below the RBI’s target, while core inflation is no major concern. An August rate cut is almost certain. Headline inflation rose to 3.2% y/y …
12th July 2019
Production collapse strengthens case for August rate cut The much larger-than-expected drop in Mexican industrial production, of 2.1% m/m, reinforces our downbeat view on the economy, and is likely to push the central bank towards cutting interest rates …
Strong rise in industrial output in May, but GDP growth still slowed in Q2 May’s strong increase in euro-zone industrial production should allay concerns about the wider economy falling into recession, but it is still consistent with GDP growth slowing in …
Trade softens as headwinds intensify Exports declined last month as a result of the step-up in US tariffs in May and waning global demand. Imports also weakened on the back of a renewed domestic slowdown. Export growth turned negative in June, falling …
Credit growth extends its modest recovery A shift toward fiscal easing helped to push up credit growth last month but the pace of lending remained relatively weak and still looks consistent with a further slowdown in economic growth. Chinese banks …
Industry rebound suggests economy avoided contraction in Q2 The stronger-than-expected Turkish industrial production figures for May suggest that the economy may just have avoided a fresh fall in GDP in Q2. Nonetheless, we expect the economic recovery …
Slowest growth in a decade The advanced estimate of Singapore’s GDP suggest the economy performed very poorly last quarter. Although the economy should start to pick up a little over the coming quarters, helped by looser fiscal and monetary policy, growth …
Significant rebound in core inflation still looks unlikely The stronger 0.3% m/m gain in core consumer prices in June won’t prevent the Fed from cutting interest rates later this month and, in any case, we doubt that strength will be sustained. Headline …
11th July 2019
Irish economy slowing as no-deal Brexit risk increases After strong growth in Q1, economic growth in Ireland appears to have slowed a touch, which is likely to in part reflect concerns about Brexit. While Ireland looks set to continue growing more quickly …
Core inflation likely to fall back into 2020 While core inflation in Sweden edged up once again in June, we expect weak domestic demand to weigh on underlying price pressures over the second half of the year and into 2020. Having risen to a seven-month …
Surveyors report rise in buyer enquiries New buyer enquiries saw its first meaningful rise in over two years, but it’s too soon to call a housing market recovery. Indeed, the pick-up was partly driven by London and the South of England, where house prices …
Philadelphia refinery shutdown seems to have had little effect on stocks Although the main cause of last week’s sharp fall in commercial crude oil stocks is not clear, it does seem that the recent shutdown of the Philadelphia Energy Solution’s refinery …
10th July 2019
Inflation back below target opens door to easing The sharp drop in Brazilian inflation to 3.4% in June, which took it below the central bank’s target, suggests that policymakers will soon start to ease monetary policy. Barring any major hiccups with the …
Possible contraction in Q2, but recession unlikely Despite the rebound in monthly GDP in May, the economy may have contracted in Q2 as a whole. But it’s going to be close and we doubt we’re heading for a recession as GDP will probably rise in Q3 anyway. …
Above-target core inflation supports Norges Bank’s hawkish bias The larger-than-expected fall in the headline Norwegian inflation rate in June is unlikely to change the Norges Bank’s hawkish bias. With core price pressures still running above target, it …
Inflation falls to three-year low, easing cycle to restart soon The sharp decline in Egyptian inflation last month, to a three-year low of 9.4% y/y, increases the chances that the central bank will soon resume its easing cycle. But policymakers will wait …
African swine fever continues to take its toll Lower oil prices kept headline inflation stable last month despite a further rise in pork prices. But with pig stocks still tumbling we think increases in consumer prices will start to accelerate again before …
Inflation now falling sharply The large drop in Mexican inflation, from 4.3% y/y in May to 3.9% y/y in June, is likely to be followed by another sizeable fall this month. That should see Banxico inch further towards interest rate cuts, with an easing …
9th July 2019
Wage growth should pick up in 2020 Wages kept falling in May even though the labour market remained very tight. That reflects sampling changes which have lowered the aggregate wage level. As those distortions start to fade, wage growth should pick up even …
Further fall in inflation likely to prompt a rate cut this month The further fall in Russian inflation to 4.7% y/y last month, coming alongside recent dovish comments from the central bank, has prompted us to pencil in a 25bp rate cut (to 7.25%) at the …
8th July 2019
Slump in German manufacturing continues The small increase in output in May does not signal the end of the Germany’s manufacturing downturn. On the contrary, it now looks almost certain that production declined in Q2 overall, contributing to a sharp …
Business investment set to slow further Despite a slump in May, machinery orders point to broadly stable capital spending in the second quarter. Even so, we expect investment growth to slow sharply over the coming quarters. The 7.8% m/m plunge in …
Payrolls too strong to justify immediate Fed rate cut The 224,000 gain in non-farm payrolls in June was much stronger than the consensus estimate of 160,000 and would seem to make a mockery of market expectations that the Fed will cut interest rates by up …
5th July 2019
Slight dip in employment not a major concern The 2,200 decline in employment in June is not a concern given that the economy created an average of 50,000 jobs per month over the first five months of this year. That torrid pace was never sustainable, so …
House prices fall as construction slows While house prices edged down in June, the Halifax index is still an outlier compared to the other main indices. Meanwhile, housing starts cooled in Q1. Looking ahead we expect the market to stay weak, with house …
Renewed drop in inflation to continue The renewed drop in inflation in June is likely to continue as the headline rate is dragged down by falling food and fuel price inflation, providing a green light for the central bank to cut rates in August. Today’s …
Growth in retail sales likely to have slowed in Q2 May’s euro-zone retail sales data were weaker than expected and support our view that GDP growth in the bloc slowed to 0.2% q/q in Q2. Looking ahead, lower inflation is likely to raise households’ …
4th July 2019
Stable, but set to fall to zero Swiss inflation held steady at a very low rate in June and we expect it to fall to zero during the second half of the year on the back of the stronger franc. With deflationary fears set to come back on the agenda, we think …
Consumption growth to remain soft in the second quarter The weakness in retail sales so far in Q2 suggests consumption growth remained sluggish in the second quarter. Sluggish consumption is one reason why we expect GDP growth to slow from 2.8% in 2018 to …
The jump in net imports is unlikely to continue A surge in net imports meant that commercial crude oil stocks fell by less-than-expected last week. We expect stocks to continue to drop in the weeks ahead in line with the seasonal uptick in gasoline demand …
3rd July 2019
Tougher times ahead for exporters Canadian exporters are doing well given the evidence of a marked deterioration in the global backdrop but, with the domestic and global manufacturing surveys deteriorating further in June, it is hard to see how this …
Net trade likely to remain a drag on GDP growth The sharp widening in the trade deficit to $55.5bn in May, from $51.2bn, suggests that net trade was a slightly bigger drag on second-quarter GDP growth than we had previously anticipated, with the latter …
Refinancing drives surge in mortgage applications Mortgage applications surged in June, as existing borrowers took advantage of declining mortgage interest rates. Meanwhile, house purchase applications also rose, but only modestly. Looking ahead, we …
Relatively resilient services sector won’t prevent contraction Following the falls in the manufacturing and construction surveys, the smaller decline in the headline business activity balance of the services PMI, from 51.0 in May to 50.2 in June, was a …
PMIs hold up in the Gulf, but momentum is unlikely to last June’s PMI figures were robust across the Gulf, but we expect that activity will slow as oil prices falter and fiscal policy becomes less supportive. Meanwhile, subdued price pressures in Egypt …
June surveys round off a disappointing Q2 While the Composite PMIs for June were flat for Spain and edged up for Italy, the overall picture remains one of weak economic growth in the second quarter. And with price pressures remaining weak, there is every …
Plunge in inflation brings rate cuts onto agenda, but all hinges on lira The sharp decline in Turkish inflation in June, to 15.7% y/y, increases the chances that the central bank will embark on an easing cycle at its policy meeting later this month. But …
Record trade surplus provides a little support to net exports in Q2 The record trade surplus in May was supported by the recent surge in iron ore prices so will not completely flow through to stronger net exports in Q2. Even so, we expect net trade to …
Slipping into recession The fall in Brazilian industrial production in May, of 0.2% m/m, adds to the evidence that the economy fell into a technical recession in Q2. With inflation also easing, an interest rate cut seems likely as soon as the Copom …
2nd July 2019
Weak house price growth in June According to the Nationwide, house price growth was very subdued June. And while the Brexit outcome is as uncertain as ever, the already high level of house prices suggests a rebound in the housing market is unlikely over …
Manufacturing conditions still deteriorating Although the ISM manufacturing index didn’t fall as far as feared in June, the decline in the more forward-looking new orders component suggests the worst is still to come . The drop in the headline index to a …
1st July 2019
Labour market recovery continues despite manufacturing slowdown May’s euro-zone unemployment data showed that the steady recovery in the region’s labour market continued, despite the likely slowdown in GDP growth in Q2. But with business surveys remaining …
Brexit comedown and weak global economy weigh on manufacturing The drop in the manufacturing PMI from 49.4 in May to 48.0 in June (consensus 49.2) takes it to its lowest level since February 2013 and indicates that the sector is still suffering from a …
Survey in sustained slump South Africa’s manufacturing PMI picked up in June, but it still points to a poor performance in Q2. While the survey sometimes provides misleading readings, its consistent weakness suggests growth was sluggish. Figures released …
Lending slips in May With house purchase lending falling gently in May, there is no sign of a rebound in the housing market. Indeed, with renewed Brexit uncertainty likely in the coming months, we expect house purchase mortgage approvals to end 2019 down …
