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Germany’s industrial output probably contracted by 0.5% m/m in October (07.00 GMT) We expect China’s exports to have fallen by 5.5% y/y due to cooling global demand We think the Bank of Canada will hike rates by 25bp, while Poland’s central bank stays …
6th December 2022
The better-than-expected 263,000 gain in non-farm payroll employment suggests it’s still the best of times in the labour market but, digging below the surface, there are worrying signs that it could be the worst of times soon. Although non-farm payroll …
Export volumes struggling despite boost from agricultural sector The essentially unchanged level of export volumes in October, despite big gains in agricultural and pharmaceutical exports, suggests the sector is struggling amid weaker global demand. …
Property valuation scores fell further in Q3 as rises in alternative asset yields outweighed the marginal increase in all-property yields, but alternative asset yields have dropped back in Q4 to-date, meaning we may have reached a trough. (See Chart 1.) …
Headline index starts to fall as recession cuts demand As expected, the headline CIPS construction index retreated in November as falling demand outweighed the benefit of easing prices and an increase in the availability of contractors. As the recession …
The RBA today hiked the cash rate by 25bp as widely anticipated and while the statement was marginally less hawkish, we’re sticking to our view that the Bank will lift the cash rate to 3.85% by April. The Bank’s decision to lift the cash rate from 2.85% …
RBA not backing away from rate hikes just yet The RBA today hiked the cash rate by 25bp as widely anticipated and while the statement was marginally less hawkish, we’re sticking to our view that the Bank will lift rates to 3.85% by April. The Bank’s …
Household real incomes to fall in 2023 despite energy subsidies Labour cash earnings increased by a slower 1.8% y/y in October due mostly to a much smaller gain in volatile bonus payments. However, real wage losses have extended for a seventh consecutive …
Regular earnings growth to maintain quicker pace Labour cash earnings increased by a slower 1.8% in October due mostly to a much smaller gain in volatile bonus payments. Regular earnings held steady due to high inflation and the boost from the reopening, …
5th December 2022
The last big central bank decisions of 2022 resulted in another batch of hefty rate hikes – if smaller than recent – but also provided important signals about the direction of policymaking in the coming year. Group Chief Economist Neil Shearing and …
The national accounts data provided two pieces of good news this week, with revisions to the historical series and stronger-than-expected third-quarter growth leaving GDP higher than expected. While some argue that this will cause the Bank of Canada to …
2nd December 2022
Unemployment rate declines despite slowdown in hiring The slowdown in hiring in November did not prevent a decline in the unemployment rate, as the labour force contracted. The Bank of Canada will be more encouraged by the fall in the 3-month annualised …
Resilience in payrolls and wages won’t stop Fed from slowing rate hike pace The resilience of the labour market and the resurgence in wage pressures don’t change our view that core price inflation is going to fall more rapidly than the Fed believes, and …
This week’s data releases showed that higher interest rates are starting to influence the economy. This means that at some point the Bank of England will have to start to think more about the appropriate level of interest rates rather than the pace of …
There is a good chance that CPI inflation has peaked or will peak before the end of the year. There are even some signs that inflation is becoming less persistent. This may contribute to the Bank of England slowing the pace of rate hikes from 75 basis …
Following the Nationwide data showing a larger-than-expected fall in house prices in November, we hosted an online Drop-In on 1 st December to discuss how far prices could fall and what the downturn could mean for transactions and construction. This …
China’s EV push a major threat The 2.6% m/m drop in industrial production in October was the second consecutive fall. And while motor vehicle output rebounded from the plunge in September, it was still 16% below its 2019 level. Firms are still pinning …
Hopes may be rising that price pressures may finally be easing, but investors risk missing the fact that not all inflation cycles are alike. We think core inflation in the US will fall far faster than it will in the euro-zone, and this will have big …
1st December 2022
Total employment grew across the 30 metros, but at a slower pace as labour market conditions continued to ease. With our proprietary indicators pointing to a 90% probability of an imminent recession, we maintain the view that those metros worst affected …
Index drops below 50 mark The decline in the ISM manufacturing index to 49.0 in November, the lowest reading since the early stages of the pandemic, from 50.2, leaves it at a level consistent with a stagnation in broader economic growth. The decline in …
Sharp drop in prices as market adjusts to higher mortgage rates The 1.4% m/m drop in house prices in November was far larger than anyone expected, raising the risk that prices fall more rapidly and further in response to high mortgage rates than we …
Strength in business investment won’t last Private investment probably rebounded last quarter and while firms’ projections at face value point to a further acceleration over the remainder of the financial year, the figures are consistent with a slowdown …
Rapid worsening in affordability will continue to push down prices House prices continued to fall at a rapid rate in November and with housing affordability now the most stretched since the early 1990s, that downturn has much further to run. The 1.1% m/m …
30th November 2022
While the progressive inversion of the Treasury yield curve may seem inconsistent with the recent rebound in risky assets in the US, they had already discounted some bad news about the economy. Nonetheless, we still think there is scope for the rally in …
Refineries may reduce output soon amid soft domestic demand Commercial crude stocks plunged as the refinery utilisation rate rose, net imports fell sharply and strategic reserve releases continued to wind down. However, signs of lower domestic product …
Higher interest rates weighing on domestic demand Core inflation pressures eased in October Bank to drop down to 25 bp hike as it balances risks of over- and under-tightening The easing of the three-month annualised measures of core inflation in October …
Further downgrades as yields rise and rental growth falls back The latest IPF Consensus Survey showed further significant downgrades for total returns in 2022 and 2023, as higher interest rates have boosted yields and a looming recession cuts rental …
As the economy slides into a mild recession in the first half of next year, triggering a rebound in the unemployment rate to almost 5% by end-2023, the resulting slowdown in the growth rates of wages and unit labour costs will play a supporting role in …
Although we agree with the markets that the Bank of England will be patient and won’t pivot from raising interest rates to actually cutting interest rates until 2024, we think that fading inflation will force the Bank to cut rates quicker than investors …
As we now think Bank Rate will peak at 4.50% next year as opposed to 5.00%, mortgage rates will be a bit lower in 2023. But ultimately, the surge in mortgage rates over the past year will leave the cost of buying a home with a mortgage exceptionally high, …
Industrial production looking to end 2022 with a whimper Industrial production saw a steeper contraction in October, while firms’ output forecasts for November and December point to a weak rebound. Industrial production contracted by a sharper 2.6% m/m in …
Inflation may peak below 8% in Q4 We wouldn’t read too much into the drop in the Monthly CPI Indicator in October because the figures don’t cover the entire CPI basket, but the data suggest that inflation is about to peak. Headline inflation dropped …
Production to rebound in last two months of 2022 Industrial production saw a steeper contraction in October but firms' output forecasts for November and December point to a rebound. Industrial production contracted by a sharper 2.6% m/m in October, …
Although the rally in the US dollar has seen a significant reversal over recent weeks, indicators from past turning points in the greenback suggest to us that there remains scope for the dollar to reach fresh cyclical highs if, as we expect, a global …
29th November 2022
Third consecutive month of falling prices, and counting A deterioration in affordability helped the Case-Shiller house price index to fall for the third consecutive month in September. The FHFA reported a small rise in prices, but we think more falls are …
Third quarter data showed growing evidence of a softening in tenant demand in many metros. In particular, demand appears to be slowing in a number of West Coast markets, as hybrid and remote work becomes embedded in work patterns and the cost of real …
Domestic demand contracts for first time since Q2 2021 The stronger-than-expected gain in third-quarter GDP tips the odds slightly toward another 50 bp interest rate hike from the Bank of Canada next week. But, with domestic demand contracting for the …
Headline inflation close to a peak, but core may rise further November’s fall in headline inflation in Germany and Spain suggest that the euro-zone headline rate will come in lower than we had anticipated when it is published tomorrow, and is now close …
Domestic demand contracts for first time since 2021 The stronger-than-expected gain in third-quarter GDP tips the odds slightly toward another 50 bp interest rate hike from the Bank of Canada next week. But, with domestic demand contracting for the first …
Higher interest rates beginning to influence the economy October’s money and credit figures highlight how higher interest rates are starting to influence the economy. Higher interest rates are weakening the demand for credit, especially for mortgages, …
Net lending sees further gains even as capital values fall Falling capital values have not yet deterred commercial property investors, with net lending to property increasing for the second month in a row in October. Bargain hunters may have given lending …
Slump in approvals points to sharper downturn in activity ahead Rocketing mortgage rates led to a sharp drop in mortgage approvals in October. While quoted mortgage rates have peaked they are unlikely to fall much below 5% next year, keeping the cost of …
Higher interest rates are weighing on credit and attracting savings October’s money and credit figures reveal further signs that households continue to remain cautious and higher interest rates are starting to weigh on the economy. The £0.8bn rise in …
Labour market tightening on hold, soaring inflation to drag retail sales The unemployment rate stayed unchanged in October and will hover around 2.5% through 2023 due to a looming economic recession. Meanwhile, retail sales values barely grew in October …
Soaring inflation weighing on retail sales Retail sales values barely grew in October from September and soaring inflation points to risks that growth will remain muted this quarter. Growth in retail sales values slowed sharply from 1.5% m/m to 0.2% m/m …
Halt to labour market tightening as recession looms The unemployment rate stayed unchanged in August and will hover around 2.5% through 2023 due to a looming economic recession. The job-to-applicant ratio rose from 1.34 to 1.35, the highest it has been …
28th November 2022
Overview – The surge in interest rates in recent months has quickly been reflected in property yields, and as a result we have brought forward some of our forecasted rise in yields from 2023 into 2022. But with gilts yields set to fall back next year we …
Warning lights flashing red despite solid activity data Despite the recent resilience of the hard economic data, the most reliable forward-looking indicators suggest that a recession is unavoidable – our six-month ahead composite model puts the odds at …
RBA will keep hiking for now despite consumption slowdown Following a strong eight consecutive rises since the start of the year, the decline in retail sales in October isn’t a disaster. A fall in sales volumes across Q4 now looks very likely but we …
RBA to keep hiking for now despite slowdown in consumption Following eight consecutive rises since the start of the year, the decline in retail sales in October isn’t a disaster. A fall in sales volumes across Q4 now looks very likely but we suspect that …
