While the recent economic data have surprised on the upside, property market indicators were broadly worse than expected in Q4. Occupier demand softened, particularly in the office and apartment sectors, as concerns about the outlook weighed on firms …
17th February 2023
Another round of robust US economic data and renewed hawkish rhetoric from Fed officials has given the US dollar a boost this week. With economic activity holding up better than we and most others had anticipated and price pressures appearing more …
Governor Tiff Macklem reiterated this week that the Bank of Canada wants time to assess the impact of high interest rates, suggesting it will not respond to the strength of employment by immediately resuming interest rate hikes. The weakness of home …
We think the Composite PMI rose to just above 50 in February in the euro-zone… (Tue.) …but remained below that threshold in the UK (Tue.) US real consumption probably rebounded in January, reversing declines in past months (Fri.) Key Market Themes While …
Most commodity prices fell this week (1 & 2) due to concerns about the persistence of high inflation in the US. Data showed US CPI inflation coming in slightly stronger than expected in January, pushing up interest rate expectations and giving a boost …
Colombia: here comes the state Concerns about the direction of policymaking under President Petro have once again lead to a sharp sell-off in Colombia’s financial markets this week. The catalyst this time was the government’s health reform bill, which was …
We expect MSCI’s Brazil Index to drop over the next couple of quarters in local-currency (LC) terms, before it begins to recover towards the end of this year. Since end-October, equities in Brazil have generally underperformed equities in other major …
There are growing signs that stretched affordability is weighing on homeownership, particularly for the under 35s. We expect this to persist in the coming quarters. But there is a large pool of young adults waiting to purchase their first home once …
While more disinflation may yet benefit the US stock market by, for example, facilitating a renewed decline in TIPS yields and boosting profits from the rest of the world if accompanied by a weaker dollar, we don’t think it will prevent equities from …
In a previous edition of the UK Economics Weekly we said that the CPI core services inflation and private sector pay figures released this week would prove pivotal in determining whether the Bank of England raises interest rates further or calls time on …
Echoing the unexpectedly large increase in payroll employment last month, January’s retail sales and manufacturing output data were unquestionably strong too. Admittedly, retail sales appear to have been boosted by problems with the seasonal adjustment, …
Capital value falls accelerated in Q4 as euro-zone all-property yields surged higher. And although rents increased in both offices and industrial, the outsized jump in yields meant euro-zone all-property capital values fell by about 8% q/q – the …
Tough times ahead for CEE, after Q4 contraction … Q4 GDP data released across Central and Eastern Europe (CEE) this week were a mixed bag, but show that the regional slowdown at the end of 2022 was (broadly) as we had anticipated. We now know that the …
The ECB’s doves have been pretty quiet for the past few months, but Fabio Panetta – who is probably the most influential one these days – gave a moderately dovish speech this week. Among other things, he suggested that inflation may already have peaked. …
The increase in Switzerland’s core inflation rate in January is likely to provoke a strong response from the SNB at its next meeting in March. We now forecast it to raise the policy rate from 1.0% to 1.5% at that meeting, followed by an additional 25bp …
What does South Africa’s budget hold in store? South Africa’s mounting economic and political challenges, including the deepening energy crisis, set the stage for the fiscal scales to tip towards providing more support and away from fiscal consolidation …
Food price inflation may be overstated The consumer price data for January released this week proved something of a nasty surprise , with the headline rate jumping unexpectedly sharply to 6.5% y/y, pushing it above the ceiling of the RBI’s 2-6% target …
Buyer sentiment seems to be improving New home sales have taken a beating since their peak in early 2021. But there are some green shoots in the recent data which show sales in large cities rising at the start of this year. (See Chart 1.) We think this …
Asia to dominate by 2050 We published our latest Long Run Outlook this week with detailed forecasts out to 2050 for 60 economies. They suggest that Emerging Asia will dominate the global economy in 2050. The region’s share of global GDP (measured at …
This week’s data contained encouraging signs that inflationary pressures are fading, and the risks to our view that Bank Rate will rise to 4.5% this year now lie to the downside. The January MSCI data also included good news for investors, with …
Russia’s crude oil production has, up until now, been remarkably resilient in the face of Western sanctions. But the recent announcement of a voluntary cut seems to be the first concrete sign that Russia is concerned about its ability to maintain output …
Too soon to conclude that retail is coming out of its funk The rebound in retail sales in January was better than expected, had echoes of the leap in US retail sales and suggests that the festive/new year period wasn’t a complete write-off. But while …
2023 may be better than 2022 for retailers, but it will still be a struggle The 0.5% m/m rise in retail sales volumes in January was better than the consensus forecast of a 0.3% m/m decline (CE +0.5% m/m), echoes the leap in US retail sales earlier this …
Thailand’s economy contracted sharply in the final quarter of last year, as a strong recovery in the tourism sector was unable to compensate for weakness elsewhere. Looking beyond the weak fourth quarter though, we think the economy is likely to benefit …
The 11,500 drop in employment in January marked the second consecutive fall and we think it marks the beginning of a sustained period of labour market slackening. In annual terms, employment will still be up around 2.5% this quarter, but if our downbeat …
Export volumes fell again in January The 0.2% q/q rise in Q4 GDP was weaker than most had anticipated and is consistent with our view that the economy will do much worse this year than anyone expects. Indeed, the early indications are that economic …
Tourism to drive recovery after fall in Q4 GDP Thailand’s economy contracted sharply in the final quarter of last year as a strong recovery in the tourism sector was unable to compensate for weakness elsewhere. Looking beyond the weak fourth quarter …
UK retail sales volumes probably rose by 0.5% m/m in January (07.00 GMT) We think Russia’s GDP fell by 3.5% y/y in Q4 (16.00 GMT) Catch-up here on yesterday’s Drop-In on our UK economic outlook Key Market Themes The recent strength of the US dollar and …
16th February 2023
Starts fall back in January despite warm weather Single-family housing starts dropped back in January and the permits data add weight to our view that more weakness is to come. We think that starts will edge lower in the coming months, before an increase …
The Mexican peso’s outperformance since the start of 2022 has pushed up its valuation substantially, and we think that this leaves it vulnerable to sharp falls against the US dollar if, as we expect, the US economy falls into recession later this year. …
The UK avoided a recession last year partly because of more spending by households on restaurants and trains and partly because of more investment by businesses in aircraft, cars and cruise ships. This suggests the recovery from the pandemic cushioned …
EM core inflation jumped to its highest rate in almost two decades in January. That can partly be pinned on China, where core inflation has risen from a very low rate. In most other EMs, core inflation has passed its peak, which should allow policymakers …
Our latest Asia Drop-In tackles the region’s big stories, from the Bank of Japan’s new governor to China’s property rebound to Pakistan’s default risk. During this 20-minute online briefing, economists from across our Asia teams answered your questions …
Dubai’s GREs well positioned to meet debts for now The pick-up in Dubai’s economy over the past year or so has provided a better environment for government-related entities (GREs) to service large debts. But while repayments shouldn’t be much of an issue …
We think French wage inflation will remain much stronger than in the pre-pandemic period this year. This is not least because of the automatic adjustments to inflation of the minimum wage and negotiated wages engrained in the French system. Charts 1 …
Economy struggles despite strong GDP print The surprise acceleration in Israel GDP growth in Q4, to 5.8% q/q annualised, is not as good as it seems at first sight. The strength was largely driven by an unexpected surge in expenditure on personal …
Inflation across most of Latin America has peaked, but this is mainly an energy story – core price pressures are proving much more persistent. And underlying price pressures are likely to ease only gradually over the coming months, which will keep …
A raft of strong data out of the US have poured cold water on the idea that its economy has tumbled into recession at the start of 2023. And this comes after GDP data revealed that the euro-zone and UK economies (narrowly) avoided outright contraction …
The survey data suggest that the modest decline in mortgage rates since October falls a long way short of what would be required for house prices to bottom out. The fall in market interest rates since the “mini” budget has allowed the average quoted …
A combination of higher interest rates and rising raw material prices have interrupted the long-term declines in the costs of renewables and battery power, and could push costs up further in the near term. However, such pressures will dissipate as policy …
The central bank of the Philippines (BSP) today raised its main policy rate by a further 50bps (to 6.00%) and increased its inflation forecast for this year significantly. We are revising our interest rate forecasts, and now expect two more 25bps hikes …
Bank Indonesia (BI) kept its main policy rate unchanged today (at 5.75%) and signalled that further rate increases this year were unlikely. This supports our view that the tightening cycle has now come to an end. We expect the policy rate to remain on …
Nigerians go to the polls on 25th February for general elections which could put the country on a very different path. Will the outcome of the vote end years of economic mismanagement and usher in a wave of pro-market reforms, or does it threaten more of …
No more hikes this year Bank Indonesia (BI) kept its main policy rate unchanged today (at 5.75%), and signalled that further rate increases this year were unlikely. This supports our view that the tightening cycle has now come to an end. We expect the …
More tightening still to come The central bank of the Philippines (BSP) today raised its main policy rate by a further 50bps (to 6.00%), and we think more tightening is likely in the near term amid worries about high inflation. The decision was in line …
Labour market will continue to slacken The weakness in January’s labour market data shows that rapid rate hikes are starting to cool activity, but with inflation still far too high that won’t prevent the RBA from tightening policy for a while yet. The …
Exports downturn well under way The trade deficit was virtually unchanged in January, as volumes and prices of exports and imports fell across the board. With the global downturn weighing on external demand, further export volume contractions are in …
Labour market will continue to loosen The weakness in January’s labour market data underlines that aggressive monetary tightening is starting to cool activity, but with inflation still far too high, that won’t prevent the RBA from hiking interest rates …
Exports and machinery orders to trend down in H1 The trade deficit was virtually unchanged in January, as volumes and prices of exports and imports fell across the board. Export volumes likely fell for the second consecutive month and with the global …
15th February 2023
Commercial crude oil stocks looking healthy Commercial crude stocks rose to their highest since June 2021 last week due to lower refinery activity. With crude demand likely to remain sluggish over the coming months, and the US government set to sell …
