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While January’s JOLTS report was not much to shout about, timelier labour market data suggest conditions look set to worsen amid DOGE’s gutting of the federal workforce. We remain optimistic for now, though, given the health of private sector hiring in …
11th March 2025
* This Focus features additional analysis added following the announcement of a snap election for April 28 th . * Recent shifts in the polls suggest new Liberal Party leader Mark Carney and Conservative Party leader Pierre Poilievre are both in with a …
10th March 2025
The Chancellor, Rachel Reeves, will present her fiscal update on 26 th March against the challenging backdrop of geopolitical ruptures, tariffs threats and a stagnating domestic economy. We expect Reeves to tighten fiscal policy by a further £10bn (0.3% …
Wage growth will accelerate further Regular pay growth surged in January and with this year’s spring wage negotiations set to result in stronger pay hikes than last year, wage growth will pick up further over the course of the year. According to the …
9th March 2025
The US tariff exemption for USMCA-compliant goods still leaves considerable uncertainty for the economy because less than 40% of exports to the US last year were formally USMCA compliant. The share that could be quickly declared USMCA-compliant is likely …
7th March 2025
Trump tariff push descends into farce Tariff flip-flop amplifies confusion Markets reacted badly this week when President Donald Trump first imposed 25% tariffs on all imports from Canada and Mexico, with the only partial exemption for Canadian energy. …
The UK government’s decision to raise defence spending from 2.3% of GDP to 2.5% of GDP by 2027 was upstaged this week. It may have been enough to impress President Trump, but incoming German Chancellor Merz has raised the bar. The German response differs …
Labour market still in decent shape The modest 151,000 rise in non-farm payrolls in February and 0.1%-point rise in the unemployment rate to 4.1% confirms the economy started the year soft but is not plummeting towards a recession. Some of those fears may …
Weather rather than tariffs to blame for weak hiring The essentially unchanged level of employment in February was probably mostly due to the unseasonably severe winter weather during the survey reference week rather than the threat of US tariffs. …
This page has been updated with additional analysis since first publication. House prices may be starting to lose some momentum The small 0.1% m/m fall in Halifax house prices in February is at odds with the 0.4% m/m rise in the Nationwide measure and …
Biggest pay hikes since 1991 forthcoming Japan’s Trade Union Confederation (RENGO) revealed yesterday that its members are requesting a 6.09% rise in pay (including seniority pay hikes) in this year’s spring wage negotiations (Shunto). That marks an even …
RBA won't provide much interest rate relief The minutes of the RBA’s February meeting confirmed that the Bank’s decision to cut rates last month had come down to the wire. Moreover, with concerns still persisting about lingering inflation risks, the Board …
Recent strength of GDP and employment data irrelevant amid existential tariff threat Even if tariffs soon lifted, Bank could cut by more than markets are pricing in this year If tariffs are sustained, Bank could eventually return interest rates to …
6th March 2025
The unravelling of US exceptionalism in stock markets since Donald Trump returned to the White House on 20 th January has been mainly driven by concerns about the US’ dominance of AI and the relative health of its economy (which has also dragged down …
An immersive, interactive guide to the most pressing issue facing the global economic outlook. Click below to start exploring and learn which economies are most exposed to higher tariffs, which are most vulnerable to them, and the steps that could be …
Trade deficit hits all-time high as importers continue to rush to beat tariffs The ballooning of the trade deficit to a record high of $131.4bn in January once again stemmed from a huge surge in imports as businesses rushed to fast-track orders before new …
Exports to the US reach a record high amid tariffs The huge increase in exports in January was in line with the timely advance US data released last week and implies US importers looked to front-run tariffs ahead of Donald Trump’s return to the Oval …
Although our forecast for first-quarter GDP growth is now down to -1.9% annualised, we still believe that, on balance, the US economy will escape recession and rebound in the second quarter, as the distortion caused by the unseasonably severe winter …
Shunto set to result in stronger pay hikes than last year With Japan’s trade unions requesting an even larger pay hike in this year’s spring wage negotiations (Shunto) than they did a year ago, we now expect the negotiations to result in a base pay hike …
President Donald Trump's decision to grant a one-month exemption to the Big Three Automakers (Ford, GM & Stellantis) is something of a disappointment given the earlier heavy hints from his Commerce Secretary Howard Lutnick that more widespread relief was …
5th March 2025
While the 0.1% q/q rise in GDP in Q4 of last year was stronger than we and most other forecasters expected, the combination of higher taxes for businesses announced in last October’s Budget, a lingering drag from the previous interest rate hikes and …
Services sector holding up despite policy uncertainty After the slew of weaker activity and survey data in recent weeks, the small rise in the ISM services index in February should provide some reassurance that the floor is not falling from under the …
If the US tariffs remain in place, Canada will undoubtedly fall into recession. The limited decline in the loonie so far suggests markets are still pricing in a quick U-turn from the Trump administration. But even if the tariffs are soon lifted, their …
4th March 2025
Japanese firms will suffer some collateral damage from the 25% US tariff on imports from Canada and Mexico. And if Trump presses ahead with tariffs on imports from Japan, carmakers would be most affected. Nonetheless, we suspect that the sales of Japanese …
This page has been updated with additional analysis since first publication. Consumer rebound has further to run Today’s retail sales release should mollify the RBA’s concerns that the pickup in consumer spending last quarter may have been a one-off. …
RBA will only deliver shallow easing cycle The minutes of the RBA’s February meeting are consistent with our view that the Bank will continue to ease policy but won’t cut interest rates very far. It came as no surprise that the Board debated the decision …
President Donald Trump’s has claimed that there is “no room left’ for Canada and Mexico to avoid the imposition of 25% across-the-board tariffs at midnight tonight and he has reportedly signed a separate Executive Order raising the tariff rate on Chinese …
3rd March 2025
Our updated analysis of the most attractive apartment markets for remote workers sees Austin nudge Nashville into second place after two years at the top of the table, with San Antonio climbing to third. On the other hand, Tampa fell from fourth to …
The latest PMIs suggest that global industrial activity gained some momentum in February. But with more US tariffs on manufactured goods likely to come into force in the coming months, any rebound in industrial activity could prove short-lived. Meanwhile, …
Prices already surging ahead of tariffs The fall in the ISM manufacturing index in February likely marks the beginning of the end of the recent mini renaissance, as the reality of the disruption to the sector caused by tariffs (including retaliatory …
This page has been updated with additional analysis since first publication. Households still in the mood to save rather than spend The stagnating economy is partly because households appear to be continuing to save rather than spend, which is unlikely to …
New Zealand’s current account deficit will remain large as domestic demand rebounds and the government is running a sizeable structural budget deficit. While the New Zealand dollar has recently been among the worst-performing G10 currencies, we expect it …
The modest uptick in Australian house prices last month is unlikely to mark the beginning of a meaningful rally. With the Reserve Bank of Australia set to deliver a shallow easing cycle, housing affordability will remain stretched, weighing on the …
Following the 0.5% m/m slump in real consumption in January and the massive 10% m/m surge in real goods imports, we now expect first-quarter GDP to contract by 1.0% annualised. Assuming that surge in imports reflects the front-running of tariffs, however, …
28th February 2025
Economy doing well ahead of tariff threats Fourth-quarter GDP growth of 2.6% annualised was much stronger than the 1.8% rate we and the Bank expected, while third-quarter growth was revised up to 2.2%, from the initially reported 1.0%. As a result, growth …
This week’s pull-back in the US stock market and the unravelling of US exceptionalism in equities since Donald Trump returned to the White House on 20 th January have been driven by growing concerns about two key risks that we highlighted here to our …
All-property values edged down by 0.1% in Q4 but the magnitude of decline narrowed. Appraisal-based cap rates also fell for the first time since mid-2022. However, we still believe appraisals have further to fall given the narrow spread to risk-free …
Favourable base effects pull down core inflation The 0.28% m/m rise in core PCE prices in January was a big improvement on last year’s 0.5% m/m gain, but the 2.6% annual core inflation rate is still too hot for the Fed’s liking and, with inflationary …
This page has been updated with additional analysis since first publication. Revisions leave economy in a much better place The 2.6% annualised gain in GDP last quarter was much stronger than the Bank of Canada’s forecast for a 1.8% increase and was …
Things change quickly with Trump as President. Only two weeks ago, the title of our UK Economics Weekly was “Trump’s tariffs tirade becomes more troubling for the UK” as it looked as though the UK’s goods exports to the US would be hit with a 25% …
This page has been updated with additional analysis since first publication. Housing market maintaining momentum as the wider economy is losing it Some of the bigger-than-expected 0.4% m/m rise in Nationwide house prices in February (consensus and Capital …
Soft data belie lingering capacity pressures At first glance, data released this week should give the Reserve Bank of Australia greater confidence that it has brought inflation under control. To start with, the ABS’ Monthly CPI indicator showed that both …
Ratio of deaths to births reaches record high According to preliminary data released this week, the number of births in 2024 fell by 5% to a record low of 721,000, while the number of deaths edged up by 1.8% to a record high of 1,62mn. Even though net …
Inflation on track to overshoot BoJ’s forecasts The January activity data suggest that GDP will have fallen this quarter, but that would follow strong gains in previous quarters. With inflation set to overshoot the Bank of Japan’s forecasts, we still …
We forecast a 170,000 gain in non-farm payrolls in February, given that most of the recent cuts to the federal workforce won’t yet have shown up in the data and employment in weather-sensitive sectors should have rebounded to a degree. Otherwise, we think …
27th February 2025
Durable goods orders rebound thanks to strong Boeing orders The increase in durable goods orders in January was due to the volatile transport component, while core orders were unchanged. Although underlying capital goods shipments fell, business …
Could uncertainty weigh on the global economy? Instead of clearing up the uncertainty about the direction of US economic policy, Donald Trump’s victory in last November’s presidential election has only magnified it, with threats of massive punitive …
It is very unusual for the Bank of England to be cutting interest rates when inflation is above the 2% target and is expected to rise further. There’s a growing risk, then, that inflation fears will force the Bank to stop cutting rates. Equally, though, …
Harsh winter weather takes its toll on buyers The large fall in new home sales in January was to be expected given the disruption from the unseasonably severe winter weather. While sales should rebound this month, elevated mortgage rates will limit the …
26th February 2025
The acceleration in house price growth in January suggests the housing market has maintained momentum as the wider economy is losing it. What’s more, our forecast for mortgage rates to fall further than is widely anticipated suggests the market will …
