Monthly data point to healthy fourth-quarter growth The monthly data suggest GDP growth slowed to 1.6% annualised in the fourth quarter, which would be better than initially expected considering the surge in interest rates. Nonetheless, with some of the …
31st January 2023
There is a touch of the Dr Jekyll and Mr Hyde about China’s climate credentials, with its well-documented record of burgeoning emissions and reliance on coal standing in stark contrast to its increasing influence over the supply of green technology. The …
Monthly data point to healthy fourth-quarter GDP growth The monthly data suggest that GDP expanded by 1.6% annualised in the fourth quarter. That would mark a sharp slowdown from the gain of 2.9% in the third quarter, but would still be much better than …
Easing labour market conditions pushing wage growth lower The 1.0% rise in private wages and salaries in the fourth quarter, down from a 1.2% gain in the third quarter, adds to the evidence that wage growth is slowing gradually. The Fed is still likely to …
Economy now in a slowdown The 0.4% q/q rise in Mexican GDP in Q4 suggests that the economy held up better than its Latin American peers towards the end of last year. But even so, the economy in the midst of a slowdown, which we expect to worsen in the …
Global steel supply to remain subdued in early 2023 Global steel output slumped in December and fell sharply in 2022 as a whole. With demand likely to be weak, at least in the first half of 2023, we do not expect a marked rebound any time soon. The World …
Approvals fall to their lowest since 2009 A further slump in mortgage approvals in December, to the lowest level since the height of the pandemic, confirmed that the extremely high cost of mortgage borrowing has caused more buyers to withdraw from the …
Banks still willing to lend even as capital values fall Even as investors have pulled back from the market, net lending to property remained positive in December. That may reflect some distressed borrowing as investors looks to boost liquidity in the face …
Drag from higher interest rates intensified in December December’s money and credit figures revealed that higher interest rates further dampened economic activity at the end of last year. Moreover, the drag on activity will continue to intensify this …
Recession likely in first half of this year The small increase in euro-zone GDP in Q4 was better than we feared a few months ago but the economy excluding Ireland still flat-lined. As the data deteriorated towards the end of the quarter and tighter …
Further weakness in bank lending to come Much like the latest money and credit data, the Q4 Bank Lending Survey painted a much more downbeat picture of economic prospects than the latest business surveys. Banks are tightening their lending standards and …
This page has been updated with table and charts of key figures. Growth slow to round off a bumper 2022 The flash estimate for Saudi Arabia’s economy showed GDP expanded by a solid 1.5% q/q in Q4, but year-on-year growth continued to soften and we expect …
Recession underway The 0.3% q/q contraction in Czech GDP in Q4 confirmed that the economy was in recession over the second half of last year. The outlook for the economy has brightened a bit in recent months as natural gas prices have fallen sharply and …
Drag from higher interest rates intensified in December December’s money and credit figures revealed that higher interest rates further dampened economic activity at the end of last year. Moreover, the drag on activity will continue to intensify this year …
Consumption remains resilient and labour market still very tight With inflation still accelerating, we expect the cash rate to reach 3.85% by April However, sharp slowdown in activity and inflation will prompt rate cuts by year-end The incoming data …
Economy likely to contract in first half of 2023 The small increase in France’s GDP in Q4 last year was worse than it first appears as household consumption fell sharply and investment growth slowed. It looks as if a (mild) recession in the first half of …
Reopening kick starts a rapid recovery The official PMIs add to evidence of a rapid rebound in economic activity this month as disruption from the reopening wave faded. More shoppers returned to the street boosting services activity while easing labour …
Further rise in services spending will prevent fall in Q4 consumption Retail sales volumes declined last quarter on the back of a weaker-than-expected end to 2022. A solid increase in services spending means overall consumption should still have risen at …
Recession may have already begun The unemployment rate stayed unchanged in December, but labour market conditions are beginning to betray signs of loosening. Similarly, the strong rebound in retail sales is likely to give way to slower growth as the …
Weakening industrial production outlook heralds recession Retail sales rebounded in December and industrial production was mostly flat in December. However, firms’ forecasts are consistent with sharp contractions in industrial output over the coming …
Unemployment rate to rise before long The unemployment rate stayed unchanged in December, but labour market conditions are beginning to betray signs of loosening. We are expecting unemployment to rise to 2.8% by mid-year due to a recession. The labour …
30th January 2023
It’s well known that, with the yield curve inverting the Fed is now racking up losses, but what is less appreciated is that the higher interest payments it is making are going mostly to foreign banks and money market funds. The Fed earns interest on …
We think China’s PMIs picked up in January as its COVID wave ebbed (01.30 GMT) Euro-zone GDP probably flatlined in the fourth quarter… (10.00 GMT) …and economic growth may have weakened in Mexico and the Czech Republic Key Market Themes The Fed , ECB …
The outlook for Latin America has turned more positive at the start of the year as China has shifted away from its zero-Covid policy and commodity prices have rallied. But this comes against a backdrop in which regional growth is showing clearer signs …
Although there has been some good news for risky assets over the past couple of months, we still think they will struggle before long as economic growth disappoints in major advanced economies. The global equity market rally that began at the back end of …
The Lunar New Year holiday wasn’t quite back to normal this year as fears of spreading COVID to elderly relatives prevented many households from returning to their hometowns – long-distance journeys, while the highest since the start of the pandemic, …
Asian currencies have continued to rebound against the US dollar over the past month, and most are now up by around 5-15% against the greenback since early November. Optimism around China’s reopening and expectations for a Fed policy pivot have been the …
The shift away from floating-rate to fixed-rate mortgages presents risks as well as benefits. It will protect homeowners who are lucky enough to have a long time remaining on their fixed rate contract from higher mortgage payments. But that reduces the …
While an improvement in appetite for risk has fuelled a strong start to 2023 by UK equities and sterling, we doubt this will remain a source of support as recessions in the US, the UK and the euro-zone economies take hold. We anticipate the FTSE 100 …
Sentiment up, price pressures coming off the boil but still strong The improvement in economic sentiment in January is consistent with the picture painted by other surveys. But the high level of firms’ selling price expectations shows that the ECB’s …
Sharp slowdown in Q4, but sentiment improves further in January Economic sentiment in Central and Eastern Europe picked up again in most countries in January and our regional-weighted measure hit a four-month high. We still think that GDP in most …
Recession not off the table yet The fall in German GDP in Q4 shows that the energy crisis started to dent activity at the end of last year. This pours cold water on the recent optimism about the prospects for the euro-zone and suggests that a technical …
A Q4 fall in GDP The 4.9% increase in Polish GDP over 2022 as a whole is consistent with a slowdown in growth to around 1.6% y/y in Q4 and a small quarterly decline in output of around 0.5% q/q, confirming that the economy slumped towards the end of the …
Recession not off the table yet The fall in German GDP in Q4 suggests that the energy crisis started to dent activity at the end of last year. This pours cold water on the recent optimism about the prospects for the euro-zone and suggests that a technical …
All attention this week will be on a swathe of major central bank decisions, with the Federal Reserve’s first rate announcement of the year due on Wednesday, followed by the Bank of England and the European Central Bank on Thursday. As the week’s policy …
Recession began in Q4 after all Data published today show that the economy contracted by 0.6% q/q in Q4 as the resilience previously reported towards the end of last year has been revised away. With the more timely data for December and January still …
The conventional wisdom is that the annual spring wage negotiations (Shunto) are a bellwether for wage growth. In reality, the small number of employees covered by the talks and their bias towards workers in large manufacturing firms means that the Shunto …
In this week's episode: It's a big week for markets, with US December payrolls due and the Fed, the ECB and the Bank of England all set to deliver their first policy decisions of the year. Group Chief Economist Neil Shearing discusses what to expect, …
29th January 2023
A streak of stronger-than-expected economic data in the euro-zone has given markets there a boost this year. But with much of the good news seemingly already discounted, and, in our view, a still hawkish ECB, we expect rallies in equities and government …
27th January 2023
After rising sharply for much of this year, the Lunar New Year holiday in China meant that commodity prices generally took a bit of a pause this week. The only exceptions were natural gas prices, which continued to plunge, owing to lower-than-normal …
We expect the Fed to slow the pace of interest rate hikes to 25bp… (Wednesday) …but the ECB and Bank of England are likely to raise rates by 50bp (Thursday) We’ve pencilled in a below-consensus gain of 150,000 in US non-farm payrolls (Friday) Key Market …
The US dollar looks set to end another week broadly unchanged against most major currencies. Activity data released this week seemed consistent with resilience in European economies and near-recessionary conditions in the US , and we have revised our …
Our forecasts for house prices, mortgage rates and incomes over the next few years mean affordability will remain relatively stretched compared with the past 15 years. But there is good reason to think that mortgage payments as a share of income were …
Common currency talk highlights dollar concerns The week kicked off with the surprise news that Argentina and Brazil are looking at establishing a common currency to facilitate trade between the two countries. Further reports have clarified that, rather …
While a “risk-off” period in markets may prompt it to pause in the near term, we expect the recent pattern of the US dollar retreating as non-US equities outperform to set the tone for the next couple of years. One major recent theme in global markets has …
Recession denial in full effect The commentary this week dismissing the validity of the Conference Board’s leading indicator (see here ), which is currently giving an unambiguous recession warning, reminds us of the old quote from JK Galbraith that “faced …
This week’s Australian CPI data delivered an unwelcome surprise for the RBA. The headline rate rose from 7.3% to 7.8% in Q4, compared with an analyst consensus of 7.5%. While that was lower than the RBA had been expecting back in November (8.0%), the …
