Trade hit by domestic and external weakness The sharp narrowing of the trade deficit to $61.5bn in November, from $77.8bn, came as a big fall in exports was offset by an even sharper drop in imports. Net trade still looks to have been a small drag on …
5th January 2023
Lower commodity prices push goods trade into deficit Lower commodity prices have now wiped out the goods trade surplus, while the falls in export and import volumes present downside risks to the preliminary estimate that GDP edged up in November. The …
The latest MSCI data show that prime property values underperformed the wider market last year. But with the rest of the market more vulnerable to the economic recession and as MSCI values catch up, relative performance is likely to shift in 2023. The …
Goods trade balance moves back into deficit Lower commodity prices have now wiped out the goods trade surplus, while the falls in export and import volumes present downside risks to the preliminary estimate that GDP edged up in November. The merchandise …
Industry stuck in the doldrums The 0.1% m/m fall in Brazilian industrial production in November and the weak surveys for December provide further evidence that the economy is in the midst of a slowdown. But the central bank will wait for further signs of …
Fed doubling down on hawkish views The minutes of the Fed’s December policy meeting reveal officials in hawkish mood, with participants arguing that “a restrictive policy stance would need to be maintained until the incoming data provided confidence that …
4th January 2023
While our forecast that the economy would slow in 2022 on the back of high inflation and Fed policy tightening was right, like every other forecaster we were surprised by its extent. This threw off our call for further property yield falls in 2022. But we …
The latest JOLTS data suggest that labour market conditions remain quite tight and a lot more adjustment is needed to ensure that the drop back in price inflation to 2% will be sustained. While the job openings rate was unchanged at 6.4% in November, …
Index drops into recessionary territory The decline in the ISM manufacturing index to a two-and-a-half year low of 48.4 in December, from 49.0, is another sign that the economy lost more momentum at the tail-end of last year. Nearly all the survey-based …
December FOMC minutes may reveal impact of softer CPI prints on Fed thinking (19.00 GMT) We think the US trade balance narrowed dramatically in November (13.30 GMT) Sign up for our Drop In on the outlook for global inflation here Key Market Themes …
China’s abandonment of its zero-COVID policy could lead to supply chain disruption in other EMs, particularly other parts of Asia and Mexico, though we’re not too concerned yet. And outbound Chinese tourism is likely to soar, to the benefit of Hong Kong …
Weaker ISM shows activity stalling, but labour market conditions remain tight The decline in the ISM manufacturing index to a two-and-a-half year low of 48.4, from 49.0, is another sign that the economy was losing momentum at the tail-end of last year. …
Rates on hold, but cuts still some way off Poland’s central bank (NBP) left interest rates unchanged at 6.75% again today. We expect the next move by the NBP will be an interest rate cut , although that is only likely to arrive towards the end of 2023. …
The sharp fall in the Egyptian pound today, coming in the wake of last week’s move to ease FX restrictions, suggests that the authorities are starting to make good on their pledge to shift to a more flexible exchange rate regime. There are already signs …
Lending weak, but no longer falling A second consecutive increase in home purchase applications in December suggests that declining mortgage rates have allowed buyer demand to bottom out. Indeed, as we expect mortgage rates to continue to fall, the …
The nomination of a less dovish candidate to succeed BoJ Governor Kuroda would probably signal that Yield Curve Control will soon be abandoned, though we would still expect the Bank to keep its short-term policy rate at -0.1%. This would result in a …
Net lending rises further despite worsening outlook Net lending to property accelerated in November to an 11-month high. But given the worsening economic and property outlook we expect it will soon go into reverse. Indeed, investment activity is now …
Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. This will be a constant theme over the year ahead, …
Approvals collapse as adjustment to higher rates begins in earnest The impact of the surge in mortgage rates following the “mini” budget on 23 rd September was realised in November as mortgage approvals collapsed. The modest drop back in fixed mortgage …
Higher interest rates continue to weigh on the economy November’s money and credit figures showed further signs that higher interest rates are dampening activity, particularly in the housing market. And this will be a constant theme throughout the year …
Developments of the past two weeks reinforce the message that the world economy is headed for recession and disinflation in 2023. With the full effects of policy tightening yet to be felt, and re-opening disruption to China’s economy set to linger, things …
Gulf non-oil sectors lost steam at the end of 2022 December’s PMIs suggest that non-oil sectors across the Gulf lost some steam at the end of 2022, with the worsening global backdrop weighing particularly heavily on the UAE. Elsewhere, there were signs …
Further improvement, but recession still likely December’s final PMIs suggest the euro-zone economy held up better than we expected in Q4, but are still consistent with a mild recession. They also suggest price pressures remain very high. The upward …
Fall in headline rate but core rate rises Headline inflation in Switzerland fell in December but the rise in the core rate will be a concern for SNB policymakers. We still think that the Bank will raise rates by just 25bp in March, compared to the 50bp …
It is three years since a cluster of cases of severe pneumonia started to draw attention in Wuhan. Chart 1 maps economic developments in China since then. The blue bars show cumulative growth since the end of 2019 and the black outlines show growth over …
Strong PMI readings at odds with the hard activity data India’s manufacturing and services PMI readings rose to multi-month highs in December but are at odds with the hard activity data that point to a slowdown in domestic and external demand. India’s …
Although the manufacturing PMIs for December picked up in some highly-open EMs in Asia and Central Europe, industry in these countries remains very weak. And the surveys suggest that activity has softened further in major EMs including China (due to …
3rd January 2023
The US ISM Manufacturing Index may have dipped further in December (15.00 GMT) We expect Poland’s central bank to keep rates on hold on Wednesday Read our key calls for the global economy and financial markets in 2023 here Key Market Themes After …
London house prices are likely to continue to underperform even if the shift in buyer demand away from the capital due to remote working ends. More stretched house prices in the capital prior to the jump in mortgage rates means the impact of higher …
Table of Key Forecasts Overview – Inflation is finally falling and we envisage further sharp declines in almost all economies during 2023. (See Chart 1.) In most cases, this disinflation will be more dramatic than either the consensus of economists or …
Economists from our Global Economics service held a special discussion about the trajectory of inflation across advanced and emerging economies in 2023. During this 20-minute briefing, the team addressed key issues from their latest Global Inflation Watch …
We estimate that employment growth slowed more sharply in December, with non-farm payrolls rising by 160,000. The unemployment rate probably edged up to an 11-month high of 3.8%. Although employment growth has been solid in recent months according to the …
India’s current account deficit is likely to have widened to 3% of GDP in 2022, the largest in a decade. We expect the deficit to narrow slightly in 2023 as commodity prices ease and domestic demand comes off the boil. While this still leaves the rupee …
Plunge in inflation in December likely to reverse in January The sharp fall in German inflation in December was due to one-off energy subsidies so it will probably reverse in January. Headline inflation is still likely to decline rapidly in March, but we …
The December survey data out of China were uniformly downbeat. The plunge in the official services PMI points to a fall in oil demand, but we suspect that the hit to industrial activity (and metals demand) has been more modest. Looking ahead, we expect …
Drop in inflation in December likely to reverse in January The sharp falls in CPI inflation in several major German states in December suggest that inflation figures for Germany as a whole and for the euro-zone (due later today and on Friday, …
Further weakness ahead Manufacturing PMIs across the region rose slightly in December but remained weak overall. We continue to expect weaker global demand, high inflation and interest rates to drag on manufacturing ahead. December PMIs have been released …
Breakneck housing downturn has much further to run Australia’s house prices have never fallen so fast in such a short period of time and the risks to our forecast of a 15% peak-to-trough fall are shifting to the downside. The 1.2% m/m fall in house prices …
Headwinds from reopening continue into 2023 The latest surveys suggest that the reopening wave delivered another blow to the economy in December. Services activity looks to have slumped. Industry was not spared, although the hit appears more modest. But a …
Growth slowed sharply in the first two months of Q4 and we expect a further slowdown over the coming months as high inflation, multi-decade high interest rates and weaker global demand weigh on prospects. The flash estimate for Q4 GDP, largely computed …
Headwinds from reopening continue into 2023 The latest manufacturing surveys suggest that the hit to factory activity intensified further in December following the surge in infections. A combination of recurrent virus waves, a deepening global downturn …
The economy is likely to teeter on the brink of recession in 2023 Economic growth slowed sharply during the first two months of the fourth quarter and we think a further slowdown is likely over the coming quarters. The flash estimate for Q4 GDP, largely …
Falls in house prices will continue throughout 2023 The slowdown in house price falls in December is little comfort when leading indicators point to further sharp declines. Despite mortgage rates edging lower in recent weeks, we continue to think that …
30th December 2022
US demand looks set to hold up well, despite slower economic growth Commercial crude stocks rose last week owing to a rebound in net imports, which was largely the result of the reopening of the Keystone pipeline. More interesting was the jump in implied …
29th December 2022
Click here to read the full report. We now expect a small fall in rents next year in a handful of metros as affordability constraints and falling employment take their toll on demand. At the same time, a wave of completions in some of the markets with the …
New home sales increase despite jump in mortgage rates New home sales increased for the second month in a row in November. That is at odds with other measures of market activity, which have fallen sharply in response to the jump in mortgage rates. We …
23rd December 2022
This week brought further signs of slowing activity growth and falling inflation, trends we expect to intensify next year. Meanwhile, Congress has averted a government shutdown, but there appears to be a growing risk of another damaging stand-off over the …
The November CPI data were a mixed bag, with deflationary pressure on goods starting to feed through but strong price rises for several key services. The 3-month annualised measures of core inflation that the Bank of Canada follows will probably drop back …
Click here for full report: Overview – Consistent with our national office story, we expect a few years of insipid rent growth and returns for most US office markets. Expensive coastal metros will continue to see weak demand as high rates of sublease …
