The shift toward living with COVID will put some upward pressure on prices in China. But the uptick in inflation will not be as large as that seen in many other countries as they emerged from COVID controls over the past couple of years. While the initial …
9th January 2023
Outlook improved, but headwinds remain The rise in German industrial output in November confirms that industrial output held up better than we had expected in Q4. However, while the recent slump in gas prices should help energy-intensive firms in the …
Outlook improved, but headwinds remain The rise in German industrial output in November suggests that industrial output has held up better than we anticipated in the fourth quarter in part because of an increase in production in energy-intensive …
Credit growth in China probably remained weak at the end of last year We think US CPI inflation fell further in December (Thu.) We expect rate hikes in Korea and Romania next week Key Market Themes While investors seem to have judged that today’s …
6th January 2023
Financial markets have begun 2023 on a cautious note, see-sawing on mixed data. Although it has dropped back today, the US dollar has started the new year on the front foot, rising against most other major currencies on the week as a whole. That said, …
Most commodity prices declined this week, with energy prices falling especially sharply. Unseasonably mild weather in Europe and the US weighed on heating demand, prompting a plunge in gas prices. The European natural gas price currently sits at levels …
Our key calls for 2023 highlight major shifts in the outlook for real estate. We expect all-property total returns to be negative for the first time since 2009. At a sector level, we expect retail to do best, ending industrial’s decade of dominance, while …
Although valuation premia in certain parts of the US stock market shrank significantly last year, we think there is still some room for this to continue in the coming decade and weigh on their relative performance. To re-cap, there was a marked reversal …
The resilience of the labour market is a risk to our view that the Bank of Canada will pause its tightening cycle after a final 25 bp hike this month, even as the slump in natural gas prices raises the chance that CPI inflation will fall faster than the …
While we expect mortgage rates will fall to 5.75% by end-2023, affordability will remain stretched. Alongside a weakening economy and falling house prices that will weigh on housing market activity. Indeed, we think 2023 will be the worst year for sales …
Sub-Saharan Africa’s grim year ahead Last year ended with the bang of Ghana’s sovereign default , and 2023 has started with economies bracing for disruptions due to the end of zero-COVID in China and a looming global recession. While these are likely to …
The data this week suggested that the weak global backdrop is being compounded by a deterioration in domestic activity, although the labour market still appears to be in good health. Domestic weakness adding to external headwinds The November trade data …
The past few weeks have brought the news that the UK economy is lagging even further behind its G7 counterparts. (See here .) One reason for this relative underperformance is real business investment, which accounts for 9.5% of real GDP and in Q3 was …
A worrying first week of Lula’s presidency The biggest event in the region this week was the inauguration of Brazil’s president Lula on 1 st January. And his first actions (and those of some of his cabinet) provide reasons for investors to be concerned …
Sharp decline illustrates that recession still more likely than soft landing The slump in the ISM services index to a 19-month low of 49.6 in December, from 56.5, is another signal from the surveys that despite the resilience of employment growth, …
While we think the hawkish ECB poses a near-term threat to euro-zone government bonds, we still expect their yields to be lower, in general, by the end of this year . Having climbed throughout December, developed market government bond yields have …
The narrative surrounding Europe’s energy crisis has completely shifted in recent weeks as warmer-than-normal winter temperatures have reduced heating demand and pushed gas prices down sharply. This will help to improve external positions and lower …
It was meant to be a discussion all about the upside and downside risks that clients should keep an eye on in 2023. But a growing online debate about attempts to push the renminbi in energy trade between China and the GCC countries sidetracked it. Group …
Labour market data boost odds of a soft landing The solid 223,000 gain in non-farm payrolls and drop-back in unemployment to a 50-year low in December will, at face value, do little to ease the Fed’s concerns about resilient core services inflation. …
Swiss manufacturing cruising, services snoozing The latest batch of surveys suggest that, in common with the euro-zone, prospects for the Swiss economy improved marginally at the end of last year. For a start, the KOF economic barometer for December …
Surge in employment locks in another interest rate hike The surge in employment in December and renewed fall in the unemployment rate suggest that the Bank of Canada will raise interest rates again later this month, although the fall in wage growth …
The property repricing in response to higher interest rates has not yet run its course. Coupled with a recession-driven slowdown in rent growth, this means 2023 is shaping up to be another bleak year for European real estate. Given the rapid rise in …
Surge in employment locks in another interest rate hike The surge in employment in December and renewed fall in the unemployment rate suggests that the Bank of Canada will raise interest rates again later this month, although the fall in wage growth means …
Wage growth slowing despite employment resilience The solid 223,000 gain in non-farm payrolls and drop-back in unemployment to a 50-year low in December will, at face value, do little to ease the Fed’s concerns about resilient core services inflation. …
Inflation is on its way down Headline inflation in the euro-zone has probably passed its peak. (See here .) Admittedly, core inflation rose to a new record high in December, with both services and core goods inflation increasing in y/y terms. Core goods …
The recent plunge in wholesale gas prices means that utility prices for households may fall below the government’s price freeze in July. As a result, CPI inflation will be around 0.3 percentage points (ppts) lower than we previously thought in the second …
European natural gas prices have halved over the past month as usage stayed low and LNG imports hit record highs. Barring dramatically colder weather, EU gas storage looks set to be in a more comfortable position than we had expected. As a result, we have …
Forecast change on China border reopening Tourism across Asia has rebounded strongly in recent months, with arrivals in most places now at around 45% of pre-crisis levels. (See Chart 1.) Chart 1: Tourist Arrivals (% of 2019 level) Sources: Refinitiv, …
PMIs increasingly at odds with hard data The PMI surveys for December released this week suggest that India’s economy was firing on all cylinders at the end of 2022. Both the manufacturing and services measures hit multi-month highs (see Chart 1), while …
After November’s positive surprise, will December’s CPI report provide more evidence that US inflationary pressures are easing – and what would that mean for the Fed’s policy calculus? Chief US Economist Paul Ashworth and Senior US Economist Andrew …
Deep downturn in Q4, but signs of improvement in December The latest EC Economic Sentiment Indicators for Central and Eastern Europe point to a regional decline in GDP in the order of 0.5% q/q in Q4, but it was encouraging that sentiment increased for the …
COVID-19 has torn through China’s population with remarkable speed. Medical experts estimate that over 70% of the population in major cities such as Shanghai have been infected since mid-November. Anecdotal evidence suggests that the human cost among the …
Headline index falls below 50 as recession hits property demand The headline CIPS construction index fell below 50 in December, indicating a contraction in activity, as the recession hit demand and developers’ concerns about capital values increased. With …
New year cheer but ECB will stick to hawkish script The fall in inflation and improvement in economic sentiment in December suggest that the euro-zone’s case of stagflation is not quite as acute as feared a few months ago. Nonetheless, a technical …
New year cheer but ECB will stick to hawkish script The fall in inflation and improvement in economic sentiment in December suggest that the euro-zone’s case of stagflation is not as acute as feared a few months ago. Nonetheless, a technical recession is …
PMI picks up, but manufacturing sector set for tough 2023 South Africa’s manufacturing PMI picked up for a fourth consecutive month, to 53.1, in December but the backdrop of persistent power cuts, tight policy and a global recession means that we think …
Downward pressure on the Hong Kong dollar has abated in recent weeks and we think it is very unlikely that the existing currency framework will be abandoned any time soon. For much of 2022, the USD/HKD rate traded at the upper end of the band defined by …
Q4 industry slump won’t prevent GDP rebound We warned in December that the surge in manufacturing inventories in the Tankan signals a sharp downturn in industrial activity. As it happens, industrial production only fell marginally in November. But that …
House price falls already well advanced The further large fall in house prices recorded by Halifax in December suggests that the house price correction is further advanced than we previously thought. Indeed, while the Nationwide figures point to a …
End of China’s zero-Covid to boost travel exports Media reports suggest that China will start to import Australian coal from April. We explained here why the impact on the economy should be modest. A more important development is the end of zero-Covid in …
Wage growth should settle around 1% this year The sharp slowdown in wage growth in November was mostly due to a plunge in volatile bonus payments and wage growth will rebound over the coming months . The slowdown in wage growth in November, from 1.4% to …
Wage growth will settle around 1% The sharp slowdown in wage growth in November was mostly due to a plunge in volatile bonus payments and it will rebound over the coming months. The slowdown in wage growth in November, from 1.4% y/y to 0.5%, was more …
5th January 2023
Hit to implied product demand from cold weather likely to be short-lived Commercial crude stocks rose last week due to refinery closures in the wake of the extremely cold weather. But this should be short-lived, with most refinery plants back online soon. …
After post-pandemic property rallies hit the skids last year, what will 2023 bring? Economists from across our US Commercial and Housing teams held a special briefings on what to expect in the coming 12 months. During this 30-minute session, the team …
After post-pandemic property rallies hit the skids last year, what will 2023 bring for UK and euro-zone markets? Economists from across our UK Commercial and Housing and Europe Commercial Property teams held a special briefing on what to expect in key …
The 0.3% q/q contraction in Q3 left real GDP 0.8% below its Q4 2019 pre-virus level and the UK economy lagging even further behind its major counterparts. In contrast, GDP has risen above its pre-pandemic level in all G7 economies, including the US …
Euro-zone inflation may have fallen to 9.2% in December (10.00 GMT) We think US non-farm payrolls growth slowed to 160,000 in December (13.30 GMT) The US ISM Services survey will probably point to slowing momentum (15.00 GMT) Key Market Themes Despite …
The latest fall in the Egyptian pound sends a strong signal that the authorities are committed to the shift to a more flexible exchange rate. And while the weaker currency poses a threat to the country’s fragile public debt dynamics, investors seem to …
Strong rental growth and higher mortgage costs will keep shelter inflation elevated for the next few months, but we expect it to fall sharply over the rest of 2023 as lower house prices feed through. Shelter inflation surprised to the upside of our …
We have revised our European wholesale gas price forecast down and, as a result, now expect euro-zone inflation to fall more rapidly than we had previously anticipated. In turn, this means that real incomes and economic activity might be slightly …
