Industrial rebound, but recession still coming The big rebound in German industrial output in January suggests that industry may continue to hold up well in the face of the energy crisis. However, with the renewed drop in retail sales pointing to …
8th March 2023
Industrial rebound, but recession still coming The big rebound in German industrial production in January suggests that industry may continue to hold up well in the face of the energy crisis. However, with the renewed drop in retail sales pointing to …
What will UK Chancellor Jeremy Hunt deliver in his Spring Budget? Will he be able to splash any cash, will he hold back sweeteners until closer to the next general election, or will the OBR’s new economic forecasts tie his hands? Group Chief Economist …
7th March 2023
Germany’s industrial production probably fell a bit further in January (07.00 GMT) We think Poland’s central bank will leave its policy rate on hold… (13.00 GMT) …and the Bank of Canada will keep its policy rate unchanged as well (15.00 GMT) Key Market …
Higher rate expectations drag many commodity futures curves lower Most commodity prices fell and futures curves shifted lower this past month as higher interest rate expectations in advanced economies clouded the demand outlook. This is consistent with …
Fed Chair Jerome Powell confirmed today that interest rates are set to rise higher than we previously anticipated. But with most evidence still pointing to economic weakness and markedly lower inflation this year, we still believe the Fed will begin …
Powell confirms higher peak in rates Fed Chair Jerome Powell appears to have confirmed today that interest rates are set to rise a higher than we previously anticipated. But with most evidence still pointing to economic weakness and lower inflation this …
China’s imports were weak in January-February, but commodity imports fared better. What’s more, we think crude oil imports, in particular, will pick up from here given the resurgence in travel demand. China’s January-February trade data (published today) …
We think that most – perhaps two thirds – of the drag on activity from tighter monetary policy in advanced economies is still to come through in 2023. So, despite some surprisingly resilient data recently, we are sticking to our forecasts for advanced …
Recovery from Q4 GDP-shocker likely to be muted South Africa’s GDP fell by a sharper-than-expected 1.3% q/q in Q4, and the broad-based weakness in economic activity is unlikely to improve any time soon as severe power cuts and fiscal consolidation …
The substantial recovery in Halifax house prices in February added weight to the view that we will see a stand off between buyers and sellers that causes transactions to slump, but minimal price falls. That would be a historical anomaly, which is why our …
No reopening boost to imports yet China’s import volumes were little changed at the beginning of the year, disappointing hopes for a rebound. But we still think that reopening will eventually drive a pick-up in imports. And while exports fared better than …
The Reserve Bank of Australia signalled that further tightening will be needed when it hiked the cash rate to 3.60% today and we’re sticking to our forecast that the Bank will lift the cash rate to 4.10% by May . The RBA’s decision to lift the cash rate …
RBA will hike the cash rate to 4.10% The RBA signalled that further tightening will be needed when it hiked the cash rate to 3.6% today and we’re sticking to our forecast that the Bank will lift the cash rate to 4.10% by May. The RBA’s decision to lift …
Net exports should support GDP growth in Q1 Although the rise in export earnings lagged growth in the import bill in January, we still think net trade will provide a decent boost to GDP growth this quarter. The decline in the trade surplus in January, …
Worst hit to real wages since GFC could see spending fall in Q1 Wage growth fell sharply in January to its weakest in almost two years due largely to a slowdown in the growth of regular and overtime hours worked. Real wages posted the worst fall since the …
Net exports will support GDP growth in Q1 Notwithstanding a fall in the trade surplus in January, we think net trade is likely to provide a boost to GDP growth in Q1. The decline in the trade surplus, from $13bn to $11.7bn in January came in below the …
This inaugural Climate Economics Outlook establishes our bottom-up long-term forecasts for greenhouse gas emissions for the world’s largest polluters. These forecasts will serve as a baseline for future analysis of the impacts of alternative climate …
6th March 2023
We expect Australia’s central bank to hike by 25bp (04.30 GMT) Fed Chair Powell may reveal whether his outlook for interest rates has changed (15.00 GMT) We think China’s exports weakened, but imports strengthened, in January and February Key Market …
In this Update we examine the implications of affordability for house prices at the market level. Despite sunbelt markets seeing the strongest house price growth over the past couple of years, affordability looks most stretched in the West. This has been …
Click here to view an online briefing with our team about China's economic plans. It was recorded on 6th March, 2023. The economic plans that have been detailed at the National People’s Congress are more cautious and restrained than had seemed likely …
Non-performing loan (NPL) ratios have risen by as much as 4-5%-pts during non-banking crisis downturns in EMs in the past. This time around, there are reasons to think that the increase will be smaller and EM banks generally look well placed to cope. But …
Construction activity rebounds The headline CIPS construction index rebounded back into expansionary territory in February and the forward-looking indicators also showed further improvement. Commercial developers may be taking advantage of lower input …
Germany is more vulnerable than most advanced economies to a reduction in trade with China both because of the scale of trade and the use of Chinese-made inputs to its large manufacturing sector. We have highlighted in our Spotlight series that the …
Sales up in January but trend is still down January’s rise in euro-zone retail sales was not enough to offset December’s fall. And the low levels of household confidence suggest that consumption will decline in the coming months. The national-level data …
Inflation likely to stay above 3% over the coming months. The CPI data for February suggest there is a long way to go before inflation returns to target especially as underlying prices pressures show no signs of abating, with the core inflation rate …
Payrolls week invariably means another feeding frenzy in markets over the latest numbers from the Bureau of Labor Statistics. But this is a volatile series, and one that frequently gets revised. Any sensible central banker will remain above the fray to …
Wage growth should rebound in February We think the surprise sharp fall in wage growth in January was at least in part the result of Lunar New Year disruptions and there should be a rebound in February. The much slower wage growth in January, falling …
With labour productivity falling the most on record over the past year, unit labour cost growth has surged even as hourly earnings growth has remained sluggish. While we expect productivity growth to rebound, we also expect hourly earnings growth to …
It’s US payrolls week and all eyes will be on whether January’s blowout jobs growth number was just a one-off or confirmation that – despite the Fed’s actions – the labour market remains tight. Labour market conditions matter hugely for how much further …
5th March 2023
It was another fairly quiet week in commodity markets, with prices caught between diverging narratives. Rather perversely, robust economic data in advanced economies weighed on commodity prices. This is due to expectations that economic resilience will …
3rd March 2023
Our new forecasts for metro employment growth have prompted limited change in the rankings for total jobs over the next three years. But, there are two shifts, both owing much to recent and likely further cuts in the tech sector. First, we think 2023 …
Although recent economic data have surprised to the upside, we still think that economic growth in the US will falter later this year. In our view, indicators of the equity risk premium in the US point to some complacency regarding the economic outlook, …
Currency markets have mostly gone sideways this week, with the US dollar set to end it a touch weaker against most other major currencies. (See Chart 1.) With both activity and price data continuing to surprise to the upside in the US , Europe and China, …
Very weak Q4 figures The fourth quarter GDP figures published over the past few weeks made for grim reading. GDP contracted in around half of the countries covered by our Emerging Asia services. Only India, Indonesia and the Philippines recorded decent …
We expect Australia’s RBA to hike by another 25bp (Tue.) Japan’s central bank will probably abandon Yield Curve Control (Thu./Fri.) We think US non-farm payrolls rose by 200,000 in February (Fri.) Key Market Themes Notwithstanding the partial …
Koruna strength will add to disinflation in Czechia The recent strength of the Czech koruna, which hit a 14-year high of 23.3/€ this week, adds to a number of disinflationary forces that are currently taking hold in the country. And we think that …
Nigeria to take baby steps in pro-market direction The results of Nigeria’s presidential election were quickly challenged by the opposition this week, which is likely to keep investors on tenterhooks. And even once the dust settles, we suspect that …
The latest data give the Bank of Canada plenty to think about ahead of its policy announcement next week. The data appear to lend support to the Bank’s view that a soft landing is still achievable, with the stagnation in fourth-quarter GDP followed by a …
Mixed labour market signals Labour market data released this week from Brazil, Chile and Colombia flew under the radar, but they provide a useful guide to inflation risks. The common theme is that labour markets are losing steam amid an economic slowdown. …
Surveys not consistent with economic reacceleration The marginal fall in the ISM services index to 55.1 in February, from 55.2, suggests activity continues to expand at a reasonably healthy pace, but provides further reason to doubt the idea that there …
The February employment report and Fed Chair Jerome Powell’s testimony to Congress next week should give a clearer indication of whether recent talk of interest rates going “higher for longer” is justified. Longer, but not necessarily higher? Market rate …
Brexit looking a bit brighter The economic developments this week were generally positive, starting with news that the Prime Minister, Rishi Sunak, struck a deal with the EU on trading arrangements for Northern Ireland, officially known as the Windsor …
With much of the global economy holding up surprisingly well and inflation not coming down as quickly as expected, investors are weighing up the risk that policy rates remain elevated for much longer than previously thought. This Update discusses what …
Another inflation surprise… The focus this week was on yet another higher-than-expected inflation print. The headline inflation rate edged down in February, but only to 8.5%, whereas a much bigger fall had been anticipated. And the core measure rose …
Sweden in recession This week brought yet more bad news about Sweden’s economy. Before the first release of Q4 GDP on 30 th January, the available monthly data pointed to an increase of around 0.5% q/q in the quarter as a whole. But those data were then …
PMIs point to resilience, especially in services February’s final Composite PMIs suggests that economic activity in the euro-zone has been fairly resilient in February, with the indices for Spain and Italy, and for the services sector, particularly …
Following the release of GDP data for Q4 (Q3 of FY22/23) this week, we now know that the economy grew by 6.7% in 2022 as a whole, one of the fastest growth rates anywhere in the world. Output was 10% above pre-pandemic levels at the end of last year. (See …
Inflation declines, but disinflation process slows Inflation in Turkey fell to 55.2% y/y in February, but underlying price pressures remain strong and the disinflation process appears to be happening more slowly than had been expected. Inflation will stay …
