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16 Nov. 2015 Is Banxico Still Willing to Hike Just After the Fed in December? (Publication Centre)
Mexico's domestic conditions don't warrant an imminent rate hike in the near term. Headline inflation continues to fall, reaching an all-time low of 2.5% in October. It should remain below 3% in the coming months. And core prices remain wellbehaved, increasing at a modest pace, signalling very little pass-through of the MXN's depreciation. Economic activity gained some momentum in Q3-- this will be confirmed on Friday's GDP report--but demand pressures on inflation are absent and the output gap is still ample. Under these conditions, policymakers should not be in a rush to hike, but they have signalled once again that they will act immediately after the Fed.
14 December 2018 Look Behind the Headlines for the Real Retail and Industrial Stories (Publication Centre)
We argued earlier this week that the data on the consumer economy are likely to be rather stronger than the industrial numbers.
16 December 2016 Black Friday Sales Boom Likely will be Followed by a Bust (Publication Centre)
The remarkable recent strength in retail sales continued into November, with total sales volumes rising by 0.2% and sales ex-motor fuels up by 0.5%. Those numbers aren't spectacular but they have to be seen in the context of October's huge 1.9% jump in sales ex-motor fuel; usually, after such a big gain we'd expect a correction the following month.
10 January 2019 Risks to the Consensus for November GDP Lie to the Upside (Publication Centre)
It's hardly surprising that the consensus forecast for month-to-month growth in November GDP, released on Friday, is a mere 0.1%, given the flow of downbeat business surveys.
13 July. 2015 Industrial Production in Mexico stalled in May - But no panic, yet (Publication Centre)
Mexico's latest industrial production figures, released on Friday, showed that the recovery is stuttering. May output fell 0.9% year-over-year, down from the 1.2% gain in April. Total production was depressed by a 1.5% month-to-month drop in construction output, after two consecutive increases.
10 July 2018 Will the Government's New Brexit Plans Boost Business Investment? (Publication Centre)
Business investment has held up better than most economists--ourselves included--expected after the Brexit vote.
10 July 2017 Robust Q2 GDP Growth in the Eurozone Likely are in the Bag (Publication Centre)
Friday's industrial production reports in the Eurozone were sizzling. In Germany, headline output rose 1.2% month-to-month in May--after a downwardly-revised 0.7% rise in April--which pushed the year-over-year rate up to a six-year high of 4.9%.
2 August 2017 Inflation to Erode Chinese Demand in the Second Half (Publication Centre)
The Caixin manufacturing PMI rebounded to 51.1 in July from 50.4 in June, soundly beating the consensus for no change. The PMIs are seasonally adjusted but the data are much less volatile on our adjustment model. On our adjustment, the headline has averaged 50.9 so far this year, modestly higher than in the second half of last year.
12 July 2019 House Prices Starting to Turn The Corner, Despite Brexit Uncertainty (Publication Centre)
June's RICS Residential Market Survey brings hope that the housing market already is over the worst.
13 Mar. 2015 Q1 GDP outlook is still decent, despite poor Industrial Production (Publication Centre)
Industrial production in the Eurozone fell a disappointing 0.1% month-on-month in January, driven by low output in Italy and Germany, as well as a large drop in Finland. But December production was revised up to 0.3% month-to-month, from the initially estimated 0.0%.
13 March 2017 A Slowdown in the U.K. Will Dent the German Trade Surplus (Publication Centre)
Germany's external surplus remained resilient at the start of the year. Data on Friday showed that the seasonally adjusted trade surplus rose marginally to €18.5B in January, from a revised €18.3B in December.
10 August. 2016 Surprise Rise in Brazil's Retail Sales, Fundamentals Remain Poor (Publication Centre)
Brazil's retail sales ended the second quarter on a less-bad footing. Sales volumes increased 0.1% month-to-month in June, pushing the year-over-year rate up to -5.3%, from -9.0% in May. Smoothed year-over-year growth in retail sales has improved to -7% from its cyclical trough of around -9% in the end of last year.
16 March 2018 Housing Starts and Manufacturing Likely Shone in February (Publication Centre)
Today brings yet another broad array of data, with new information on housing construction, industrial production, consumer sentiment, and job openings.
10 Feb. 2015 Small Firms are Back in Business, But They Can't Find Staff (Publication Centre)
The headline index in today's NFIB small business survey probably won't quite converge with the ISM manufacturing index, but it will come v ery close. To close the gap completely, for the first time since the crash, the NFIB needs to rise to just over 102, from 100.4.
12 Feb. 2016 Mexico's Industrial Economy Struggled in Q4 - Better Ahead? (Publication Centre)
Yesterday's Mexican industrial data painted a downbeat picture of the sector at the end of last year, and highlighted the downside risks facing the economy in the first half of this year. Industrial output fell 0.1% month-to-month and was flat year over-year in December, with weakness in all sectors except manufacturing. Overall, industrial activity expanded by only 0.2% year-over-year in the fourth quarter, the slowest pace since late 2013.
16 May 2018 Downside Risks to April Housing Construction, IP Looks Strong (Publication Centre)
We see downside risk to the housing starts numbers for April, due today. Our core view on housing market activity, both sales and construction activity, is that the next few months, through the summer, will be broadly flat-to-down.
13 July 2018 Why are House Sale Instructions Starting to Rise? (Publication Centre)
A dearth of properties for sale has helped to ensure that house prices have continued to rise since the Brexit vote, despite weaker demand. But now, signs are emerging that demand and supply are coming closer to balance
16 November 2017 The Eurozone's Trade Surplus Won't Stay so High for Long (Publication Centre)
We are sticking to our view that the Eurozone's trade surplus will fall in the next six months, despite yesterday's upbeat report. The seasonally adjusted trade surplus leapt to a record high of €25.0B in September from revised €21.0B in August, lifted by an increase in exports and a decline in imports.
19 July 2018 Housing Investment Likely Dipped in Q2 it's the Only Point of Weakness (Publication Centre)
We can't finalize our forecast for residential investment in the second quarter until we see the June home sales reports, due next week, but in the wake of yesterday's housing starts numbers we can be pretty sure that our estimate will be a bit below zero.
16 Dec. 2014 - Industrial rebound continues, despite the plunging Empire State (Publication Centre)
You'd have to be very brave to take the weakness of yesterday's Empire State survey more seriously than the strong official industrial report published 45 minutes later. The hard data showed industrial production up 1.3% month-to-month, and only two tenths of that gain was explained by the cold weather, which drove up utility energy output.
14 June 2019 Wage Growth in the Eurozone Remains Strong... Just Sayin' (Publication Centre)
Last week's evidence of still-strong wage growth in the EZ at the start of the year almost surely has gone unnoticed as markets focus on the prospect of rate cuts, not to mention more QE, by the ECB.
16 August. 2016 Markets Still Too Sanguine on the Outlook for RPI Inflation (Publication Centre)
Markets expect RPI inflation--which still is used to calculate index-linked gilt payments, negotiate wage settlements, and revalue excise duties--to rise to only 2.7% a year from now, from 1.6% in June. By contrast, we expect RPI inflation to leap to 3.5%. As we outlined in yesterday's Monitor which previewed today's numbers, CPI inflation likely will shoot up to 3% from 0.5% over the next year.
12 April 2017 Mexico's Industrial Sector Resilient in Q1, Despite External Threats (Publication Centre)
Yesterday's industrial production report in Mexico added weight to the idea that the sector improved marginally in the first quarter, despite many external threats. Industrial output rose 0.1% month-to-month in February, following a similar gain in January. The calendar-adjusted year-over-year rate rose to -0.1%, after a modest 0.3% contraction in January.
16 August 2018 Domestic Demand Strength from Q2 Spilled Over into Early Q3 (Publication Centre)
Yesterday's wave of data suggested that a good part of the strength in final demand in the second quarter was sustained into the first month of this quarter, and perhaps the second too.
16 Sept. 2015 Brazil's Austerity Measures Sound Good, But Probably Won't All Happen (Publication Centre)
Brazil's government announced on Monday spending cuts and new tax increases, aiming to generate a 0.7% of GDP primary surplus, and so restore market confidence and avoid further credit rating downgrades. The plan is to reduce expenditure by BRL26B next year--or 0.4% of GDP--mainly through freezing public sector salaries and slashing social projects. These measures, especially the latter, will likely meet strong resistance in Congress. The salary freeze has more of a chance of passing, but reducing or closing some Ministries is a cost-cutting exercise with an extremely high political price.
13 February 2019 EZ Industrial Output Slumped in Q4, but Q1 Will Be Better (Publication Centre)
Today's industrial production report in the Eurozone will be poor.
16 November 2018 Don't Count on Chinese Industry Turning the Corner, Just Yet (Publication Centre)
Industrial production growth in China appears to be stabilising, following the slowdown in Q2.
19 March 2019 Don't get Used to a Japanese Trade Surplus Just Yet (Publication Centre)
Japan's adjusted trade balance flipped back to a modest surplus of ¥116B in February, after seven straight months of deficit.
14 January 2019 Japan's Current Account Surplus Won't Keep Falling Korea's Will (Publication Centre)
Japan's unadjusted current account surplus fell sharply in November, to ¥757B, from ¥1,310B in October.
14 Jan. 2015 Industrial Production: A Tale of the Two Major LatAm Economies (Publication Centre)
On Monday we highlighted the grim state of the Brazilian industrial sector, where output fell by a huge 5.8% year-over-year in November. By contrast, the outlook for Mexico's industrial sector is much brighter.
12 August. 2016 Brazil's Inflation Stubbornly High, but Temporary Pressures Will Ease (Publication Centre)
Brazil's benchmark inflation index, the IPCA, rose 0.5% unadjusted month-to-month in July, pushing the year-over-year rate down marginally to 8.7%, from 8.8% in June. Overall inflation pressures in Brazil are easing, especially in regulated prices, which have been the main driver of the disinflation trend this year. But market-set prices are still causing problems.
12 August. 2015 Industrial Production in Mexico is Stabilizing, Better News Ahead? (Publication Centre)
Mexico's latest industrial production figures, released yesterday, showed that growth is stabilizing, but it likely will not accelerate any time soon. June output rose 1.4% year-over-year, rebounding from the 1.0% contraction in May, and matching April's gain. The increase in output was relatively broad-based, with solid gains in mining and utilities.
10 March 2017 Evidence of a Brazilian Business Cycle Recovery this Year is Building (Publication Centre)
Brazil's industrial sector had a relatively good start to the year. Data on Wednesday showed that production fell 0.1% month-to-month in January, less than markets expected, and the year-over-year rate rose to 1.4%, after a 0.1% drop in December.
13 Jan. 2016 Mexico's Industrial Sector Still Slowing - Services to the Rescue? (Publication Centre)
November production data in Mexico, released Monday, showed that the industrial economy remained quite soft in the last part of last year. The collapse in capital spending in the oil sector, slowing public spending, and weaker growth in EM and the U.S. manufacturing sector have combined to hit Mexican industrial output quite hard. Total production rose just 0.1% year-over-year in November, down from an already weak 0.5% in October, and below the 1.3% average increase in Q3. Output fell 0.5% month-to-month, the biggest drop since May, reflecting broad-based weakness.
13 October. 2016 EZ Industrial Production Rebounded Only Modestly in Q3 (Publication Centre)
Yesterday EZ industrial production report confirmed the message from advance country data that manufacturing rebounded towards the end of summer. Output, ex-construction, jumped 1.6% month-to-month in August, and the July data were revised up by 0.4 percentage points.
13 Oct. 2015 Construction to Push Up EZ GDP Growth in Coming Quarters? (Publication Centre)
Households remain the key driver of the cyclical recovery in the Eurozone. We have seen, so far, little sign that investment will be able convincingly to take over the baton if momentum in consumers' spending slows. The average rate of growth of investment since 2013 has been 0.5%, about two-thirds of the pace seen in previous cyclical upturns. Weakness in construction--about 50% of total euro area investment--has been one of the key factors behind of the under performance.
1 May 2017 Ignore the Weak Q1 GDP Numbers -- they Cannot be Trusted (Publication Centre)
If you apply a seasonal adjustment to a seasonally adjusted series, it shouldn't change. When you apply a seasonal adjustment to the U.S. GDP numbers, they do change. First quarter growth, reported Friday at just 0.7%, goes up to 1.7%, on our estimate.
20 November 2018 The Housing Downturn won't Kill the Rest of the Economy, this is not 2008 (Publication Centre)
The media and markets are waking up to the idea that the housing market has peaked in the face of higher mortgage rates and slightly--so far--tighter lending standards.
20 September 2016 The Recycling of the EZ's Current Account Surplus Continues (Publication Centre)
The external surplus in the EZ economy slipped in July. The seasonally-adjusted current account surplus dropped to €21.0B, from a revised €29.5B in June, hit by an increase in the current transfers deficit, and a falling trade surplus. The recent increase in the transfers deficit partly is due to the migrant deal with Turkey, and we expect it to remain elevated.
20 Nov. 2015 EZ Current Account Surplus Goes from Strength to Strength (Publication Centre)
The current account surplus in the Eurozone is well on its way to stabilising above 3% of GDP this year. The seasonally adjusted surplus rose to €29.4B in September from a revised €18.7B in August, lifted by a higher trade surplus, thanks to rebounding German exports. The services balance was unchanged at €4.5B in September, while the primary income balance edged higher to €4.8B from €4.0B. The improving external balance has been driven mostly by a surging trade surplus with the U.S. and the U.K., as our first chart shows.
1 November 2017 Rising Industrial Output Will Lift Chile's IMACEC, Jobs Wil Follow (Publication Centre)
Industrial output in Chile struggled late in the third quarter, falling 1.3% month-to-month in September. The year-over-year rate, calendar and seasonally adjusted, rose 2.4% in September, down from a revised 5.3% in August.
H2 2017 U.S. Outlook - Brace for a Sustained Shift in Interest Rate Expectations (Publication Centre)
Pantheon Macroeconomics is pleased to make available to you our Outlooks for the second half of 2017 for the US, Eurozone, UK, Asia, and Latin America. These reports present our key views, giving you a concise summary of our economic and policy expectations. If you are interested in seeing publications which you don't already receive, please request a complimentary trial
20 Nov. 2015 Economic Conditions Deteriorate in Brazil - No Bottom Just Yet (Publication Centre)
This week economic data highlighted the severity of Brazil's economic recession and the huge challenges it will face next year to return to growth. The recession further deepened in the third quarter with the economic activity index--a monthly proxy for GDP--surprising, once again, to the downside in September. The index fell 0.5% month-to-month, pushing the year-over-year rate down to 6.2%, the steepest fall on record. The series is very volatile on a monthly basis, but the underlying trend remains grim.
20 September 2017 August Retail Sales to Confirm Consumption Still Weak in Q3 (Publication Centre)
August's retail sales figures, released today, look set to show that growth in consumers' spending has remained subpar in Q3, casting doubt over whether the MPC will conclude that the economy can cope with a rate hike this year.
EZ Datanote: Industrial Production and Trade, France, April (Publication Centre)
In one line: Robust, but base effects are challenging for manufacturing in Q2.
21 July. 2015 Easier Lending Standards Set to Lift Second Half Housing Activity (Publication Centre)
If the only things that mattered for the housing markets were the obvious factors--the strength of the labor market, and low mortgage rates--the sector would be booming. Activity is picking up, with new and existing home sales up by 23% and 9% year-over-year respectively in the three months to May, but the level of transactions volumes remains hugely depressed. At the peak, new home sales were sustained at an annualized rate of about 1½M, but May sales stood at only 546K. Adjusting for population growth, the long-run data suggests sales ought to be running at close to 1M.
21 June 2019 No Sign the BoE is About to Follow Others With Fresh Stimulus (Publication Centre)
The MPC's unanimous decision to keep Bank Rate at 0.75% and the minutes of its meeting left little impression on markets, which still see a higher chance of the MPC cutting Bank Rate within the next 12 months than raising it.
21 March 2018 Fiscal stimulus in the EZ won't cure global imbalances (Publication Centre)
Global current account imbalances are back on the agenda. In the U.S., economic policies threaten to blow out the twin deficit, while external surpluses in the euro area and Asia are rising.
21 January 2019 The EZ's Current Account Surplus is now Well Below 3% of GDP (Publication Centre)
The Eurozone's current account surplus almost surely fell further in Q4.
21 February 2018 The ECB is in the Headlines, But Not Because of its Monetary Policy (Publication Centre)
Politics are once again encroaching on the economic story in the Eurozone. At the ECB, this week has so far been a tumultuous one.
21 February 2017 Brazil's Current Account Remains Healthy, FDI In ows are Robust (Publication Centre)
Brazil's current account data last week provided further evidence of stabilisation in the economy, despite the modest headline deterioration. The unadjusted current account deficit increased marginally to USD5.1B in January, from USD4.8B in January 2016, but the underlying trend remains stable, at about 1.3% of GDP. Our first two charts show that the overall deficit began to stabilize in mid-2016, as the rate of improvement in the trade balance slowed, reflecting the easing of the domestic recession.
21 February 2017 Fiscal Policy Won't Be Eased, Even If January's Surplus is Huge (Publication Centre)
January's public finance data, released today, take on particular importance because they are the last to be published before the Chancellor delivers his first Budget on March 8. The public finances nearly always swing into surplus in January, primarily because the deadline for individuals to submit self-assessment--SA--tax returns for the previous fiscal year is at the end of the month. Firms also pay their third of four payments of corporation tax for their profits in the current fiscal year.
LatAm Datanote: Industrial Production and unemployment, Chile, April (Publication Centre)
In one line: Soft industrial data, and external conditions for EM economies are becoming increasingly challenging
LatAm Datanote: Industrial Production, Mexico, April (Publication Centre)
In one line: Ignore the un-adjusted headline; production did well at the start of Q2.
16 June 2017 Housing Construction Should Rebound (Publication Centre)
We were surprised by the weakness of the April housing starts report; we expected a robust recovery after the March numbers were depressed by the severe snowstorms across a large swathe of the country. Instead, single-family permits rose only trivially and multi-family activity--which is always volatile--fell by 9% month-to-month.
2 November. 2016 Brazil Industrial Output Remains Sluggish, but Q4 will be Better (Publication Centre)
Brazil's September industrial production report, released yesterday, confirmed the message from survey data that the sector stabilized towards the end of summer. Output rose 0.5 month-to-month, and August output was revised up by 0.3 percentage points.
US Datanote Productivity and Labor Costs Jobless Claims (Publication Centre)
In one line: Spectacular but unsustainable.
13 May. 2016 Brazil's Retail Sector Still Under Pressure - Stabilization in H2, Just? (Publication Centre)
The recession in Brazilian consumers' spending continues, but the severity of the pain is easing. Retail sales plunged 0.9% month-to-month in March, pushing the year-over-rate down to -5.7%, from a revised -4.2% in February. The March headline likely was depressed by the early Easter.
16 January 2018 The Eurozone's Trade Surplus Will Fall in the First Half of 2018 (Publication Centre)
The euro area's external surplus remained resilient toward the end of 2017, in the face of a stronger currency. The seasonally adjusted trade surplus rose to €22.5B in November, from €19.0B in October, lifted primarily by a jump in German exports.
10 August 2018 The Housing Market Still has a Faint Pulse (Publication Centre)
Surveys released over the last week have suggested that the housing market might be past the worst.
16 July 2018 No Hard Evidence that Tariffs are Hurting Business Investment... Yet (Publication Centre)
We can see no hard evidence, yet, that the expanding trade war with China and other U.S. trading partners is hitting business investment.
20 Apr. 2015 Eurozone's CA Surplus is Being Recycled to Fund Carry Trades (Publication Centre)
The Eurozone's current account surplus remains in a firm uptrend, and should continue to rise this year, despite a small dip in the February surplus to €26.4B from a revised €30.4B in January.
20 Apr. 2016 Rousseff Loses Key Impeachment Vote - Presidency on the Brink (Publication Centre)
Brazil's lower house of Congress on Sunday voted to start impeachment proceedings against President Dilma Rousseff, who is accused of tampering with the public accounts to help secure her re-election in 2014. Ms. Rousseff's opponents obtained 367 votes, exceeding the two-thirds majority, needed to send the motion to the Senate.
20 February 2019 China's Current Account Surplus is Stabilising, but at a Very Low Level (Publication Centre)
China's current account surplus grew further in the final quarter of 2018, more than doubling to $54.6B, from $23.3B in Q3.
20 July 2017 The June Housing Starts Rebound is not the Start of a Boom (Publication Centre)
We would like to be able to argue with conviction that the surge in June housing starts and building permits represents the beginning of a renewed strong upward trend, but we think that's unlikely.
U.K. Datanote: U.K. Halifax House Price Index, April (Publication Centre)
In one line: Still implausibly strong.
20 Feb. 2015 Data Surprises Don't Tell Us Much About the Economy (Publication Centre)
At the headline level, much of the recent U.S. macro dataflow has been disappointing. January retail sales, industrial production, housing starts, and both ISM surveys--manufacturing and non-manufacturing-- undershot consensus, following a sharp and unexpected drop in December durable goods orders.
20 December 2016 Will Households Drain Housing Equity to Support Consumption? (Publication Centre)
One of the most surprising features of the economic recovery has been that households have not responded to the surge in house prices by releasing housing equity to fund consumption. Housing equity rose to 4.2 times annual disposable incomes in 2015, up from 3.7 in 2012. It has more than doubled over the last two decades.
1 September 2017 Expect Strong August Payrolls, but Calendar Distortions will hit Wages (Publication Centre)
Leading indicators all point to a solid August payroll number. Survey-based measures of the pace of hiring signal a 200K-plus increase, and jobless claims--a proxy for the pace of gross layoffs--are at a record low as a share of the workforce.
20 April 2018 The EZ current account surplus is rising (Publication Centre)
The EZ's current account surplus is solid as ever, despite falling slightly in February to €35.1B, from an upwardly-revised €39.0B in January.
19 February 2018 Growth in Households' Spending Won't Recover This Year (Publication Centre)
Slower growth in households' spending was the main reason why the economy lost momentum last year.
10 Nov. 2015 Focus on Older Workers in Jobs Report Misses the Bigger Picture (Publication Centre)
Investors and market observers of a relatively bearish persuasion argued over the weekend that the details of the October employment report were less encouraging than the headline, principally because the household survey showed that all the job growth, net, was among older workers, defined as people aged 55-plus. This, they argue, suggests that most of the increased demand for labor was concentrated in low-paid service sector jobs, where older workers are concentrated, perhaps reflecting retail hiring ahead of the holidays. Such a wave of hiring is unlikely to be repeated over the next few months, so payroll growth won't be sustained at its October pace.
18 December 2017 Why We're Below the Consensus on CPI Inflation Next Year (Publication Centre)
Our forecast that CPI inflation will return to the 2% target by the end of 2018 sets us apart from the MPC and consensus, which expect a more modest decline, to 2.4%.
17 July 2018 Will Price Changes Spare the Blushes of EZ Net Trade in 2018 (Publication Centre)
The euro area's trade surplus slipped further mid- way through the second quarter; falling to a 15-month low of €16.9B in May, from a downwardly-revised €18.0B in April, and extending its descent from last year's peak of nearly €24.0B.
15 July. 2015 Q2 GDP Tracking Models are Too Pessimistic, Focus on Net Trade (Publication Centre)
Yesterday's industrial production report was grim reading, with volatility in Greece and the Netherlands, as well as revisions, throwing off our own, and the market's, forecasts. Output fell 0.4% month-to-month in May, well below the consensus and our expectation for a 0.2% rise, pushing the year-over-year rate higher to 1.6%, from a revised 0.9% in April.
18 December 2017 The Large Decline in the EZ Trade Surplus is a Sign of More to Come (Publication Centre)
The euro area's external surplus dipped at the start of Q4.
11 January 2019 Downside Risk to December's CPI Watch Used Auto Prices Airline Fares (Publication Centre)
The CPI report due today will be released on schedule, because the Bureau of Labor Statistics, which compiles the data, remains open during the partial government shutdown.
11 July 2017 Strong Import Growth is Starting to Weigh on German Trade Surplus (Publication Centre)
The German trade surplus increased slightly in May, following weakness in the beginning of spring. The seasonally adjusted surplus rose to €20.3B in May, from €19.7B in April; it was lifted by a 1.4% month-to-month jump in exports, which offset a 1.2% rise imports.
11 July 2017 Small Businesses are Still Optimistic, but a Correction is Due (Publication Centre)
Before last November's election, movements in the headline NFIB index of activity and sentiment among small businesses could be predicted quite reliably from shifts in the key labor market components, which are released in advance of the main survey.
11 October 2018 Weak GDP in August Sets the Tone for the Rest of this Year (Publication Centre)
The stagnation of GDP in August, following five consecutive month-to-month gains, confirms that the economy's momentum in prior months was simply weather-related.
11 October. 2016 German Exports Came Roaring Back in August, After a Weak July (Publication Centre)
Yesterday's German trade data showed that the external surplus recovered in August, following its poor start to Q3. The seasonally-adjusted trade surplus rose to €22.2B, from €19.4B in July.
15 November. 2016 Mexico's Benign Industrial Outlook Clouded by the U.S. Policy Agenda (Publication Centre)
Mexico's latest industrial production data were worse than we expected. Output rose just 0.1% month-to-month in September, pushing the year- over-year rate down to -1.3%, from a downwardly revised +0.2% in August.
11 December 2018 Macro Data set to Split: Consumer Strength, Industrial Weakness (Publication Centre)
The next few months, perhaps the whole of the first quarter, are likely to see a clear split in the U.S. economic data, with numbers from the consumer side of the economy looking much better than the industrial numbers.
11 December 2018 China's Trade Surplus is Set to Rebuild Next Year (Publication Centre)
China's trade surplus appears modestly to be rebuilding, edging up to $34.0B in November, on our adjustment, from $33.3B in October. The recent trough was $24.B, in March.
12 September 2018 Mortgage Demand Spiked in August, but Expect a Weak Fall (Publication Centre)
The key piece of evidence supporting our view that housing market activity has peaked for this cycle is the softening trend--until recently--in applications for new mortgages to finance house purchase.
18 July 2017 The Conundrum of Germany's Huge Current Account Surplus (Publication Centre)
No subject in the EZ economy is a source of more dispute than Germany's ballooning current account surplus. The Economist recently identified he German surplus as a problem for the world economy.
18 January 2018 Housing Starts Likely Dipped Last Month, but the Trend is Rising (Publication Centre)
Hot on the heels of yesterday's news that the NAHB index of homebuilders' sentiment and activity dropped by two points this month -- albeit from December's 18-year high -- we expect to learn today that housing starts fell last month.
18 July 2017 Rising Leverage will Prevent House Prices from Falling this year (Publication Centre)
The slowdown in households' real incomes has taken a swift toll on the housing market this year. Measures of house prices from Nationwide, Halifax, LSL and Rightmove essentially have flatlined since the end of 2016, following four years of rapid growth, as our first chart shows.
11 July 2018 Monthly GDP Data Tip the Balance Towards an August Rate Hike (Publication Centre)
The upturn in the new monthly measure of GDP in May, released yesterday, was strong enough--just--to suggest that the MPC likely will raise Bank Rate at its next meeting on August 2.
17 May 2017 Is Housing Activity set to Reach New Cycle Highs this Summer? (Publication Centre)
Last week, the MBA's measure of the volume of applications for new mortgages to finance house purchase rose 1.7%.
11 May 2017 A Poor Q1 for French Industrial Production, but Q2 will be Better (Publication Centre)
French manufacturing came roaring back at the end of Q1. Industrial production jumped 2.0% month-to- month in March, driving the year-over-year rate higher to +2.0%, from a revised -0.7% in February.
17 October 2018 The Eurozone's Trade Surplus is Headed Down a Notch this Year (Publication Centre)
The Eurozone's trade surplus rebounded slightly over the summer, rising to €16.6B in August from €12.6B in July, helped mainly by a 2.0% month-to- month jump in exports.
11 Mar. 2016 Don't Hold Your Breath for a Budget Surplus (Publication Centre)
Chancellor George Osborne has invested considerable personal capital in attaining a budget surplus by the end of this parliament, and he has passed a 'law' to ensure he and his successors achieve this goal. But the current fiscal plans, which will be reviewed in the Budget on March 16, make a series of optimistic assumptions on future tax revenues and spending savings.
12 Nov. 2015 US Fed is Set to Hike in December, A Worry For LatAm But not a Crisis (Publication Centre)
LatAm economies this year have faced a tough external environment of subdued commodity prices, weaker Chinese growth, the rising USD, and the impending Fed lift-off. At the domestic level, lower public spending, low confidence, and economic policy reform have clashed with above-target inflation, which has prevented central bankers from loosening monetary policy in order to mitigate the external and domestic headwinds. In these challenging circumstances, LatAm growth generally continues to disappoint, though performance is mixed.
17 October 2017 The rebound in EZ trade surplus is ruse (Publication Centre)
Yesterday's sole economic report showed that the Eurozone's external surplus recovered ground over the summer, but we don't think the rebound will last long.
15 March 2018 Old-Guard Industry gets a Q1 Reprieve, but it's Temporary (Publication Centre)
Industrial production bounced back in February. These data point to a reprieve for old-guard dirty industry, after stringent anti-pollution curbs were put in place in Q4.
11 May. Will March Industrial Production Break the Run of Bad News? (Publication Centre)
The popular belief that economists rarely agree about anything is reinforced by the extremely wide dispersion of forecasts for March industrial production. The forecasts range from the wildly optimistic prediction of a 1.9% month-to-month rise, to a downright miserable 0.3% decline. We think production rose by about 0.5% month-to-month, and this likely will be interpreted as a decent result, following the recent run of bad news.
17 May. 2016 The EZ Trade Surplus is Stalling, but Net Exports will Lift Q2 GDP (Publication Centre)
Data today likely will show that the seasonally adjusted trade surplus in the Eurozone jumped to €23.0B in March, from €20.2B in February. The headline was boosted, though, by sharp month-to-month falls in German and French imports, partly due to the early Easter.
11 November. 2016 French Industrial Output Weak in Q3, Likely Better in Q4 (Publication Centre)
Yesterday's French industrial production data were worse than we expected. Output slipped 1.1% month-to-month in September, pushing the year-over-year rate down to -1.1% from a revised +0.4% in August. Mean-reversion was a big driver of the poor headline, given the upwardly-revised 2.4% jump in August.
11 June 2018 China's Trade Surplus Should Start Trending up Again Later this Year (Publication Centre)
China's trade surplus has been trending down in the last two years.
18 August 2017 Japan's Trade Surplus Bounced. Exports to U.S. Strengthen (Publication Centre)
Japan's July adjusted trade surplus rebounded to ¥337.4B from ¥87.3B in June, far above consensus. On our seasonal adjustment, the rebound is slightly smaller but only because we saw less of a drop in June.
11 October 2017 Japan's Current Account Surplus to Remain Stable in 2018 (Publication Centre)
Japan's official seasonally adjusted current account surplus rose to ¥2.27T in August from ¥2.03T in July. But we don't trust the seasonals, and our adjustment model shows the surplus fell slightly, to ¥1.91T in August. A further small decline likely is coming in Q4.
11 November. 2016 Will the Housing Market Recovery Hit Affordability Buffers? (Publication Centre)
After wobbling immediately after the referendum, house prices appear to be back on a rising trajectory. The Halifax measure of house prices, which is based on the lenders' mortgage offers, rose by 1.4% month-to-month in October, following a 0.3% increase in September.
11 June 2019 A Sino-U.S. Deal would Curb China's Trade Surplus...But Only Temporarily (Publication Centre)
China's trade surplus bounced back strongly in May, rising to $40.1B on our adjustment, from $35.7B previously.
17 September 2018 China's August Activity Headlines are Misleading on Multiple Counts (Publication Centre)
The headlines of China's August activity data are missing the real story in recent months.
18 April 2017 The Weather is Playing Tricks with EZ Industrial Production Data (Publication Centre)
As warned--see our Monitor April 7--economic data in the Eurozone disappointed while we were away. Industrial production, ex-construction, in the euro area slipped 0.3% month-to-month in February, and the January month-to-month gain was revised down by 0.6 percentage point to +0.3%.
15 October 2018 Mexico's Industrial Output will Improve Fundamentals are Strong (Publication Centre)
The industrial production trajectory in Mexico looked strong going into Q3, but Friday's report for August threatens to change that picture.
12 March 2018 Expect Rate "Adjustments" from the BoJ, a 2019 "Exit" Looks Unlikely (Publication Centre)
One critical point emerged from last week's otherwise uneventful BoJ meeting: Governor Kuroda said that the BoJ might "adjust" rates before hitting the 2% inflation target.
10 October 2018 Why aren't Households Draining Plentiful Housing Equity? (Publication Centre)
The economy's recovery from the 2008/09 recession has been weaker than after the previous two downturns partly because households have not depleted housing equity to fund consumption.
12 June 2019 Mexico's Manufacturing Remains Resilient USMCA Deal Awaits (Publication Centre)
Mexico's industrial production report released yesterday brought encouraging news about the state of the economy, helping relieve some doubts about its health.
16 August 2018 China's Phoenix Property Market Heats... Will it Help GDP Growth (Publication Centre)
It has been clear for some months now that China's housing market is refusing to quit, and July's data showed the phoenix rising strongly from the ashes.
10 October. 2016 EURGBP close to parity will sting EZ trade surplus (Publication Centre)
The euro has been one of the main "beneficiaries" of the pound's relentless decline, which took on ridiculous dimensions as the GBP crashed almost 10% in the early hours of Friday. EURGBP briefly touched 0.94, before settling at 0.9, up just shy of 30% since November.
13 December 2017 October's Dip in EZ Industrial Production is no Cause for Alarm (Publication Centre)
Today's industrial production data will confirm that EZ manufacturing suffered a slow start to Q4. Advance country data signal a 0.2% month-to-month fall in October, slightly worse than the consensus, 0.0%.
18 September 2017 Will Markets Care About a Falling Trade Surplus in the Eurozone? (Publication Centre)
The Eurozone's external surplus weakened at the start of Q3.
11 September 2017 China's Trade Surplus Edges Lower with net Trade Contributing Little (Publication Centre)
Chinese exports grew by just 5.5% in dollar terms year-over-year in August, down from 7.2% in July. Export growth continues to trend down, with a rise of just 0.2% in RMB terms in the three months to August compared to the previous three months, significantly slower than the 4.8% jump at the p eak in January.
19 August. 2016 The Consumer Bubble Will Pop Around the Year-End (Publication Centre)
It would be a serious mistake to conclude from July's retail sales figures that consumers' spending will be immune to the fallout of the Brexit vote. Households have yet to endure the hiring freeze and pay squeeze indicated by surveys of employers, or the price surge signalled by sterling's sharp depreciation. The real test for consumers' spending lies ahead.
13 Nov. 2015 Mexican Domestic Industrial Sectors Offset External Headwinds (Publication Centre)
Mexican manufacturing data continue to offer a counterweight to strong consumers' spending and services numbers. Output in the key manufacturing sector contracted by 0.2% month-to-month in September, due mainly to severe external headwinds. But the year-over-year rate was unchanged at 3.3%, with a flat underlying trend. Total industrial output, by contrast, rose 0.4% month-to-month in September, pushing the year-over-year rate up to 1.7%, from an upwardly-revised 1.1% gain in August.
14 Oct. 2015 Ignore Falling Energy Prices, and Focus on Core Inflation in Q4 (Publication Centre)
Collapsing energy prices continue to weigh on the headline inflation rate in the Eurozone's largest economy. Final September CPI data in Germany confirmed that inflation fell to 0.0% year-over-year from 0.2%, due to a 9.3% plunge in energy prices -- down from a 7.6% fall in August--mainly a result of a collapse in petrol price inflation. This comfortably offset an increase in food inflation to 1.1% from 0.8%, due to surging vegetable and fruit prices.
19 Feb. 2016 Weak Manufacturing is a Serious Problem, for Manufacturers (Publication Centre)
Manufacturing does not consistently lead the rest of the economy. Neither does it consistently lag. On average, turning points in the rates of growth of manufacturing output and GDP are coincident, as our first chart clearly shows. But coincidence is not causality.
17 August 2018 Net Exports in the EZ Probably Will be a Drag on Growth in 2018 (Publication Centre)
The Eurozone's trade surplus remained subdued at the end of the second quarter; it dipped to €16.7B in June from €16.9B in May.
19 Feb. 2015 QE and the booming external surplus create conditions for EUR carry trades (Publication Centre)
Data later today will likely show that the Eurozone's external balance remained firm last quarter at a record 2.5% of GDP. We think the seasonally adjusted current account surplus rose to €20.0B in December from €18.1B in November, with positive momentum in the key components continuing.
19 December 2017 The Rise in Oil Prices will Damage Japan's Trade Surplus (Publication Centre)
Japan's trade surplus is set to fall in coming months, as domestic demand remains robust, while recent oil price increases will be a drag, lifting imports.
17 Dec. 2014 Sentiment Surges, but Russian Rout Forces a Reminder of 1998 (Publication Centre)
With Russia and some other emerging economies now in full panic mode, the financial market story is sharply divided between two narratives. Either the plunge in global energy prices acts as positive catalyst by boosting real incomes and allowing most central banks to run easier monetary policy or it is a sign that risk assets are about to hit a deflationary wall.
19 December 2017 House Prices Look Set Merely to Flatline in 2018 (Publication Centre)
House prices are on course to rise only by around 2% this year, the smallest increase for five years.
13 December 2016 Mexico's Industrial Sector Started Q4 Slowly, 2017 will be Poor (Publication Centre)
Industrial production in Mexico remained under pressure at the start of Q4. Output rose just 0.1% month-to-month in October, leaving the year-over-year rate unchanged at -1.4%, down from an average of -0.8% in Q3.
15 August 2017 The German Economy Fired on All Cylinders in the First Half of 2017 (Publication Centre)
Today's advance Q2 GDP report in Germany will add evidence that the EZ economy performed strongly in the first half of 2017. We can be pretty sure that the headline will be robust. The German statistical office reports a confidential number to Eurostat for the first estimate of EZ GDP--two weeks ahead of today's data--which was a solid 0.6%.
13 April 2018 Decent Industrial Data in Mexico, but Brazilian Retail Sales Weaken (Publication Centre)
Mexico's February industrial production report was weaker than markets expected. Output expanded by 0.7% year-over-year, below the consensus, 1.2%, and slowing from 0.9% in January.
11 August. 2016 Household Spending Will Not Defy Gravity For Long Surveys (Publication Centre)
Recent retail surveys have indicated that consumers are not suffering yet from Brexit blues. The BRC reported that year-over-year growth in total sales values picked up to 1.9% in July, from 0.2% in June. After adjusting for falling prices, this measure suggests that year-over-year growth in official retail sales volumes held steady at about 4% last month.
17 Feb. 2016 Behind Utility-Hit Headlines, the Industrial Sector is Growing, Jus (Publication Centre)
If the collapse in oil sector capex and the strong dollar were going to push the industrial economy into recession, it probably would have started by now
11 September 2017 The German Trade Surplus is Falling, but Real Wages are Rising (Publication Centre)
The seasonally adjusted trade surplus in Germany slipped to €19.6B in July, from €21.2B in June, its lowest since April, and we are confident that it has peaked for this cycle.
12 June. 2015 Industrial Output is on Track for a New Post-Crisis High This Year (Publication Centre)
Eurozone manufacturing probably stalled at the start of the second quarter. We think industrial production rose a mere 0.1% month-to-month in April, lower than the 0.4% consensus forecast, and equivalent to a 0.8% increase year-over-year. Output ex-construction was up 0.8% in Germany, but this is likely to be offset by declines in France and Italy, and a hefty 3.2% fall in Greece.
11 Dec. 2015 Upturn in French Industrial Output is Misleading and Won't Last (Publication Centre)
October industrial production data in France surprised to the upside yesterday, with headline output rising 0.5% month-to-month, well above the consensus estimate and our own forecast for a monthly fall. Production was lifted by a 5.1% month-to-month jump in energy output, due to unusually cold weather, offsetting a 0.5% decline in manufacturing output, the fifth drop in the past six months.
15 Dec. 2015 Solid Industrial Production in the Eurozone Given Global Weakness (Publication Centre)
Industrial production in Eurozone had a decent start to the fourth quarter. Output ex-construction rose 0.6% month-to-month in October, pushing the year-over-year rate up to 1.9% from a revised 1.3% in September. Production was lifted by gains in the major economies, and surging output in the Netherlands, Portugal and Lithuania. Across sectors, increases in production of capital and consumer goods were the main drivers, but energy output also helped, due to a cold spell lifting demand and production in France.
11 August 2017 Commodities Driving Japan's PPI, a Weaker Yen is Needed to Lift CPI (Publication Centre)
Japanese PPI inflation rose sharply to 2.6% in July from 2.2% in June, well above the consensus for a modest rise.
11 April 2018 Sanctions against Russia are a mixed blessing for the EZ (Publication Centre)
The plunge in Russia's financial markets, in response to targeted U.S. sanctions--see here--against Russian oligarchs and government officials, was the main EU news story yesterday.
15 August 2017 China's Boomlet Causes Volatility for Japan, Second Half to Weaken (Publication Centre)
Japanese real Q2 GDP growth surprised analysts, increasing sharply to a quarterly annualised rate of 4.0%, up from 1.0% in Q1 and much higher than the consensus, 2.5%. But its no coincidence that the jump in Japanese growth follows strong growth in China in Q1.
18 October 2017 Housing Activity is Poised for a Hefty Q4 Rebound as Demand Rebounds (Publication Centre)
Today brings the September housing construction report, which likely will show that activity was depressed by the hurricanes.
15 August 2017 Weak Q2 for Mexico's Industrial Activity, but What Happens in Q3? (Publication Centre)
Last week's industrial report confirmed that the Mexican economy softened at the end of the second quarter. Industrial production was unchanged year- over-year in June, calendar-and seasonally adjusted, down marginally from +0.1% in May.
18 Nov. 2015 Weak Manufacturing Won't Push the EZ Economy into Recession (Publication Centre)
Historical evidence suggests that we should be worried about the relative weakness in the Eurozone's manufacturing sector. Industrial production ex-construction has historically been a key indicator of the business cycle, despite accounting for a comparatively modest 19% of total value-added in the euro area. In all three previous major downturns, underperformance in the manufacturing sector sounded the alarm six-to-nine months in advance that the economy was about to slip into recession.
11 April 2018 February Data Likely will Show that the Industrial Revival is Losing Pace (Publication Centre)
Industrial production hit its stride last year, notching up eight consecutive month-to-month gains--the longest run of unbroken growth since May 1994--before a setback in December, which was triggered by the temporary closure of the Forties oil pipeline.
13 August 2018 Japan's Households Finally Stage a Come Back, Time for a BoJ Hike? (Publication Centre)
Japan's GDP growth came roaring back in Q2, thanks to a strong rebound in private consumption, and an acceleration in business capex.
21 November 2017 Near-term Risks are to the Downside for Japan's Trade Surplus (Publication Centre)
Japan's official adjusted surplus rose in October but we think the September figure was an understatement. On our adjustment, the surplus was little unchanged at ¥360B in October.
21 August 2018 Could Stockpiling for a No-Deal Brexit Boost the Economy? (Publication Centre)
We have been asked several times in recent days whether a pick-up in stockbuilding, as part of businesses' contingency planning for a no-deal Brexit, could cause the economy to gather some pace in the run-up to Britain's scheduled departure from the EU in March 2019.
7 August 2017 Japan's Wage Drop not so Damaging as Regular Wages Rise (Publication Centre)
Japanese average cash earnings posted a surprise drop of 0.4% year-over-year in June, down from 0.6% in May and sharply below the consensus for a rise of 0.5%. The decline was driven by a fall in the June bonus, by 1.5%.
28 November 2017 The EZ Economy Won't Tell us What Happens Next in Equities (Publication Centre)
This year has been a story of two halves for EZ equities. The MSCI EU ex-UK jumped 11% in the first five months of 2017, but has since struggled to push higher.
7 April 2017 Brace for Disappointing Industrial Production Data Today (Publication Centre)
Manufacturing orders in Germany recovered some ground in the middle of Q1, following the plunge at the beginning of the year. Factory orders rose 3.4% in February, pushing the year-over-year rate up to +4.6% from a revised 0.0% in January.
7 August 2017 While we were Out... (Publication Centre)
...The Fed did nothing, surprising no-one; the labor market tightened further; the housing market tracked sideways; survey data mostly slipped a bit; and oil prices jumped nearly $4, briefly nudging above $50 for the first time since May.
7 December 2018 Will the BoJ be Put Off Policy Adjustments by Market Turmoil? (Publication Centre)
Recent market turmoil and concerns on the outlook for global growth have re-awakened talk of stimulus. For the BoJ, this inevitably raises the question of what could possibly be done, given that policy already appears to be on the excessively loose side of loose.
28 August. 2015 August Payrolls Will Support Fed Inaction - Unemployment Won't (Publication Centre)
We argued yesterday that the August payroll number is unlikely to be a blockbuster, thanks to a combination of problems with the birth/death model and the strong tendency for this month's jobs number to be initially under-reported and then revised substantially higher. But these arguments don't apply to the unemployment rate, which is derived from the separate household survey.
28 July 2017 The Downturn in Housing Market Activity has Further to Run (Publication Centre)
Equity prices for companies dependent on the U.K.'s residential property market tumbled yesterday as several companies reported poor results for the first half of 2017. Most companies blamed a decline in housing transactions for falling profits.
28 July. 2016 Acceleration of Q2 GDP Won't Have Much Bearing on Stimulus Debate (Publication Centre)
Taken at face value, the preliminary estimate of Q2 GDP suggests that the economic recovery weathered Brexit risk well. But growth received support from some unsustainable sources, and also probably was boosted by a calendar quirk. Meanwhile, with few firms or consumers expecting a vote for Brexit prior to the referendum, Q2's brisk growth tells us little about how well the economy will cope in the current climate of heightened uncertainty.
28 November. 2016 The Housing Slowdown Next Year Will be Offset by Fiscal Easing (Publication Centre)
We have been asked how we can justify raising our growth forecasts but at the same time arguing that the housing market is set to weaken quite dramatically, thanks to the clear downshift in mortgage applications in recent months. Applications peaked back in June, so this is not just a story about the post-election rise in mortgage rates.
7 Apr. 2016 The Oil Industry Won't Disappear - the Contraction Will End Soon (Publication Centre)
If the current rate of contraction continues, the U.S. onshore oil industry will cease to exist in the third week of January next year. Over the past six weeks, the number of operating rigs has dropped by an average of 8.5, and 362 rigs were running last week. At the peak, in early October 2014--just 18 months ago--the rig count reached 1,609.
29 July. 2016 Will Household Saving Rise and Tip the Economy into Recession? (Publication Centre)
Households' saving decisions will play a key role in determining whether the economy slips into recession over the next year. Indeed, all of the last three recessions coincided with sharp rises in the household saving rate, as our first chart shows. Will households save more in response to greater economic uncertainty?
29 June 2017 GDP Seasonal Adjustment Problems Persist, a Fix is Promised in July (Publication Centre)
The third estimate of first quarter GDP growth, due today, will not be the final word on the subject. Indeed, there never will be a final word, because the numbers are revised indefinitely into the future.
29 March 2019 Debt-Assisted Household Spending Will Keep Potential BoK Cuts at Bay (Publication Centre)
Korea's business survey index rose for a second straight month in March, to 75 from 73 in February, on our adjustment.
29 January 2019 Industrial Profits in China Remain Terrible, Underneath the Surface (Publication Centre)
China's industrial profits data for December showed continued weakness in the sector, with no clear signs that a turnaround is in the offing.
6 September 2017 Will the Brazilian Industrial Sector Continue to Perform Strongly? (Publication Centre)
Brazil's industrial sector came roaring back at the start of Q3, following a poor end to Q2. Industrial production jumped 0.8% month-to-month in July, driving the year-over-year rate higher to 2.5%, from 0.5% in June and just 0.1% on average in Q2.
29 Apr. House Price Trend to Remain Firm, Despite Tax Hikes and Brexit Risk (Publication Centre)
Housing market data yesterday fostered the view that prices are vulnerable to a fall following April's increase in stamp duty--a transactions tax-- and before the E.U. referendum in June. Political uncertainty, however, has rarely had a pervasive or sustained impact on prices in the past.
29 August 2017 The next few Months will Test Temer's Capital in Congress (Publication Centre)
Brazil's economic outlook is gradually improving following a challenging Q2, which was hit by political risk, putting business and consumer confidence under pressure.
7 January 2019 The Downbeat PMIs Should be Trusted This Time Around (Publication Centre)
Evidence that mounting concerns about Brexit have caused the economy to slow to a near-halt continued to accumulate last week.
27 September 2016 Housing Market to Remain Fragile Deep into Next Year (Publication Centre)
The further decline in mortgage approvals in August shows that housing market activity remains very subdued. The recent fall in mortgage rates likely will prop up demand soon, but the poor outlook for households' real incomes suggests that both activity and prices will revive only modestly over the next year.
8 August. 2016 Brazil's Economy is Stabilizing. Mexico's is Slowing, Temporarily (Publication Centre)
While we were out, Brazil's economic and political position continued to improve. The recession eased in the second quarter and into July. Industrial production, for example, increased in June for the fourth consecutive month, rising by 1.1% month-to-month.
21 Oct. 2015 Eurozone Now Runs a Bigger Current Account Surplus Than Japan and China (Publication Centre)
The Eurozone's external surplus remains solid, despite hitting a wall in August. The seasonally adjusted current account surplus fell to €17.7B in August from €25.6B in July, due to a €7B fall in the goods component. A 5.2% month-to-month collapse in German exports -- the biggest fall since 2009 -- was the key driver, but we expect a rebound next month. The 12-month trend in the Eurozone's external surplus continues to edge higher, rising to 3% of GDP up from 2.1% in August last year.
26 September 2016 PMIs Point to Slower EZ GDP Growth, but Details are Confusing (Publication Centre)
Friday's PMI data in the Eurozone added to the evidence that GDP growth is slowing, after a cyclical peak last year. The composite PMI in the euro area slipped to a 21-month low of 52.6 in September, from 52.9 in August.
8 August. 2016 The Term Funding Scheme is Not a Game-Changer (Publication Centre)
Economists failed to foresee the U.K.'s growth spurt in 2013 partly because they underestimated the positive impact of the Funding for Lending Scheme, launched in mid-2012. In fact, the FLS was so successful at stimulating mortgage lending that it had to be "refocussed" to apply solely to business lending in January 2014.
8 Dec. 2015 Energy Production Will Depress German Industrial Output in Q4 (Publication Centre)
German industrial output was off to a sluggish start in the fourth quarter. Production eked out a marginal 0.2% month-to-month gain in October, pushing the year-over-year rate down to 0.0% from a revised 0.4% in September. Manufacturing output rose 0.6%, led by a 2.7% jump in production of capital goods, but the underlying trend in the sector overall is flat. On a more positive note, construction output rose 0.7% month-to-month in October, and leading indicators suggest this could be the beginning of a string of gains, lifting investment spending in coming quarters.
26 August. 2016 Early GDP Estimates Often Fail to Register Turning Points (Publication Centre)
Today's second estimate of Q2 GDP likely will restate the preliminary estimate that quarter-onquarter growth picked up to 0.6%, from 0.4% in Q1. Over the last two decades, the second estimate of GDP has differed from the preliminary estimate just 38% of the time.
26 Feb. 2016 A Tale of Two Current Account Paths, Adjusting to New Realities (Publication Centre)
Brazil's external accounts continue to be the country's bright spot, having improved considerably in recent quarters. The unadjusted current account deficit for January, USD4.8B, was lower than expected and much smaller than the USD12.2B shortfall a year earlier.
27 April 2018 Households' Borrowing is Slowing, Highlighting Their Renewed Caution (Publication Centre)
The squeeze on real wages has just ended and GfK's consumer confidence index hit a 11-month high in March.
27 June 2018 China Turns to the RRR to Sustain the Debt Clean-up Amid Fed Hikes (Publication Centre)
In yesterday's Monitor, we laid out the prime causes of China's weekend announcement, cutting the reserve requirement ratio.
02 Feb. 2016 Is the Recovery in Business Investment About to Fizzle Out? (Publication Centre)
Business investment has been resilient to the slowdown in the wider economy so far, with year-over-year growth in the first three quarters of 2015 averaging a very respectable 6.2%. Outside the oil sector, firms are generating healthy profits and can borrow cheaply.
27 November 2018 Japan's Flash PMI Puts a Q4 GDP Rebound into Serious Doubt (Publication Centre)
Japan's flash Nikkei manufacturing PMI report for November was abysmal, putting the chances of a recovery this quarter into serious doubt.
27 Oct. 2015 Are the Foundations of the Recovery in House Prices Secure? (Publication Centre)
House prices look set for another growth spurt, pushing the house price-to-earnings ratio--the most widely used measure of valuation sustainability--close to levels seen shortly before the late-2000s crash. But we don't place much store by the price-to-earnings ratio. Better, more reliable indicators suggest that a higher level of house prices will prove sustainable.
03 Feb. 2016 Industrial Output Dived in Q4, But Reasons For Optimism in Brazil? (Publication Centre)
Brazil's economic news this week remained bleak at the headline level, but some of the details were less terrible in than in recent months. Industrial production fell by a worse-than-expected 11.9% year-over-year in December, marginally up from the 12.4% drop in November.
7 June 2019 The Rising Threat of Protectionism Is Hurting More than Just the MXN (Publication Centre)
Monday will see 5% tariffs going into effect on Mexican exports to the U.S.--which totalled about USD360B last year--unless President Trump steps back from the brink.
7 March 2018 Brazil's Industrial Sector Remains Solid, Despite Slipping in January (Publication Centre)
Brazil's industrial sector was off to a soft-looking start in Q1, but the fall in January output was chiefly payback for an especially strong end to 2017.
27 March 2018 The Housing Market Remains Fragile, Limiting the MPC's Options (Publication Centre)
Yesterday's figures from trade body U.K. Finance showed that January's pick-up in mortgage approvals was just a blip.
6 Nov. 2015 Brazil's Industrial Recession Deepens - Chile's Recovery in Place (Publication Centre)
Brazil's industrial sector continues to suffer, despite September's report surprising marginally on the upside. Output contracted 1.3% month-to-month in September, after a 0.9% fall in August, pushing the year over-year rate down to -10.9% down from -8.8% in August. This is the biggest drop since April 2009. Output has fallen an eye-popping -7.4% year-to-date, and in the third quarter alone activity contracted by 3.2% quarter-on-quarter, in line with our vie w for a 1.2% contraction in real GDP for the third quarter.
29 May 2019 Chinese Industrial Profits Tanked in April, after the March Spike (Publication Centre)
Industrial profits in China dropped 3.7% year-over- year in April, after surging 13.9% in March, according to the officially reported data.
31 August. 2016 ADP Likely to Report Strong August Payrolls, But it's Unreliable (Publication Centre)
We are expecting a hefty increase in the August ADP employment number today--our forecast is 225K, above the 175K consensus --but we do not anticipate a similar official payroll number on Friday. Remember, the ADP number is based on a model which incorporates lagged official employment data, the Philly Fed's ADS Business Conditions Index, and data from firms which use ADP for payroll processing.
31 January 2018 Growth in Households' Spending ending (Publication Centre)
December's money and credit figures suggest that households are in no fit state to step up and drive the economy forwards this year.
5 May 2017 Brazil's Industrial Output Dropped in March, but the Trend is Rising (Publication Centre)
Wednesday's Brazilian industrial production data were worse than we expected but the details were less alarming than the headline. Output slipped 1.8% month-to-month in March, the biggest fall since August 2015, setting a low starting point for Q2.
31 August 2017 Inflation Pressures in the Eurozone are Responding to Robust Growth (Publication Centre)
Inflation pressures in the Eurozone probably firmed slightly in August. Data yesterday showed that inflation in Germany and Spain rose by 0.1 percentage points to 1.8% and 1.6% year-over-year respectively, and we are also pencilling-in an increase in French inflation today, ahead of the aggregate EZ report.
31 August 2017 Does the Corporate Borrowing Surge Signal a Capex Recovery? (Publication Centre)
The summer usually is a quiet time for business, but seemingly not for CFOs this year. Yesterday's money and credit figures from the Bank of England showed that borrowing by private non-financial corporations has rocketed. Net finance raised by PNFC's from all sources increased by £8.9B in July, compared to an average increase of just £2.5B in the previous 12 months.
5 September 2017 Underlying Trend in Labor Data Unaffected by "Soft" August Report (Publication Centre)
We had hoped that the statistical problems which have plagued the initial estimates of August payrolls in recent years had faded, but Friday's report suggests our judgement was premature.
5 October 2018 Should Surveys Pointing to Higher Core Goods Inflation be Trusted? (Publication Centre)
The CPI inflation rate for non-energy industrial goods--core goods, for short--has tracked past movements in trade-weighted sterling closely over the last ten years, because virtually all goods in this sector are imported.
30 September. 2016 August Spending is Less Worrying than the Scope for Higher In ation (Publication Centre)
Yesterday's relatively good news--we discuss the implications of the August trade data below--will be followed by rather more mixed reports today. We hope to see a partial rebound, at least, in the September Chicago PMI, but we fully expect soft August consumer spending data.
31 May 2019 The Economy Won't Be Knocked Off Course by Rising Household Saving (Publication Centre)
Households' willingness to save a smaller fraction of their incomes goes a long way to explaining why the U.K. economy hasn't lost too much momentum since the Brexit vote.
31 May. Are House Prices Near a Ceiling, or Just Temporarily Slowing? (Publication Centre)
Housing market activity has weakened sharply over the last two months. Indeed, figures this week likely will reveal that mortgage approvals plunged in April and that house price growth slowed in May. The increase in stamp duty for buy-to-let purchases at the start of April and Brexit risk, however, entirely explain the slowdown.
4 July 2018 Rising Household Saving Likely will Keep Spending Growth Subdued (Publication Centre)
The economy would have ground to a halt last year had households not reduced their saving rate sharply.
4 July. 2016 Industrial Output in Brazil has Hit Bottom, but No Quick Recovery (Publication Centre)
Friday's Brazilian industrial production data were relatively positive. Output was unchanged month-to-month in May, and April's marginal gain was revised slightly higher. The flat monthly reading pushed year-over-year growth in output up marginally to -8.9% from -9.1%. May production rose month-to-month in two of the four major categories.
4 September 2017 Will the Economy be Hit by a Snap Back in Households' Saving Ratio? (Publication Centre)
Households' decision to reduce their saving rate sharply was the main reason why economic growth exceeded forecasters' expectations in the aftermath of the Brexit vote.
4 July 2017 Why Hasn't EZ Industrial Output Responded to the PMIs? (Publication Centre)
Yesterday's PMI data confirmed that the EZ manufacturing sector is in rude health. The manufacturing PMI in the euro area rose to a cyclical high of 57.4 in June, from 57.0 in May, slightly above the first estimate. New orders and output growth are robust, pushing work backlogs higher and helping to sustain employment growth.
4 February 2019 Brazil's Q4 Industrial Weakness was Offset by Robust Consumption (Publication Centre)
Brazil's December industrial production and labour reports, released late last week, confirmed that the recovery was struggling at the end of last year.
4 Apr. 2016 Did the Brazilian Industrial Slump Ease Significantly in Q1? (Publication Centre)
The Brazilian manufacturing sector remains very depressed by weak end-demand, but the misery is easing, at the margin. Industrial production fell 2.5% month-to-month in February, equivalent to an eye-watering 9.8% contraction year-over-year, but this was rather less bad than the 13.6% slump in January.
5 June 2018 A Customs Union U-turn is Coming, but not Until the Autumn (Publication Centre)
In theory, June should be a crunch month for Theresa May's Brexit plans. The Prime Minister will meet EU leaders on June 28 and hopes to have found a consensus in cabinet by then for how the U.K. will trade with the EU outside of the customs union.
5 September. 2016 Brazil's Industrial Sector is Stabilizing - Modest Gains Ahead? (Publication Centre)
Friday's Brazil industrial production data were surprisingly upbeat. Output rose 0.1% month-to-month in July, slightly better than the consensus forecast for no change. July's modest gain was the fifth consecutive increase, confirming that industrial output in Brazil is stabilizing, and it paints a less grim picture of GDP growth at the start of Q3.
30 July 2018 Do Rising Tokyo CPI Housing Costs Matter for the BoJ's July Meeting? (Publication Centre)
Tokyo inflation surprised us on Friday, rising to 0.9% in July, from 0.6% in June.
3 July 2017 China's Industrial Complex still Strong in Q2, H2 in Draghi's Hands (Publication Centre)
We expect China's quarterly real GDP growth in the second quarter to edge down from Q1, but only because Q1 growth was unsustainable. The official data shows real GDP growth at 1.3% quarter-onquarter in Q1.
3 July. 2015 Surprising But Not Sustainable Jump in Brazil's Industrial Output (Publication Centre)
The second quarter is over but it is too early to give a reliable forecast of the pace of Brazilian GDP growth. However, an array of leading and coincident indicators points to a steep contraction in Q2 and a bleak second half of the year. Unemployment is leaping higher, along with inflation and household debt, and the ongoing monetary and fiscal tightening will further hurt the real economy ahead.
3 June. 2015 Brazil's Industrial meltdown continues - Better news elsewhere (Publication Centre)
Brazil industrial production continues to edge lower, falling 1.2% month-to-month in April, a 7.6% year-over-year drop. In March, output was down only 3.4% year-over-year, but the data are volatile in the short-term. The trend is about -7%, down from -3.8% in the second half of last year.
3 February 2017 Brazil's Q4 Industrial Output was Poor, Q1 Will be Much Better (Publication Centre)
Brazil's Q4 industrial production report, released Wednesday, confirmed that the recovery remained sluggish at the end of last year. December's print alone was relatively strong, though, and the cyclical correction in inventories--on the back of improving demand--lower interest rates, and the better external outlook, all suggest that the industrial economy will do much better this year.
3 February 2017 The U.S. Puts Germany's Huge Trade Surplus Under the Spotlight (Publication Centre)
In our Monitor on January 27 we speculated that the new U.S. administration would see Germany's booming trade surplus as a bone of contention. We were right. Earlier this week, Peter Navarro, the head of Mr. Trump's new National Trade Council, fired a broadside against Germany, accusing Berlin for using the weak euro to gain an unfair trade advantage visa-vis the U.S.
3 April 2019 A Decent Industrial Report in Brazil, but the Rebound Remains Subpar (Publication Centre)
Brazil's February industrial production numbers, labour market data, and sentiment indicators are gradually providing clarity on the underlying pace of activity growth, pointing to some red flags.
6 June 2018. Brazil's Industrial Sector Maintained Momentum in April, Will it Last? (Publication Centre)
Yesterday's industrial production report in Brazil was sizzling. Headline output jumped 0.8% month- to-month in April--well above the 0.4% consensus-- pushing the year-over-year rate up to 8.9%, a five- year high.
6 July 2018 Industrial Activity in LatAm Taking Different Paths, Temporarily at Least (Publication Centre)
Industrial activity in LatAm, at least in the largest economies, is taking different paths.
6 January 2017 Brazil's Industrial Recovery is Underway, but it is Painfully Slow (Publication Centre)
Yesterday's Brazilian industrial production data continue to tell a story of a slow business cycle upturn. Output rose 0.2% month-to-month in November, after a downwardly revised 1.2% plunge in October. The year-over-year rate, though, jumped to -1.1%, from -7.3% in October. The underlying trend is now on the mend, following weakness in Q3 and early Q4. Output rose in November three of the four major categories and in 13 of the 24 sectors.
30 April 2019 No Boost to Business Confidence from the Brexit Delay (Publication Centre)
News that the U.K.'s departure from the E.U. has been delayed by six months, unless MPs ratify the existing deal sooner, appears to have done little to revive confidence among businesses.
30 August. 2016 Strong Consumption Set to Support Robust Third Quarter GDP Growth (Publication Centre)
In the wake of the robust July data and the upward revisions to June, real personal consumption--which accounts for 69% of GDP--appears set to rise by at least 3% in the third quarter, and 3.5% is within reach. To reach 4%, though, spending would have to rise by 0.3% in both August and September, and that will be a real struggle given July's already-elevated auto sales and, especially, overstretched spending on utility energy.
30 Jan. 2015 Plunging Oil Prices Boost Chile's Consumers - Businesses Still Weak (Publication Centre)
Chile's economy is showing the first reliable signs of improvement, at last. December retail sales rose 1.9% year-over-year, up from 0.4% in November, indicating that household expenditure is starting to revive, in line with a pick-up in consumer confidence and the improving labor market.
3 September 2018 The ECB is Fighting an Uphill Battle to Push Core Inflation to 2% (Publication Centre)
We are all for ambitious economic targets, but the ECB's pledge to drive EZ core inflation in the Eurozone up to "below, but close to" 2% is particularly fanciful.
3 October 2018 Chuseok Hit Clouds the End of Marginally Stronger Q3 in Korea (Publication Centre)
Korean industrial production surprised to the upside in August, according to data released yesterday.
6 February 2019 Q1 GDP Growth will be Lacklustre, but not as Bad as the PMIs Imply (Publication Centre)
Yesterday's news that the business activity index of the Markit/CIPS services survey fell again in January, to just 50.1--its lowest level since July 2016--has created a downbeat backdrop to the MPC meeting; the minutes and Q1 Inflation Report will be published on Thursday.
3 October 2017 BanRep Leaves Rates on Hold, But Further Stimulus Will Come Soon (Publication Centre)
Colombia's Central Bank is facing a short-term test. The recent fall in inflation was interrupted in August--data due on Thursday will show another increase in September--while economic growth, particularly consumption, is struggling, at least for now.
26 August. 2016 Brazil's Market-set Prices Remain Sticky, Rate Cuts to be Postponed? (Publication Centre)
According to Brazil's mid-August inflation reading, which is a preview of the IPCA index, overall inflation pressures are easing. But some price stickiness remains, due to inertia and temporary shocks, despite the severity of the recession and the rapid deterioration of the labour market in recent months.
7 September. 2016 Capex Rebounding in Q3, Except in the Housing Component (Publication Centre)
If you had asked us in the spring where the action would be in capital spending over the summer, we would have said that the housing component was the best bet. Right now, though, the opposite seems more likely, with housing likely to be the weakest component of capex.
08 Mar. 2016 Can the Spike in Labor Market Participation be Sustained? (Publication Centre)
It's very tempting to look at the upturn in the participation rate in recent months and extrapolate it into a sustained upward trend. If the trend were to rise quickly enough, it conceivably could prevent any further fall in the unemployment rate, preventing it falling below the bottom of the Fed's estimated Nairu range.
23 July 2018 The Eurozone's Current Account Surplus likely Plunged in Q2 (Publication Centre)
The Eurozone's current account surplus extended its decline in May, falling to a nine-month low of €22.4B, from €29.6B in April.
9 January 2019 Brazil's Industrial Sector Ended Q4 on a Weak Footing Can it Improve (Publication Centre)
Brazil's industrial sector is still struggling, despite recent signs of better economic and financial conditions.
23 January 2018 Plunging Oil Output Points to Below-Consensus Q4 GDP (Publication Centre)
We see considerable downside risk to the consensus forecast that GDP increased by 0.4% quarter-on-quarter in Q4, the same as in Q3.
22 February 2019 Scope for Further Fiscal Stimulus Remains Intact (Publication Centre)
After a disappointing run of monthly data, the huge surplus on the main "PSNB ex ." measure of borrowing in January must have been greeted with relief at the Treasury.
23 August. 2016 The Inventory Cycle is About to Turn, Worsening the Downturn (Publication Centre)
Whether the economy enters recession will hinge more on corporate behaviour than on consumers. Household spending accounts for about two thirds of GDP, but it is a relatively stable component of demand. By contrast, business investment and inventories--which are often overlooked--are prone to wild swings.
23 January 2018 Eurozone Households Enter 2018 With Robust Tailwinds (Publication Centre)
Today's data likely will show that EZ households' sentiment remained close to a record high at the start of the year.
25 September 2018 US Home Prices are Still Rising, but Momentum is Slowly Fading (Publication Centre)
In recent months we have argued that housing market activity has peaked for this cycle, with rising mortgage rates depressing the flow of mortgage applications.
23 Mar. 2016 Rousseff's Government is on the Ropes - Fiscal Progress Will Slow (Publication Centre)
Political turmoil in Brazil continues to undermine President Dilma Rousseff's leverage over the economy. On Friday, the Lower House of Congress voted to start impeachment proceeding against Ms. Rousseff. She has until early April to present her defense against charges that she doctored government accounts and used graft proceeds to fund the 2014 electoral campaign.
22 February 2017 Easier lending standards to boost housing market? (Publication Centre)
Whatever today's report tells us about existing home sales in January, the underlying state of housing demand right now is unclear. The sales numbers lag mortgage applications by a few months, as our first chart shows, so they're usually the best place to start if you're pondering the near-term outlook for sales. But the applications data right now are suffering from two separate distortions, one pushing the numbers up and the other pushing them down. Both distortions should fade by the late spring, but in they meantime we'd hesitate to say we have a good idea what's really happening to demand.
22 Mar. 2016 The Upturn in Core Inflation is Real - Don't Focus on the Noise (Publication Centre)
We pointed out in yesterday's Monitor that Fed Chair Yellen appears to be putting a good deal of faith in the idea that the recent upturn in core inflation is temporary. She argued that "some" of the increase reflects "unusually high readings in categories that tend to be quite volatile without very much significance for inflation over time".
9 Feb. 2015 The German economy is improving: Q4 GDP will beat consensus (Publication Centre)
German industrial production data were presented by Bloomberg News as signs that the recovery is "gathering momentum", but it is slightly premature to make that call. Narrow money growth is currently sending a strong signal of higher GDP growth this year in the euro area, but the message from the manufacturing sector is still one of stabilisation rather than acceleration.
07 October. 2016 Brazil Advances on Austerity, Expect More Progress Soon (Publication Centre)
On Tuesday, Brazil's Special Committee presented its recommendation for a constitutional amendment capping spending. Currently it is being voted in the Lower House Committee.
23 March 2017 The Eurozone's Primary Income Surplus is Climbing Steadily (Publication Centre)
The Eurozone's total external surplus hit the skids at the start of the year. Yesterday's report showed that the seasonally adjusted current account surplus plunged to a two-year low of €24.1B in January, from a revised €30.8B in December.
9 February 2018 China's Trade Surplus Knocked by Calendar Effects, RMB Takes a Cue (Publication Centre)
China's trade surplus tumbled to $20.3B in January, from $54.7B in December, surprising the consensus for little change.
09 Feb. 2016 How Robust is the Case for Expecting Lower Rates? (Publication Centre)
Investors currently think that official interest rates are more likely to fall than rise this year. Overnight index swap markets are factoring in a 30% chance of a rate cut by December, but just a 1% chance of an increase by year-end. The case for expecting looser monetary policy, however, remains unconvincing.
23 August. 2016 Mexico Struggled at the end of the First Half - Will it Rebound? (Publication Centre)
The Mexican economy shrank by 0.2% quarter-on-quarter in Q2, according to the final GDP report, a tenth better than the preliminary reading. The year-over-year rate rose marginally to 2.5% from 2.4% in Q1. But the year-over-year data are not seasonally adjusted, understating the slowdown in the first half of the year, as shown in our first chart.
1 August 2017 Money Data Show Diverging Household and Corporate Fortunes (Publication Centre)
The latest money and credit data highlight that the financial fortunes of firms and households have begun to differ markedly. Private non- financial corporations--PNFCs--are enjoying strong growth in their broad money holdings. The 1.2% month-to-month increase in PNFC's M4 was the largest rise since August 2016, and it lifted the year- over-year growth rate to 9.3%, from 9.0% in May.
22 November 2017 What's the Case for Increased Fiscal Stimulus in the Eurozone? (Publication Centre)
The euro area's record-high external surplus has prompted commentators to suggest that the zone has room to loosen fiscal policy to support growth, or at least relax the deficit reduction rules.
22 November 2018 Next Year's Fiscal Stimulus Is Secure, Despite the Poorer Borrowing Data (Publication Centre)
October's surprise jump in public borrowing is not a material setback for the Chancellor, who will stick to his new Budget plans for modest fiscal stimulus next year.
9 March 2017 ADP Report Raises the Chance of a Blockbuster February Jobs Number (Publication Centre)
We expected a consensus-beating ADP employment number for February, but the 298K leap was much better than our forecast, 210K. The error now becomes an input into our payroll model, shifting our estimate for tomorrow's official number to 250K; our initial forecast was 210K.
22 May 2018 Sino-U.S. Negotiations Present a Risk to Japan's Trade Surplus (Publication Centre)
Japan's trade surplus rebounded to ¥522B in April, on our adjustment, from ¥390B in March, around the same level as the official version, though from a higher base.
22 Mar. Housing Market Revival Reflects More than Stamp Duty Increase (Publication Centre)
The recent revival in housing market activity reflects more than just a temporary boost provided by imminent tax changes. The current momentum in market activity and lending likely will fade later this year, but we think this will have more to do with looming interest rate rises than a lull in activity caused by a shift in the timing of home purchases.
22 May 2017 The Housing Market is Weakening, but Lasting Price Falls aren't Likely (Publication Centre)
Even the most bullish estate agent in Britain would struggle to put a positive spin on the latest housing market news. The latest levels of the official, Nationwide, and Halifax measures of house prices all are below their peaks.
9 May 2018 Is Down Now the Only Way for U.K. House Prices? (Publication Centre)
Britain's housing market appears to be going from bad to worse.
22 October 2018 The EZ External Surplus is Being Boosted by Services Exports (Publication Centre)
The Eurozone's external surplus rebounded over the summer, reversing its sharp decline at the start of Q3.
22 January 2018 Is the EZ's Current Account Surplus Pulling the Euro Up? (Publication Centre)
The data tell an increasingly convincing story that the Eurozone's external surplus rose further in the second half of last year.
23 August. 2016 EZ PMIs to Signal Stable GDP Growth in the Third Quarter (Publication Centre)
Today's market attention will be focused on the advance August PMI data in the major EZ economies. We think the composite PMI in the euro area was unchanged at 53.2 in August, consistent with stable GDP growth of 0.3%-to-0.4% quarter-on-quarter in Q3. The signal of "stability" in the Eurozone business cycle has been consistently relayed by the PMI since the beginning of the year.
22 June 2018 Business Capex is Still Set for Rapid Growth, Trade Spats Permitting (Publication Centre)
A round of recent conversations with investors suggests to us that markets remain quite skeptical of the idea that the recent upturn in capital spending will be sustained.
23 August 2017 Fiscal Restraint, not a Surging Economy, Drove July's Surplus (Publication Centre)
Yesterday's public finance figures showed that the public sector, excluding public sector banks, ran a surplus of £0.2B in July, a modest improvement on borrowing of £0.4B a year ago.
09 Mar. 2016 Surge in German Industrial Output Will Partly Reverse Next Month (Publication Centre)
German industrial output rebounded strongly at the beginning of the Q1. Production surged 3.3% month-to-month in January, pushing the year-over-year rate up to 2.2%, from a revised -1.2% in December
23 Apr. 2015 More signs of life in the housing market - This time, for real? (Publication Centre)
New home sales performed better during the winter than any other indicator of economic activity. At least, we think they did. The mar gin of error in the monthly numbers is enormous, typically more than +/-15%.
22 Dec. 2015 Low Household Saving Implies Little Upside to Spending Outlook (Publication Centre)
The national accounts for the third quarter, released on Wednesday, are likely to show that households are saving a very small proportion of their incomes. Low unemployment, subdued inflation and the healthier condition of households' balance sheets suggests that very low saving is more sustainable than in the past. Nonetheless, the low rate underlines that household spending can't grow at a faster rate than incomes for a sustained period again.
9 August. 2016 NFIB Survey Signals Better Non-Oil Business Capex as Soon as Q3 (Publication Centre)
The headline NFIB index of small business activity and sentiment in July likely will be little changed from June--we expect a half-point dip, while the consensus forecast is for a repeat of June's 94.5--but what we really care about is the capex intentions componen
25 February 2019 Will Business Investment Really Rebound if No-Deal is Avoided? (Publication Centre)
On the face of it, the potential for a tangible boost to GDP growth from a revival in business investment after a no-deal Brexit has been averted appears modest.
25 Jan. 2016 Will Housing Debt Concerns Resurface at the Bank? (Publication Centre)
Data this week look set to emphasise that heat is returning to the housing market, again. The Financial Policy Committee--FPC--still has additional tools it could deploy to cool housing demand. But the root cause of surging house prices remains very cheap debt. Alongside the inflation risk posed by the labour market, the case for the MPC to begin to raise interest rates to prevent a widespread debt problem is becoming compelling.
21 September 2016 Still Little Scope for Optimism on Business Investment (Publication Centre)
If the economy is to enter recession, falling business investment probably will have to be the main driver. Growth in consumer spending likely will slow sharply over the next year as firms become more cautious about hiring new workers and inflation begins to exceed wage growth again.
8 June 2017 Stepping on the First Rung of the Housing Ladder isn't Getting Easier (Publication Centre)
Many observers hoped that the silver lining of a slowdown in house price growth this year would be that more first-time buyers could step onto the first rung of the housing ladder. Instead, purchasing a first home has become even harder for FTBs with modest deposits.
21 September 2018 Recent Momentum in Retail Sales won't be Sustained (Publication Centre)
August's retail sales figures create a misleading impression that consumers can be relied upon to pull the economy through the next six months of heightened Brexit uncertainty unscathed.
25 August. 2016 Weak Mortgage Approvals Point to Falling House Prices Ahead (Publication Centre)
July's mortgage approvals data from the BBA brought clear evidence that households have held off making major financial commitments as a result of the Brexit vote. Following a 5% month-to-month fall in June, approvals fell a further 5.3% in July, leaving them at their lowest level since January 2015 and down 19% year-over-year.
25 January 2017 Will a Border Adjustment Tax Drive Up Inflation? (Publication Centre)
We've seen some alarming estimates of the potential impact on inflation of the House Republicans' plans for corporate tax reform, with some forecasts suggesting the CPI would be pushed up as much as 5%. We think the impact will be much smaller, more like 1-to-11⁄2% at most, and it could be much less, depending on what happens to the dollar. But the timing would be terrible, given the Fed's fears over the inflation risk posed by the tightness of the labor market.
05 October. 2016 Weakness in Brazil Industrial Production will be Temporary (Publication Centre)
The outlook for Brazil's industrial economy is better than at any time since before the crisis. But data released this week highlighted that the recovery will be slow and bumpy.
8 February 2017 Housing Market Flagging Again as Income Squeeze Intensifies (Publication Centre)
The MPC's interest rate cut in August, and the continued willingness of banks to lend, bolstered the housing market immediately after the referendum. But the latest indicators suggest that the market is slowing again, as the financial pressures on households' incomes intensify.
05 August. 2015 Corporate Bonds are Struggling, But QE and ZIRP offer Support (Publication Centre)
A looming rate lift-off at the Fed, chaos in Greece, and a renewed rout in commodities have given credit markets plenty to worry about this year. The Bloomberg global high yield index is just about holding on to a 0.7% gain year-to-date, but down 2.5% since the middle of May. The picture carries over to the euro area where the sell-off is worse than during the taper tantrum in 2013.
25 October 2018 Winter is Coming for the British Housing Market (Publication Centre)
Mortgage approvals by the main high street banks dropped to a five-month low of 38.5K in September, from 39.2K in August, according to trade body U.K.Finance.
25 Mar. 2015 China's slowdown a threat to U.S. Industry even when ISM revives (Publication Centre)
We have argued over the past couple of years that if you want to know what's likely to happen to U.S. manufacturing over the next few months, you should look at China's PMI, rather than the domestic ISM survey, which is beset by huge seasonal adjustment problems.
8 January 2019 The Housing Market is Set to Freeze in Early 2019, Thanks to Brexit (Publication Centre)
The housing market perhaps is where the adverse impact of Brexit uncertainty can be seen most clearly.
8 June 2018 House Prices will Continue to Flatline in the Second Half of 2018 (Publication Centre)
House prices continue to struggle for momentum, instilling caution among households. Admittedly, Halifax reported yesterday that its index jumped by 1.5% month-to-month in May.
25 August 2017 Sizzling Business Sentiment in France Signals Firm Q3 GDP (Publication Centre)
Yesterday's barrage of French business surveys contains hundreds of indicators, but its central story is comfortably simple.
8 September. 2016 Evidence of the Inefficacy of Monetary Stimulus Mounts (Publication Centre)
Evidence that households are not benefiting much from the Monetary Policy Committee's easing measures mounted yesterday, after the release of August data on advertised borrowing rates. Our first chart shows the drop in swap rates and average quoted mortgage rates since the end of last year.
24 August. 2016 The Impetus to Spending From Falling Mortgage Rates Will Wane (Publication Centre)
The proportion of households' annual incomes absorbed by servicing debt has declined steadily this decade, providing a powerful boost to spending. Indeed, the proportion of annual incomes accounted for by interest payments--mainly on mortgages--edged down a record low of 4.6% in Q1, less than half the share in 2008.
8 Oct. 2015 Flat Mortgage Demand Signals a Pause in the Housing Recovery (Publication Centre)
We planned to write today about the rebound in housing market activity over the past few months, arguing that it is about to run out of steam in the face of the recent flat trend in mortgage applications. The Mortgage Bankers Associations' purchase applications index rocketed in the spring, but then moved in a narrow range from mid-April through late September. Then, out of the blue, the MBA reported a 27% leap in applications in the week ended October 2, taking the index to its highest level in more than five years.
9 April 2019 Small Business Sentiment Ought to be Rebounding Capex Plans too (Publication Centre)
The recovery in small business sentiment since the fourth quarter rollover has been extremely modest, so far.
23 October 2018 Business Surveys have Flattened Richmond Fed due to Correct (Publication Centre)
All the regional PMIs and Fed business surveys are volatile in the short-term, so observations for single months need to be viewed with due skepticism.
22 Dec. 2014 - Don't Hold Your Breath Waiting for the Great Housing Rebound (Publication Centre)
Fed Chair Yellen said in her press conference last week that she has "...been surprised that housing hasn't recovered more robustly than it has. In part I think it reflects very tight credit--continuing tight credit conditions for any borrower that doesn't have really pristine credit... my hope is that that situation will ease over time".
23 October 2017 The EZ's Current Account Surplus Rose in Q3, but the Trend is Falling (Publication Centre)
The Eurozone's external surplus rebounded further over the summer.
22 August 2018 Venezuela's Economic Crisis Will Deteriorate Despite Recent Plan (Publication Centre)
To imagine an unstoppable macroeconomic policy disaster and desperate improvisation, just think of Venezuela.
24 September 2018 BoJ Still Likely to Shift the Focus to Capacity-Responsive Prices (Publication Centre)
Japan's CPI inflation jumped to 1.3% in August, from 0.9% in July.
8 November 2017 The Period of Leverage-Driven Growth in House Prices is Over (Publication Centre)
Mortgage lender Halifax reported yesterday that the rate of increase in house prices has picked up since the summer.
22 Apr. Progress Towards a Budget Surplus Will Remain Slow (Publication Centre)
The trend in public borrowing has improved significantly over recent months, but it is far too soon to conclude that the Chancellor is on track to meet his goal of running a budget surplus by the end of this decade. The recent economic slowdown has not impacted the public borrowing numbers, yet.
9 October 2018 Risks to the Consensus for August GDP Lie to the Upside (Publication Centre)
We expect August's GDP figures, released on Wednesday, to show that month-to-month growth slowed to 0.1%, from 0.3% in July.
8 May 2018 China's Diminished Current Account Surplus is Hugely Significant (Publication Centre)
China's current account dropped sharply in Q1, to a deficit of $28.2B, from a surplus of $62.3B in Q4.
Business Insider - German manufacturing just slumped to the lowest level since the financial crisis -- and it's a major warning sign for the global economy (Media Centre)
Claus Vistesen discussing the German PMI's
The Guardian - UK house prices make surprise 5.9% rise in February, Halifax says (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Halifax House Prices
*August 2017 - U.S.. Economic Chartbook* (Publication Centre)
Fed tightening is deferred, not cancelled...Expected a December hike after robust fall data
Independent - U.K. housing market slows as prices fall in London and South East England (Media Centre)
Samuel Tombs on U.K. House Prices
Financial Times - US durable goods orders rise by most in 7 months in March (Media Centre)
Chief U.S. Economist Ian Shepherdson discussing U.S. Durable Goods Orders
Independent - House price growth surges to 5.2% in May, says Halifax (Media Centre)
Samuel Tombs on Halifax House Price Index in May
BBC - House prices slip in May in subdued market (Media Centre)
The Street - US Yield Curve Hugs Inversion: Recession Signal Clouded by Negative Global Rates (Media Centre)
Chief U.S. Economist Ian Shepherdson discussing the latest from the Fed
27 June 2019 Mortgage Lending Likely to Remain Impervious to Brexit Uncertainty (Publication Centre)
Data from trade body U.K. Finance show that mortgage lending has remained unyielding in the face of heightened economic and political uncertainty.
26 April 2017 French Business Confidence is Solid, but Manufacturing Fell in Q1 (Publication Centre)
French manufacturing confidence soared at the start of Q2. The headline INSEE index jumped to a six-year high of 108 in April, from an upwardly revised 105 in March. The headline was flattered by a big increase in the "past activity" index, but the survey's leading indicators also improved.French manufacturing confidence soared at the start of Q2. The headline INSEE index jumped to a six-year high of 108 in April, from an upwardly revised 105 in March. The headline was flattered by a big increase in the "past activity" index, but the survey's leading indicators also improved.
24 October 2018 EZ Households Face Uncertainty, Despite Solid Fundamentals (Publication Centre)
Consumer confidence in the Eurozone rose marginally at the start of Q4, though it is still down since the start of the year.
24 November 2017 GDP Growth Remains too Reliant on Households Saving Less (Publication Centre)
Yesterday's second estimate of Q3 GDP confirmed that the U.K. economy has underperformed this year.
24 October 2018 Korea's Stronger Q3 Growth Likely due to Falling Imports, Ominously (Publication Centre)
Korea's preliminary GDP report for Q3 will be released tomorrow.
25 September 2017 Another Month, Another Robust PMI Report in the Eurozone (Publication Centre)
The Eurozone economy ended the third quarter on a strong note, according to the PMIs.
25 August 2017 Trade and Investment are Failing to Offset the Consumption Slowdown (Publication Centre)
The second estimate of GDP left the estimate of quarter-on-quarter growth unrevised at 0.3%, a trivial improvement on Q1's 0.2% gain.
25 January 2018 Japan's Trade Surplus Should Diminish but December was a Blip (Publication Centre)
Chinese New Year effects were very visible in Japan's December trade data. Export growth slowed sharply to 9.3% year-over-year in December, from 16.2% in November.
24 Nov. 2015 Will Gilts Decouple as US Treasury Yields Rise? (Publication Centre)
A less rapid tightening of monetary policy in the U.K. than in the U.S. should ensure that gilt yields don't move in lockstep with U.S. Treasury yields over the coming years. But the outlook for monetary policy isn't the only influence on gilt yields. We expect low levels of market liquidity in the secondary market, high levels of gilt issuance and overseas concerns about the possibility of the U.K.'s exit from the E.U. to add to the upward pressure on gilt yields.
24 May 2019 Boeing's Woes are Hitting Durable Goods Orders - the Core is OK, Just (Publication Centre)
A grim-looking headline durable goods orders number for April seems inevitable today, given the troubles at Boeing.
26 June 2019 June's Very Weak CBI Distributive Trades Survey is no Cause for Alarm (Publication Centre)
News websites are emblazoned with the headline that retail sales are falling at their fastest rate since the 2008-to-09 recession.
27 April 2018 Did the ECB Just Tell Markets to Look Extra-Closely at the Q2 Data? (Publication Centre)
Yesterday's ECB meeting was comfortably uneventful for markets.
26 February 2019 Weak Industrial Output will Continue to Hurt the Mexican Economy in Q1 (Publication Centre)
Data released yesterday confirmed that the Mexican economy ended Q4 poorly; policymakers will take note.
26 August. 2015 Sharp Swings In LatAm Markets Highlights Their Vulnerabilities (Publication Centre)
LatAm currencies and stock markets have suffered badly in recent weeks, but Monday turned into a massacre with the MSCI stock index for the region falling close to 4%. Markets rebounded marginally yesterday, but remain substantially lower than their April-May peaks. Each economy has its own story, so the market hit has been uneven, but all have been battered as China's stock market has crashed. The downward spiral in commodity prices--oil hit almost a seven-year low on Monday--is making the economic and financial outlook even worse for LatAm.
24 January 2019 Future Fiscal Stimulus Is Still Secure, Despite Worse Borrowing Data (Publication Centre)
On the face of it, the trend in public borrowing deteriorated sharply late last year. In the three months to December, borrowing on the main "PSNB ex ." measure, which excludes banks owned by the public sector, was a trivial £0.3B, or 1.6%, lower than in the same months of 2017.
27 January 2017 Will Mr. Trump Single out Germany for its Large Trade Surplus? (Publication Centre)
The uncertainty over the new U.S. administration's economic policies new is clouding the outlook for the Eurozone economy. The combination of loose fiscal policy and tight monetary policy in the U.S. should be positive for the euro area economy, in theory. It points to accelerating U.S. growth--at least in the near term--wider interest rate differentials and a stronger dollar. In a " traditional" global macroeconomic model, this policy mix would lead to a wider U.S. trade deficit, boosting Eurozone exports.
7 December 2017 Job Gains Easily Strong Enough to Push Unemployment Down Further (Publication Centre)
We were a bit disappointed by the November ADP employment report, though a 190K reading in the 102nd month of a cyclical expansion is hardly a disaster.
4 July 2018 Household Balance Sheets in the Eurozone are in Good Shape (Publication Centre)
Data yesterday showed that Momentum in the EZ retail sector stumbled through middle of Q2.
4 July 2017 BanRep Speeds up Rate Cuts, Expect Further Stimulus this Month (Publication Centre)
BanRep accelerated the pace of easing last Friday, cutting Colombia's key interest rate by a bold 50 basis points, to 5.75%. Economic activity has been under severe pressure in recent months. The economy expanded by only 1.1% year-over-year in Q1, following an already weak 1.6% in Q4.
4 March 2019 A Solid Finish to 2018 for Colombia Momentum Will be Sustained (Publication Centre)
Colombia's GDP growth hit a relatively solid 2.8% year-over-year in Q4, up from 2.7% in Q3, helped by improving domestic fundamentals, which offset the drag from weaker terms of trade.
5 December 2018 Brazil's Industrial Output Started Q4 Softly, but the Trend is Rising (Publication Centre)
Brazil's key data flow started Q4 on a soft note, but we still believe that the economic recovery will gather strength over the next three-to-six months.
5 February 2019 Where is the Evidence of a Pick-up in China's Household Sector (Publication Centre)
The Caixin services PMI ticked down to 53.6 in January, from 53.9 in December.
4 February 2019 Behind the Wild, Unsustainable Jobs Numbers, Wage Gains are Rising (Publication Centre)
Where to start with the January employment report, where all the key numbers were off-kilter in one way or another?
4 Apr. 2016 ECB QE is Failing to Lift Equities, but Bond Yields are Being Crushed (Publication Centre)
Today's Sentix survey of Eurozone investor sentiment likely will remain downbeat. We think the headline index rose only trivially, to 6.0 in April from 5.5 in March, and that the expectations index was unchanged at 2.8. Weakness in equities due to global growth fears and negative earnings revisions likely is the key driver of below-par investor sentiment.
30 May 2017 BanRep Turns Cautious, but Expect Further Cuts as Activity will be Weak (Publication Centre)
BanRep cut Colombia's key interest rate by 25 basis points last Friday, to 6.25%. We were expecting a bolder cut, as economic activity has been under severe pressures in recent months.
30 July 2018 Growth is Strong, but 4%-plus Cannot be Sustained (Publication Centre)
The biggest single surprise in the second quarter GDP report was the unexpected $28B real-terms drop in inventories.
30 September 2016 Britain is Turning to Debt to Maintain an Illusion of Prosperity (Publication Centre)
Today's balance of payments figures for the second quarter likely will underline that the U.K. has financed strong growth in domestic consumption by amassing debts with the rest of the world at a breakneck pace.
31 August 2018 Andean Economies Remain Strong, but External Threats are Significant (Publication Centre)
Data released yesterday show that the Chilean economy had a weak start to the second half of the year.
31 May 2017 Eurozone Core Inflation Likely will Undershoot the Consensus Today (Publication Centre)
Today's advance EZ CPI report likely will show that inflation pressures eased in May. We think inflation slipped to 1.5% year-over-year, from 1.9% in April, as the boost to the core rate from the late Easter faded.
6 April 2018 The Game Theory of Sino-U.S. Relations, the Status quo is Out (Publication Centre)
The meta game between China and Mr. Trump started as soon as he had any possibility of winning the election in 2016.
6 August 2018 China's PMIs Point to a Loss of Momentum in Q3 (Publication Centre)
China's PMIs point to softening activity in Q3. The Caixin services PMI fell to 52.8 in July, from 53.9 in June.
6 November 2018 Should the PMIs' Gloomy Prognosis be Trusted This Time? (Publication Centre)
October's Markit/CIPS services survey added to evidence that the economy has started Q4 on a very weak footing.
6 May 2019 Payrolls Can't Sustain April's Pace, but Unemployment will Keep Falling (Publication Centre)
It would be astonishing if the May and June payroll numbers looked much like April's strong data, at least in the private sector.
7 August 2017 Brazil's Central Bank Set to Ease to 7.25% or Lower by Year-End (Publication Centre)
While we were out, Brazil's economic and political situation continued to improve, allowing the BCB to cut the Selic rate by 100bp to 9.25% at its July 26th meeting, matching expectations.
7 December 2018 Chile's Central Bank will Stay in Cautiously Hawkish Mode in Q1 (Publication Centre)
Chile's central bank, the BCCh, held its reference rate unchanged at 2.75% on Tuesday, in line with the majority of analysts' forecasts.
7 February 2019 Industrial and Retail Sectors to Drive December GDP Dip (Publication Centre)
December's GDP report, released next Monday, likely will maintain the flow of negative news on the U.K. economy.
6 March 2019 Andean Policymakers in no Rush to Modify their Neutral Policy Stance (Publication Centre)
Chile's IMACEC economic activity index rose 2.4% year-over-year in January, down from 2.6% in December, and 3.3% on average in Q4, thanks mostly to weak mining production.
6 July. 2015 Colombia's Economic Activity Resilient, but is it Sustainable? (Publication Centre)
Colombia started the second quarter strongly, with the ISE economic activity indicator--a monthly proxy for GDP--expanding a solid and surprising 3.6% year-over-year in April, up from 2.9% in March. The rate of growth is well above the 2.8% gain in Q1, con firming the country's resiliency in the face of lower oil prices. Still, growth has slowed sharply since the 4.4% increase in activity in 2014, as our first chart shows.
6 August 2018 Don't Worry About July's Payroll Numbers, Trend is Still 200K-plus (Publication Centre)
We are not worried, at all, by the slowdown in headline payroll growth to 157K in July from an upwardly-revised 248K in June.
6 August 2018 July Surveys Point to Below-Trend GDP Growth in Q3 (Publication Centre)
The MPC's view that the economy likely will grow at an above-trend rate over the coming quarters was challenged immediately last week by the PMIs.
6 December 2017 Low Rates Will Continue to Spur the Industrial Recovery in Brazil (Publication Centre)
Brazilian data strengthened early in Q4, supporting the case for the COPOM to slow the pace of rate cuts. We expect the SELIC policy rate to be lowered by 50bp today, to 7.0%.
6 December 2018 November's Services PMI Bolsters our Below-Consensus Q4 GDP Call (Publication Centre)
The slump in the Markit/CIPS services PMI in November to its lowest level since July 2016 provides the clearest indication yet that uncertainty about Brexit has driven the economy virtually to a stand-still.
30 January 2019 A Mixed Bag of PMI Readings in China won't Put Off Fresh Stimulus (Publication Centre)
China's official PMIs for January, due out tomorrow, will give the first indications of how the economy started the year.
30 August. 2016 Real GDP Growth in the Eurozone is About to Come Down a Notch (Publication Centre)
Money supply data in the euro point to a cyclical peak in GDP growth this year. Headline M3 growth fell to 4.8% year-over-year in July, from 5.0% in June, chiefly due to a slowdown in narrow money. M1 growth declined to 8.4%, from 8.7%, as a result of weaker momentum in overnight deposits and currency in circulation.
28 November 2017 Political Uncertainty to Continue in Mexico Despite a Brief Pause (Publication Centre)
Mexico's political panorama seems to be becoming clearer, at least temporarily. This should dispel some of the uncertainty that has been hanging over the economy in recent months.
28 June. 2016 The Case for Stronger U.S. Economic Growth is Still Robust (Publication Centre)
Difficult though it is to tear ourselves away from Britain's political and economic train-wreck, morbid fascination is no substitute for economic analysis. The key point here is that our case for stronger growth in the U.S. over the next year is not much changed by events in Europe.
28 November 2018 No Level of Spin Can Paint China's Industrial Profits in a Better Light (Publication Centre)
The latest profits data out of China were grim, as we had expected.
28 November. 2016 Household Consumption in France Will Recover Lost Ground in Q4 (Publication Centre)
The outlook for French consumers' spending improved this month, at the margin. The headline consumer sentiment index was unchanged at 98 in November, but most forward-looking indicators rose. Consumers' spending in was flat in Q2 and Q3, following a 1.1% jump in the first quarter.
29 August 2017 Hurricane Harvey will Depress September Output and Payrolls (Publication Centre)
The terrible scenes from Texas will play out in the economic data over the next few weeks.
28 June 2018 Second Quarter Growth is on Track to be a Blockbuster (Publication Centre)
The decline in headline durable goods orders in May, reported yesterday, doesn't matter.
28 February 2017 Should the ESI's Upbeat Growth Signal be Trusted? (Publication Centre)
The E.C.'s Economic Sentiment Indicator for the U.K., released yesterday, painted an upbeat picture of the economy's recent performance. The ESI picked up to 109.4 in February from 107.1 in January; its average level since 1990 is 100. February's reading was the highest since December 2015, and it slightly exceeded the E.U.'s average of 108.9.
27 September 2018 China's Macro Stance is Loosening is it Business as Usual (Publication Centre)
In yesterday's Monitor, we laid out how conditions last year were conducive to Chinese deleveraging, and how the debt ratio fell for the first time since the financial crisis.
28 August 2018 Germany's Economy is Resilient in the Face of External Risks (Publication Centre)
Friday's detailed GDP data in Germany confirm that the euro area's largest economy performed strongly in the second quarter.
28 August 2018 Mexico Struggled at the End of the First Half Will it Rebound (Publication Centre)
The Mexican economy shrank by 0.2% quarter- on-quarter in Q2, according to the final GDP report, a tenth worse than the preliminary reading.
28 February 2017 The Eurozone Business Cycle Upturn is Resilient and Robust (Publication Centre)
Money supply dynamics in the Eurozone continue to signal a solid outlook for the economy. Headline M3 growth eased marginally to 4.9% year-over-year in January, from 5.0% in December; the dip was due to slowing narrow money growth, falling to 8.4% from 8.8% the month before. The details of the M1 data, however, showed that the headline chiefly was hit by slowing growth in deposits by insurance and pension funds.
29 August 2018 Mexico's Prospects to Improve Following the New NAFTA Pact (Publication Centre)
Mexico's risk profile and financial metrics have improved in recent days, following news of a preliminary bilateral trade deal with the U.S. on Monday.
29 January 2018 The Investor's Guide to the Business Cycle in the Eurozone (Publication Centre)
Money supply data in the EZ continue to suggest that headline GDP growth will slow soon.
3 October 2017 Robust Overseas Demand Isn't Persuading Manufacturers to Invest (Publication Centre)
U.K. manufacturers are benefiting from rapid growth in the Eurozone, but increasingly they are being held back by weak domestic demand.
3 July 2019 Brazil's Industrial Sector is Showing Early Signs of Gradual Stabilization (Publication Centre)
Data released this week in Brazil underscored the effect of weaker external conditions. This adds to the poor domestic demand picture, which has been hit by high, albeit easing, political uncertainty.
30 April 2018 The Q1 Slowdown Wasn't Just Weather-related (Publication Centre)
Last week's preliminary estimate of Q1 GDP has extinguished any lingering chance that the MPC might raise interest rates at its next meeting on May 10.
30 April 2019 Focus on Accelerating M1 Growth amid Still-Poor Survey Data (Publication Centre)
Yesterday's economic numbers in the Eurozone were mixed, but we are inclined to see them through rose-tinted glasses.
30 August 2017 Argentina's Recovery is Gaining Traction but Inflation is Still a Risk (Publication Centre)
Recently data from Argentina continue to signal a firming cyclical recovery. According to INDEC's EMAE economic activity index, a monthly proxy for GDP, the economy grew 4.0% year-over-year in June, up from an already-solid 3.4% in May.
3 July 2018 Tariffs and Truck Shortages are Creating Industrial Bottlenecks (Publication Centre)
The startling jump in supplier delivery times in the June ISM manufacturing survey, to a 14-year high, was due--according to the ISM press release--to disruptions to steel and aluminum supplies, transportation problems and "supplier labor issues".
3 July 2017 Will the Argentinian Economy be Oblivious to Political Risks? (Publication Centre)
Argentina's economic data released last week confirm that the economy is improving. Our core view, for now, is that the economy will continue to defy rising political uncertainty, both domestic and external.
29 May 2019 Consumer and Business Confidence Show Diverging Responses to Brexit (Publication Centre)
May's E.C. Economic Sentiment survey was a blow to hopes that the six-month stay of execution on Brexit would facilitate a recovery in confidence.
29 November 2018 We're Holding our Non-Consensus View for no Bank of Korea Hike (Publication Centre)
The Monetary Policy Board of the Bank of Korea will tomorrow hold its final meeting for the year.
29 October 2018 The Glass is Half-Full for French and German Households (Publication Centre)
Friday's consumer sentiment data in the two main Eurozone economies were mixed.
29 September 2017 Revisions to Show Higher Household Saving, but a Worse External Deficit (Publication Centre)
The picture of the economy's recent performance will be redrawn today, when the national accounts are published.
27 October. 2016 GDP Set to Exceed the Consensus in Q3, But Underwhelm Thereafter (Publication Centre)
Today's preliminary estimate of Q3 GDP looks set to indicate that the Brexit vote has had little detrimental impact on the economy so far.
15 July 2019 Mexico's Industrial Sector Remains Subdued Banxico to Cut Soon (Publication Centre)
Downbeat sectoral data and weakening consumer spending numbers indicate that the Mexican economy remains in bad shape.
14 September 2018 A Slightly Confusing ECB Meeting, but No Change to the Key Message (Publication Centre)
The ECB's key message was unchanged yesterday. The main refinancing and deposit rates were maintained at zero and -0.4%, respectively, and they are expected "to remain at their present levels at least through the summer of 2019."
14 Sept. 2015 Mexico's industrial output slowed in August: The recovery Is feeble (Publication Centre)
Peru's central bank, the BCRP, capitulated to the sharp PEN depreciation this year--and acceleration of inflation--and unexpectedly increased interest rates by 25bp to 3.50% last Thursday, for the first time since January. This was a brave step, showing that policymakers are extremely worried about the pace of inflation, despite activity still running below potential. The BCRP argues, though, that activity will accelerate during the coming quarters, so they need now to control inflation by anchoring expectations.
15 August 2018 Germany Carried the Day for the Eurozone Economy in Q2 (Publication Centre)
Yesterday's second EZ Q2 GDP report was slightly more upbeat than the advance estimate.
15 August 2018 Soft July Headline Retail Sales Numbers will Hide a Solid Core (Publication Centre)
The first wave of domestic third quarter data crashes ashore this morning.
15 August. 2016 Dovish, but Vigilant Policymakers in LatAm - the Fed is the Key Risk (Publication Centre)
Last week, Banxico, the BCCh and the BCRP all left their reference rates on hold. Their currencies have remained relatively stable in recent months and inflation pressures are under control. In Mexico, Banxico has adopted a more discretionary approach, following two 50bp hikes this year.
14 March 2019 Business Capex is Under Pressure, Despite January's Rebound in Orders (Publication Centre)
The January durable goods numbers, viewed in isolation, were not terrible.
14 August 2018 Turkey's Meltdown is no Threat to the U.S. Economy, or Banks (Publication Centre)
Turkey has all the problems you don't want to see in an emerging market when the U.S. is raising interest rates.
13 March 2017 Will the Labor Data Push the Fed to Hike Again in June? (Publication Centre)
With rates now certain to rise this week, the real importance of the employment picture is what it says about the timing of the next hike. To be clear, we think the Fed will raise rates again in June, and will at that meeting add another dot to the plot, making four hikes this year.
13 June 2019 The Used Car Drag on Core Inflation Probably is Over Trend Still 2% (Publication Centre)
The core CPI rose only 0.1% in May, marking the fourth straight soft reading.
13 November 2017 German GDP Growth Likely Slowed in Q3, but Trend is Robust (Publication Centre)
Macroeconomic data in the euro area were mixed in our absence.
14 August 2017 A Great First Half of 2017 for the EZ Economy, But it Won't Last (Publication Centre)
While we were away, the advance Q2 GDP report in the Eurozone confirmed our expectations of a strong first half of the year for the economy. Real GDP rose 0.6% quarter-on-quarter, the same pace as in Q1, lifting the year-over-year rate to a cyclical high of 2.1%.
14 August 2017 China's Slowdown Surprised Japan, Inventories to Boost Q2 GDP (Publication Centre)
Japanese domestic demand probably strengthened in Q2, with both private consumption and fixed investment accelerating. Trade and inventories are the key swing components for GDP growth.
15 Feb. 2016 Central Banks Keep Tightening Bias As USD Still A Concern (Publication Centre)
LatAm economies are being battered by high inflation triggered by currency sell-offs and El Niño supply shocks, so rates have had to rise despite the challenging global environment. Peru's central bank, the BCRP, was forced to increase interest rates by 25bp to 4.25% last Thursday, the fourth hike in six months, as inflation is far above the central bank's 1-to-3% target range.
15 July 2019 Jump in EZ Industrial Output in May won't be Sustained (Publication Centre)
Manufacturers in the Eurozone stood tall mid-way through Q2, despite still-subdued leading indicators.
16 May 2019 The Industrial Sector is Bottoming April's IP Data are Misleading (Publication Centre)
We are not worried about the reported drop in April manufacturing output, which probably will reverse in May.
16 July. 2015 Upbeat Yellen Dismisses European Risk - Focus Back on U.S. Data (Publication Centre)
Fed Chair Yellen said nothing very new in the core of her Monetary Policy Testimony yesterday, repeating her view that rates likely will have to rise this year but policy will remain accommodative, and that the labor market is less tight than the headline unemployment rate suggests. The upturn in wage growth remains "tentative", in her view, making the next two payroll reports before the September FOMC meeting key to whether the Fed moves then.
16 October 2018 Will Fiscal Stimulus Boost Eurozone GDP growth in 2019 (Publication Centre)
The sovereign debt crisis in the euro area was a macroeconomic horror story
17 April 2019 Households are Primed for a Housing Upturn, but not Developers (Publication Centre)
China's property market looks to be turning the corner, going by the stronger-than-expected March report.
17 August 2017 The Manufacturing Recovery Continues, but no Boom in Sight (Publication Centre)
The elevated readings from the ISM manufacturing survey this year have not been followed by rapid growth in output. The headline ISM averaged 55.8 in the second quarter, a solid if unspectacular reading. But output rose by only 1.2% year-over-year, and by 1.4% on a quarterly annualized basis.
16 August. 2016 Core CPI Inflation is Set for New Cycle Highs, but Not Just Yet (Publication Centre)
Core CPI inflation plunged in the aftermath of the crash, reaching a low of 0.6% in October 2010. It then rebounded to a peak of 2.3% in the spring of 2012, before subsiding to a range from 1.6-to-1.9%, held down by slow wage gains and the strengthening dollar, until late last year. Faster increases in services prices and rents lifted core inflation to 2.3% in February, matching the 2012 high, but it has since been unchanged, net.
16 August 2018 Mixed Signals from Italy on the 2019 Budget Prepare for Volatility (Publication Centre)
Italy's political leadership faces its first biggest test in autumn, when it has to deliver its first budget.
15 May. 2015 Oil Still Depressing Industrial Production (Publication Centre)
The consequences of the collapse in oil prices continue to reverberate through the sector. The number of rigs in operation is still falling rapidly, but the rate of decline is slowing. According to data from Baker Hughes, Inc., an average of 23 rigs per week have ceased operation over the past four weeks, the slowest decline since December.
15 June 2018 May's Surge in Retail Sales is Just a Weather-Related Blip (Publication Centre)
The trend in retail sales no longer looks quite so flat, following yesterday's May report. The level of sales volumes in April was revised up by 0.3%.
15 Sept. 2015 August Retail Sales "Soft" Again? But the Real Story is Different (Publication Centre)
Today's wave of data will be mixed, but most of the headlines are likely to be on the soft side, so the reports are very unlikely to trigger a wave of last minute defections to the hawkish side of the FOMC. As always, though, the headlines don't necessarily capture the underlying story, and that's certainly been the case with the retail sales data this year. Plunging prices for gas and imported goods, especially audio-video items, have driven down the rate of growth of nominal retail sales, but real sales have performed much better.
16 August 2017 As Good as it Gets for German GDP Growth in 2017? (Publication Centre)
Yesterday's Q2 GDP report in Germany was solid, but the headline disappointed slightly. GDP growth slowed to 0.6% quarter-on-quarter from an upwardly- revised 0.7% rise in Q1. The year-over-year rate, however, rose to 2.1% from a revised 2.0% in Q1.
16 August 2018 CPI Inflation is on Track for 2% by December, Despite July's Rise (Publication Centre)
CPI inflation is on track to fall back to 2.0% in the winter and below the MPC's target thereafter, despite rising to 2.5% in July, from 2.4% in June.
13 Jan. 2016 Even Senior Creditors are Not Safe in the Eurozone Banking Industry (Publication Centre)
Investors in Eurozone banks continue to face uncertain times, despite the ECB's best efforts to prop up the economy and financial markets via QE. The latest hit to confidence comes from the bail-in of selected senior debt in Portugal's Banco Espirito Santo. When the troubled lender was restructured in mid-2014, the equity and junior debt were left in a "bad" bank--and were virtually wiped out--while the deposits and senior debt went into the "good" bank Novo Banco. Senior debt holders expecting to recoup their money, however, were startled earlier this month by the decision to "re-assign" five selected bonds with total face value of €2B from Novo Banco to the bad bank, in effect wiping out the investors.
12 October 2018 Brazilian Households are in Good Shape, Despite Rising Political Risk (Publication Centre)
Data released yesterday support our view that the Brazilian retail sector has gathered strength in recent months, following a weak Q2, when activity was hit by the truckers' strike.
10 August 2018 Near-Term Core Inflation Risk is Modest the Fed Fears the Future (Publication Centre)
The continued modest rate of increase in unit labor costs makes it hard to worry much about the near-term outlook for core inflation.
10 August 2018 China's CPI Inflation is Likely to Slow Despite Tariff Hikes (Publication Centre)
China's CPI inflation rose to 2.1% in July, from 1.9% in June.
10 August. 2016 When Rates are Close to Zero, Behavior Changes (Publication Centre)
Slowly but surely, it is becoming respectable to argue that central bank policy in the developed world is part of the problem of slow growth, not the solution. We have worried for some time that the signal sent by ZIRP--that the economy is in terrible shape--is more than offsetting the cash-flow gains to borrowers.
10 Feb. 2016 Yellen to Sound Cautious Today, but Can't Ignore the Labor Market (Publication Centre)
Fed Chair Yellen today needs to strike a balance between addressing investors' concerns over the state of the stock market and the risks posed by slower growth in Asia, and the tightening domestic labor market.
10 January 2018 German Industrial Output Growth Won't Accelerate Much Further (Publication Centre)
Yesterday's economic data in Germany were stellar, but base effects mean that the story for Q4 as a whole is less upbeat.
10 August 2017 Chinese Producer Price Inflation is Proving Sticky (Publication Centre)
Chinese PPI inflation was unchanged at 5.5% in July; it had been expected to rise modestly. Officially, inflation peaked at 7.8% in February, but we think this peak was artificially high, thanks to seasonal effects. The slowing in PPI inflation since the peak appears to suggest that monthly price gains have slowed sharply. We find little evidence to support this.
10 Apr. 2015 Bond duration in the Eurozone is being crushed by sovereign QE (Publication Centre)
The distortions in European fixed income markets have intensified following the initiation of the ECB's sovereign QE program. In the market for sovereigns, German eight-year bond yields are within a touching distance of falling below zero, and this week Switzerland became the first country ever to issue a 10-year bond with negative yields.
1 August 2018 Mexico's Q2 GDP Dips, Due to Weakness in the Industrial Sector (Publication Centre)
Yesterday's first estimate of Q2 GDP in Mexico confirmed that the economy lost momentum in recent months.
1 August 2018 Is Consumers' Confidence Really at a 21-month High? (Publication Centre)
We're inclined to place little weight on July's E.C. Economic Sentiment Survey, which showed that consumers' confidence has picked up to its highest level since October 2016; see our first chart.
1 August 2018 The BoJ Obfuscates as it Knocks Timidly on the Exit Door (Publication Centre)
The BoJ had two tasks at its meeting yesterday.
1 June. 2016 Mounting Evidence of a Peak in the EZ Business Cycle This Year (Publication Centre)
Money supply data in the euro area disappointed yesterday. Growth in M3 fell to 4.6% year-over-year in April, from 5.0% in March, due to an accelerated fall in the pace of narrow money growth. M1 rose 9.7% year-over-year, down from 10.1% in March. It was hit by lower growth in both overnight deposits and currency in circulation.
1 March 2019 Q4 Growth Rescued by Business Spending on IP, but Q1 Set to Soften (Publication Centre)
A quick rebound in growth, after the slowdown to a reported 2.6% in the fourth quarter, is unlikely.
10 July 2018 Businesses' Capex Plans Set to Surge, Following Stronger Earnings (Publication Centre)
For some time now, we have puzzled over the softness of small firms' capital spending intentions, as measured by the monthly NFIB survey.
10 July 2019 Time for a Serious Debate about More QE in the Eurozone? (Publication Centre)
Our base case remains a 10bp cut in the deposit rate, to -0.5%, in September.
11 May 2018 Use the Euro to Predict Eurozone Core Inflation at Your Peril (Publication Centre)
The Easter effect depressed services inflation more than markets expected in April, but the main downside surprise was the tepid rebound in non-energy goods inflation.
11 Mar. 2015 Can the Uptick in New Home Sales be Sustained? (Publication Centre)
In three of the past four months, new home sales have been reported above the 460K top of the range in place since early 2013. Sales dipped below this mark in November, when the weather across the country as a whole was exceptionally cold, relative to normal.
11 September 2018 The Trade Wars are Neutral in China's Trade Surplus, so far (Publication Centre)
At the time of writing, Mr. Trump reportedly is finalising plans to impose tariffs of up to 25% on a further $200B of imports from China.
12 June 2019 Are CPI Rents Accelerating, or are the Recent Big Gains Just Noise (Publication Centre)
In March, CPI rents--the weighted average of primary and owners' equivalents rents--rose by 0.35% month- to-month.
12 November 2018 Mexico's Industrial Sector did Well in Q3, but Politics are a Threat for 2019 (Publication Centre)
The Mexican economy gathered strength in Q3, due mainly to the strength of the services sector, and the rebound in manufacturing, following a long period of sluggishness, helped by the solid U.S. economy and improving domestic confidence.
11 June 2018 German Construction is Pushing Ahead, Manufacturing is Stalling (Publication Centre)
The bad news in German manufacturing keeps coming thick and fast.
11 February 2019 Winter Bonuses will Help Q4 GDP, but they Mask Underlying Softness (Publication Centre)
Wage growth in Japan accelerated to a six-month high in December, inching up to 1.8% year-over-year, from November's 1.7%.
10 June 2019 Industrial Production in the EZ will Slow Significantly in Q2 (Publication Centre)
Friday's data provided the first bit of evidence that manufacturing in the Eurozone is headed for a slowdown in Q2, partly reversing the strength in Q1.
10 June. 2015 Inflation In Mexico Falls Below the Target - No Rush to Increase Rates (Publication Centre)
Mexico's headline inflation fell to a record low of 2.9% in May, down from 3.1% in April and below the middle of Banxico's inflation target, 2-to-4%, for the first time since May 2005. C ore inflation was unchanged at 2.3% in May; higher services prices were offset by a slowing in the rate of increase of goods prices to 2.4% from 2.7% in April, confirming that the pass-through effect from the MXN's depreciation has been very limited.
10 September 2018 Japan's Big Wage Increases Point to Robust Q3 Private Consumption (Publication Centre)
Japan's labour cash earnings rose by 1.5% year-over- year in July, a strong result in the Japanese context, if it hadn't been preceded by the 3.6% leap in June.
11 August 2017 Brazil's Inflation Rate is Falling, Mexico's Will Soon Follow (Publication Centre)
Inflation pressures in Brazil are now well- contained, with the headline rate falling to a decade low in July. We think inflation is now close to bottoming out, but the current benign rate strengthens our base case forecast for a 100bp rate cut at the next policy meeting, in September.
17 August 2018 Pessimism Towards Retailers Looks Warranted, Despite July's Sales Rise (Publication Centre)
Equity prices for U.K. retailers have performed woefully since the E.U. referendum. The FTSE All-Share Index for general retailers has underperformed the overall All-Share Index by nearly 30% since the Brexit vote.
17 Dec. 2014 Colombia's Robust Domestic Demand is Limiting the Oil Price Hit (Publication Centre)
Colombia is more vulnerable to falling oil prices than most other LatAm economies. That's why the COP has dropped by 20% since June, outpaced only by the rouble, which has problems beyond falling oil prices.
22 March 2019 China's 2018 19 Stimulus is Smaller than in the 2015 16 Round (Publication Centre)
China's growth can be decomposed into the structural story and the mini-cycle, which is policy- driven.
22 March 2018 China's State Capital to Nourish Tech but Neglect Households (Publication Centre)
So much has changed in China over the last six months that we are taking the opportunity in this Monitor to step back and gain an overview of where the economy is going in the long term.
22 May 2018 Maduro Wins Bogus Presidential Election, what will Happen Next? (Publication Centre)
President Nicolás Maduro has "won' another six-year term, as expected, even as millions of Venezuelans boycotted the election.
22 November 2017 "Spreadsheet Phil" Unlikely to Alter Austerity Formula (Publication Centre)
Public sector borrowing still is on course to greatly undershoot the March Budget forecasts this year, despite October's poor figures.
22 Oct. 2015 Markets Will Have to Settle for Just Dovish ECB Rhetoric Today (Publication Centre)
Investors looking for more QE and rate cuts will be disappointed by ECB inaction today. We think the Central Bank will keep its main interest rates unchanged, and also maintain the pace of asset purchases at €60B a month. We do, however, look for a slight change in language, hinting that QE is likely to continue beyond September next year.
22 June. 2015 Why is the Fed so Cautious About the Trajectory of Unemployment? (Publication Centre)
The closer we look at the Fed's new forecasts, the stranger they seem. The FOMC cut its GDP estimate for this year and now expects the economy to grow by 1.9%--the mid-point of its forecast range--in the year to the fourth quarter. Growth is then expected to pick up to 2.6% next year, before slowing a bit to 2.3% in 2017. Unemployment, however, is expected to fall much less quickly than in the recent past.
22 June 2018 The MPC Glosses Over Weak Data, but Must Confront Reality in August (Publication Centre)
The MPC was more hawkish than we and most investors expected yesterday. The vote to keep Bank Rate at 0.50% was split 6-3, f ollowing Andy Haldane's decision to join the existing hawks, Ian McCafferty and Michael Saunders.
21 November 2018 The Curious Case of the Crash in the French Housing Market (Publication Centre)
The French economy has suffered from weakness in manufacturing this year, alongside the other major EZ economies.
21 June 2018 Business Surveys Set to Suffer from Tariffs, but the Hit will be Uneven (Publication Centre)
The startling jump in the Philly Fed index in May, when it rose 11.2 points to a 12-month high, seemed at first sight to be a response to fading tensions over global trade.
22 August 2017 Economic Activity is Turning Up in LatAm, but no Boom Coming (Publication Centre)
LatAm's economies are gradually rebounding, boosted by easier monetary policy in most countries, falling inflation, and a relatively calm external backdrop.
22 August 2018 Sharp Fall in Borrowing Removes Need for Fiscal Tightening in 2019 (Publication Centre)
The latest public finance figures continue to imply that the Chancellor will be able to change course later this year in the Autumn Budget so that fiscal policy doesn't drag on GDP growth next year.
22 August. 2016 Fiscal Problems Will be Exposed as Brazil's Political Mess Clears (Publication Centre)
Brazil's economic performance has improved marginally in recent months, with inflation falling and economic activity and sentiment data stabilizing, or even increasing modestly. The latest regional economic activity report, for instance, showed that although overall output declined again on a sequential basis in March-to-May, three of the five regions expanded.
23 August 2017 All Systems Go for Italy's Economy, but Don't ask About the Long Run (Publication Centre)
The performance of Italy's economy in the first half of 2017 proves that the strengthening euro area recovery is a tide lifting all the r egion's boats.
23 August 2017 New Home Sales set for Cycle Highs, but Only Temporarily (Publication Centre)
The level of new home sales is likely to hit new cycle highs over the next few months, with a decent chance that today's July report will show sales at their highest level since late 2007.
24 August 2017 Markets Will Look in Vain for QE Clues from Mr. Draghi this Week (Publication Centre)
Eurozone investors are fixed on Mr. Draghi's speaking schedule this week, looking for hints of the ECB's future policy path.
24 April 2019 Industrial Sentiment is Stabilizing, Despite the Richmond Fed Drop (Publication Centre)
Yesterday's data were mixed, though disappointment over the weakening in the Richmond Fed survey should be tempered by a quick look at the history, shown in our first chart.
24 August 2017 Second Estimate of Q2 GDP to Show U.K. Missing out on G7 Boom (Publication Centre)
We expect today's second estimate of Q2 GDP to confirm that the U.K. has been the slowest growing G7 economy this year.
24 August 2018 The Glass is Half-Full in the Eurozone PMI Data for August (Publication Centre)
Yesterday's PMI data in the Eurozone economy were a mixed bag.
24 August. 2015 Better Economic News Fails to Lift LatAm Sentiment - Fx Still Trashed (Publication Centre)
Mexico's economy continues to withstand several headwinds, especially the sharp currency depreciation--shown in our first chart--falling commodity prices, and the tough external environment. The country is still one of the economic bright spots in the region, thanks to its resilient domestic demand. June retail sales rose 5.4% year-over-year, well above expectations, and up from 4.1% in May. The underlying trend is positive, averaging 4.8% in the second quarter, well above its 2014 pace.
23 November 2018 Slowing Inflation won't Deter the BoJ from Further Adjustments (Publication Centre)
October likely was the peak in Japanese CPI inflation, at 1.4%, up from 1.2% in September. The uptick was driven by the non-core elements, primarily food.
23 January 2019 Ignore Korea's Consensus-Beating Q4 GDP Print it's not Sustainable (Publication Centre)
Korea's preliminary Q4 GDP report was stronger than nearly all forecasters, including ourselves, expected.
23 August 2018 Political Risks is Rising Sharply in Brazil When Will Pressures Abate (Publication Centre)
The beginning of the electoral campaign last week in Brazil bodes uncertain results and a very close competition for the presidential elections on October 7.
23 February 2018 Even Q4's Modest GDP Growth Relied on Unsustainable Supports (Publication Centre)
U.K. activity data have consistently surprised to the downside over the last month.
23 February 2018 IFO and INSEE Business Surveys Compound February Misery (Publication Centre)
Yesterday's national surveys in the EZ confirmed the downbeat message from the PMIs and consumer sentiment data earlier this week.
23 January 2018 Why Have Rate Expectations Stopped Driving EURUSD? (Publication Centre)
In April last year, something odd happened in the FX market.
21 Jan. 2015 Colombia Will Lose Momentum in 2015, But Don't Panic Just Yet (Publication Centre)
Colombia is one of the few larger economies in Latin America to have enjoyed solid, positive economic growth over the past two years. But lower commodity prices and last year's central bank tightening, to curb high inflation generated by strong growth, have started to become visible in the main economic data.
21 December 2017 Q3 Accounts to Reveal Temporary Supports to Households' Spending (Publication Centre)
The national accounts, released on Friday, likely will restate that quarter-on-quarter GDP growth picked up to 0.4% in Q3, from 0.3% in Q2.
19 June 2019 Another One Bites the Dust Growth Cools Temporarily in Peru (Publication Centre)
Peru's April supply-side monthly GDP data confirm that the economic rebound lost momentum at the start of the second quarter.
19 August. 2016 Retail Data Point to Soft Second Quarter GDP Growth in Colombia (Publication Centre)
Data this week confirmed that private spending in Colombia stumbled in June. Retail sales fell 0.7% year-over-year, from an already poor -0.4% in May. The underlying trend is negative, following two consecutive declines, for the first time since late 2009. Domestic demand remains subdued as consumers are scaling back spending due to weaker real incomes, lower confidence and tighter credit and labor market conditions.
19 June. 2015 The Eurozone's External Surplus will be the World's Biggest, Soon (Publication Centre)
Solid trade data for April indicate a strong start to Q2 for the Eurozone's external balance, though a €3.2B fall in German net factor income will weigh on the primary income number.
2 August 2018 The Door for a Bank of Korea Rate Hike in August Closes Further (Publication Centre)
The past two days have seen a slew of data that should keep the hawks in the Bank of Korea at bay during the Board's meeting at the end of this month.
2 Feb. 2015 Will core inflation push the ECB to do even more QE this year? (Publication Centre)
The ECB moved ahead of the curve this month with its QE program of €60B per month, starting in March. But still-abysmal inflation data will prompt journalists to ask Mr. Draghi, at the next ECB meeting, about the conditions under which the central bank plans to do more.
18 October. 2016 Headline Inflation is Set to Soar, Rendezvous With Core Next Spring (Publication Centre)
In September last year, headline CPI inflation stood at exactly zero. Today, we expect to see a 1.5% print, thanks mostly to the fading impact of falling energy prices.
18 May. 2016 Did the FOMC Discuss Brexit Risk at the April Meeting? (Publication Centre)
The April FOMC statement dropped the March assertion that "global economic and financial developments continue to pose risks" to the U.S. economy, even though growth "appears to have slowed". Instead policymakers pointed out that "labor conditions have improved further", perhaps suggesting they don't take the weak-looking March data at face value. We certainly don't.
17 May 2018 Labor Market Indicators are Contradictory, Which to Trust? (Publication Centre)
Some of the recent labor market data appear contradictory. For example, the official JOLTS measure of the number of job openings has spiked to an all-time high, and the number of openings is now greater than the number of unemployed people, for the first time since the data series begins, in 2001.
17 July 2017 Mexico's Industrial Sector Remains Subdued, Oil is Mainly to Blame (Publication Centre)
Upbeat survey data and relatively resilient consumer spending numbers indicate that the Mexican economy is in good shape, despite a marginal slowdown in most of Q2.
17 October 2018 Did FOMC Members Discuss Rising R-star at the September Meeting (Publication Centre)
The median of FOMC members' estimates of longer run nominal r-star--the rate which would maintain full employment and 2% inflation--nudged up by a tenth in September to 3.0%, implying real r-star of 1%.
18 August 2017 Higher Core Inflation in the Eurozone Should be a No Brainer (Publication Centre)
Inflation data are known to defy economists' forecasts, but it should in principle b e straightforward to predict the cyclical path of EZ core inflation. It is the longest lagging indicator in the economy, and leading indicators currently signal that core inflation pressures are rising.
18 August 2017 Sluggish Income Growth has Held Back Consumption, that will Change (Publication Centre)
Consumer confidence surveys have risen since the elections to levels consistent with very rapid growth in real spending.
2 May 2019 Are Consensus-Beating Economic Data a Signal to Buy the Euro (Publication Centre)
In broad terms, the euro has followed the EZ economy in the past 12-to-18 months.
2 May 2019 Households' Spending will Tick Over Just Fine Without a Credit Impulse (Publication Centre)
GDP growth currently is subdued by historical standards, but at least it is not debt-fuelled.
21 August 2017 Chile's Economy is Improving, but Expect Only Modest Growth in H2 (Publication Centre)
Chile's Q2 GDP report, released on Friday, confirmed that the economy gathered momentum in recent months, following an alarmingly weak start to the year.
20 September 2018 Business Surveys Wobbling in the Face of Higher Rates (Publication Centre)
In the wake of the unexpectedly weak September Empire State survey, released Monday, we are now very keen to see what today's Philadelphia Fed survey has to say.
21 August 2017 Construction is Propelling the Eurozone Economy in 2017 (Publication Centre)
The construction sector remains a stand-out performer in the Eurozone economy, despite stumbling at the end of Q2.
21 August 2018 Chile's Fundamentals are Improving This Likely Will Offset External Risks (Publication Centre)
Chile's Q2 GDP report, released yesterday, confirmed that the economy gathered strength in the first half of the year, consolidating a strong recovery that started in Q3 2017.
21 August 2018 The End of the Beginning for the Greek Public Debt Tragedy (Publication Centre)
Greece's exit from eight years of near constant bail-out programs raises as many questions as it answers.
20 May 2019 Banxico Maintains its Cautious Tone as In ation Spikes Temporarily (Publication Centre)
Mexico's recent rebound in inflation and a more volatile financial environment, due to increasing global trade tensions, forced Banxico to keep its policy rate unchanged at 8.25% last Thursday.
20 March 2018 Up or down for the EZ current account surplus in 2018? (Publication Centre)
The euro area's trade advantage with the rest of the world slipped at the start of the year.
2 November 2017 Will House Prices Continue to Rise When Mortgage Rates Jump? (Publication Centre)
The MPC likely will raise interest rates today, but as we explained here, it probably will revise down its medium-term inflation forecast, signalling that it is content with the further 35bp tightening currently priced-in by markets for 2018.
2 November 2018 October Payrolls are Hurricane-Wild, but AHE is Headed for 3%-plus (Publication Centre)
Don't bet the farm on today's October payroll numbers, which will be hopelessly--and unpredictably-- compromised by the impact of hurricanes Florence and Michael.
2 October 2018 Good News for Mexico's Prospects, the USMCA will Boost Sentiment (Publication Centre)
The U.S. reached a trade agreement with Canada on Sunday, adding its northern neighbour to the pact sealed a month ago with Mexico.
20 February 2019 The EZ's Current Account Surplus Should Increase, a Bit, in Q1 (Publication Centre)
The Eurozone's external accounts were extremely volatile at the end of Q4.
24 August. 2015 U.S and U.K. Demand, Not China, Drives the Eurozone Trade Surplus (Publication Centre)
The sell-off in risky assets intensified while we were away, driven by China's decision to loosen its grip on the currency, and looming rate hikes in the U.S. The Chinese move partly shows, we think, the PBoC is uncomfortable pegging to a strengthening dollar amid the unwinding investment boom and weakness in manufacturing.
12 January 2018 China's SAFE Could end up Diversifying Away from USD After all (Publication Centre)
China's State Administration of Foreign Exchange-- SAFE--yesterday refuted claims, made earlier in the week, that senior government officials had recommended slowing or halting purchases of U.S. Treasuries.
EZ Datanote: Industrial Production, Eurozone, May (Publication Centre)
In one line: Great, but probably not enough to salvage the Q2 number.
EZ Datanote: Industrial Production, Eurozone, April (Publication Centre)
In one line: Not terrible, but outlook for Q2 as a whole is grim.
7 November. 2016 Is Sterling Now Back on a Sustained Recovery Path? (Publication Centre)
Upbeat PMIs, the MPC's abandonment of its easing bias and the High Court ruling that only a parliamentary vote--and not the Prime Minister--can trigger Article 50, all helped sterling to make up some lost ground last week.
EZ Datanote: Industrial Production, France, March (Publication Centre)
In one line: Soft, and the outlook for Q2 isn't great.
EZ Datanote: Industrial Production, Germany, April (Publication Centre)
In one line: Back to reality?
LatAm Datanote: Industrial Production and unemployment, Chile, May (Publication Centre)
In one line: A marginal improvement in manufacturing, offset by poor mining activity.
EZ Datanote: INSEE Business Sentiment and Advance PMIs, France, May (Publication Centre)
In one line: Not bad at all.
EZ Datanote: Industrial Production, Germany, March (Publication Centre)
In one line: Great, but it won't last.
EZ Datanote: Industrial Production and Trade, Germany, May (Publication Centre)
In one line: So-so, but downside risks to the Q2 GDP headline linger.
EZ Datanote: EZ Industrial Production and ZEW (Publication Centre)
In one line: Solid production data in Q1, but setback looms in Q2.
9 August. 2016 London Will Continue to Bear the Brunt of the Downturn (Publication Centre)
London has been the U.K.'s growth star for the last two decades. Between 1997 and 2014, yearover-year growth in nominal Gross Value Added averaged 5.4% in London, greatly exceeding the 4% rate across the rest of the country. Surveys since the referendum, however, indicate that the capital is at the sharp end of the post-referendum downturn.
9 August 2018 War and Peace in China's Trade Data... and Some Capital Flows (Publication Centre)
China's export data shows little impact from trade tensions so far.
9 August 2018 June GDP Data to Show Economy has Little Underlying Momentum (Publication Centre)
Investors with long sterling positions should not pin their hopes on Friday's GDP report to reverse some of the losses endured over the last week.
9 July 2018 May GDP Data will have the Final Word on an August Rate Hike (Publication Centre)
Mark Carney revealed last week that recent data had given him "greater confidence" that the weakness of Q1 GDP was almost entirely due to severe weather.
9 July 2019 Andean Inflation Prospects Remain Benign No Rush to Move Rates (Publication Centre)
Andean inflation remains under control, due to subpar growth, modest pressures on prices for nontradeables, and broadly stable currencies.
Asia Datanote: Industrial Production, Retail Sales, FAI, May, China (Publication Centre)
In one line: Some improvement in retails sales, which now face renewed headwinds; infrastructure growth driver sputters.
9 Oct. 2015 FOMC Members Sticking to Previous Positions, Mostly (Publication Centre)
The FOMC minutes showed both sides of the hike debate are digging in their heels. As the doves are a majority--rates haven't been hiked--the tone of the minutes is, well, a bit do vish. But don't let that detract from the key point that, "Most participants continued to anticipate that, based on their assessment of current economic conditions and their outlook for economic activity, the labor market, and inflation, the conditions for policy firming had been met or would likely be met by the end of the year." Confidence in this view has diminished among "some" participants, however, worried about the impact of the strong dollar, falling stock prices and weaker growth in China on U.S. net exports and inflation.
9 May 2019 March GDP Likely to Continue the Run of Above-Consensus Prints (Publication Centre)
We're among a small minority of economists forecasting that GDP rose by 0.1% month-to-month in March.
LatAm Datanote: Industrial Production, Brazil, April (Publication Centre)
In one line: A soft start to Q2, following an ugly Q1.
LatAm Datanote: Industrial Production, Brazil, March (Publication Centre)
In one line: An ugly end to the first quarter, but output likely will stabilize in Q2.
U.S. Datanote: Industrial Production, June (Publication Centre)
In one line: Manufacturing is enduring a mild recession, but it probably won't deepen much further.
U.K. Datanote: U.K. Official House Price Index, March (Publication Centre)
In one line: Near-flat trend in prices unlikely to improve soon.
U.K. Datanote: U.K. Official House Price Index, April (Publication Centre)
In one line: Flat for six months, but modest growth likely ahead.
U.S. Datanote: U.S. Housing Starts, April (Publication Centre)
In one line: Starts have further to rise, given the rebound in new home sales.
U.S. Datanote: U.S. Housing Starts, May (Publication Centre)
In one line: Homebuilders still wary, but construction activity will rise over the summer.
US 19 January 2018 Where is the Rebound in CPI Physicians' Services? (Publication Centre)
Today brings only the preliminary Michigan consumer sentiment data for January so we want to take some time to look at how recent changes to Medicare Part B premiums, which cover doctors' fees, are likely to affect inflation over the next few months.
US 15 September 2017 Core CPI Mean-Reverts, Hefty Storm-Induced Increases Ahead? (Publication Centre)
The run of soft core CPI numbers is over. The average 0.18% increase over the past two months probably is a good indication of the underlying trend -- the prints would have been close to this pace in both months had it not been for wild swings in the lodging component -- and the other one-time oddities of recent months' have faded.
U.S. Datanote: U.S. Industrial Production, April (Publication Centre)
In one line: Calendar quirks explain the drop in manufacturing output; expect a rebound in May.
U.K. Datanote: U.K. Nationwide House Prices, May (Publication Centre)
In one line: Still flat, but the trend should improve modestly later this year.
U.K. Datanote: U.K. Nationwide House Prices, June (Publication Centre)
In one line: Still essentially flat, but the impending fall in mortgage rates will help.
U.K. Datanote: Nationwide House Prices, April (Publication Centre)
In one line: Flat in Q1, but scope for modest gains ahead.
LatAm Datanote: Industrial Production, Mexico, March (Publication Centre)
In one line: Manufacturing gain fails to offset weakness elsewhere.
LatAm Datanote: Industrial Production, Mexico, June (Publication Centre)
In one line: Undershooting expectations, but we expect a modest rebound in Q3.
U.K. Datanote: U.K. CBI Industrial Trends Survey, June (Publication Centre)
In one line: Another weak survey, but production will rebound in Q3.
U.K. Datanote: U.K. CBI Industrial Trends Survey, May (Publication Centre)
In one line: Slumping as firms run down inventories.
U.K. Datanote: U.K. Halifax House Price Index, May (Publication Centre)
In one line: Still misleadingly upbeat.
U.K. Datanote: U.K. Halifax House Price Index, June (Publication Centre)
In one line: Irreconcilable with all other evidence.
9 August 2017 Chinese Trade Growth to Continue Trending Down in the Second Half (Publication Centre)
The headline Chinese trade numbers are beginning to come into line with the story we have been telling about the more recent trends.
EZ Datanote: Industrial Production, France, May (Publication Centre)
In one line: Outstanding.
8 November. 2016 Focus on the Improving Trend in German Manufacturing (Publication Centre)
Demand for German manufacturing goods slipped at the end of Q3. Yesterday's report showed that factory orders fell 0.6% month-to-month in September, constrained by weakness in domestic demand and falling export orders to other EZ economies.
8 January 2018 Brazil's Industrial Sector and Foreign Trade to Remain Resilient in Q1 (Publication Centre)
Survey data have been signalling a relatively resilient Brazilian economy in the last few months, despite intensified political risk, and hard data are beginning to confirm this story.
7 September 2018 Brace for Soft Looking August Payroll and Hourly Earnings Data (Publication Centre)
In the wake of yesterday's ADP report, which showed private payrolls rising by only 163K, we have pulled down our forecast for today's official number to 170K.
8 March 2017 Focus on the Trend in German Factory Orders, to Retain Sanity (Publication Centre)
A setback in German manufacturing orders was coming after the jump at the end of 2016, but yesterday's headline was worse than we expected. Factory orders crashed 7.4% month-to-month in January, more than reversing the 5.4% jump in December. The year-over-year rate fell to -0.8% from a revised +8.0%. The decline was the biggest since 2009, but the huge volatility in domestic capital goods orders means that the headline has to be taken with a large pinch of salt.
9 April 2018 Will China use the RMB Nuclear Option as Tariff Pain Rises? (Publication Centre)
China has a nuclear option in the face of pressure from U.S. tariffs, namely, to devalue the currency.
8 February 2018 Housing Market Wobble Highlights that the MPC Can't Hike Quickly (Publication Centre)
Markets expect the MPC to shelve November's guidance--that interest rates need to rise only twice in the next three years--at today's meeting.
8 March 2019 Business and Consumer Sentiment in Stark Contrast Who's Right (Publication Centre)
Consumer sentiment in Mexico continues to improve, consistent with tailwinds from the relatively strong labour market and the president's rising approval ratings.
8 August 2018 Red Hot Japanese Wage Growth will Help the BoJ Unwind (Publication Centre)
We hadn't expected the scorching 3.6% year-over- year growth rate in Japan's June average wages
24 February 2017 Is Sterling's Depreciation a Blessing or a Curse for Profits? (Publication Centre)
This week's GDP figures showed that firms invested only sparingly in 2016, but their financial fortunes have been bolstered by a recovery in profits. The gross operating surplus of all firms rose by 4.5% quarter-on-quarter in Q4, the biggest increase for 11 quarters. This pushed the share of GDP absorbed by profits up to 21.3%, just above its 60-year average of 21.2%.
1 Sept. 2016 Soft EZ Inflation Data Pave the Way for QE Extension Next Week (Publication Centre)
Yesterday's EZ CPI report points to a dovish backdrop for next week's ECB meeting. Advance data show that inflation was unchanged at 0.2% year-overyear in August, lower than the consensus, 0.3%. The headline was held back by a dip in the core rate to 0.8%, from 0.9% in July; this offset a lower deflationary drag from energy prices.
24 January 2017 EZ Economic Data Will Struggle to Live Up to Expectations in Q1 (Publication Centre)
Consensus forecasts expect further gains in this week's key EZ business surveys, but the data will struggle to live up to expectations. The headline EZ PMIs, the IFO in Germany, and French manufacturing sentiment have increased almost uninterruptedly since August, and we think the consensus is getting ahead of itself expecting further gains. Our first chart shows that macroeconomic surprise indices in the euro area have jumped to levels which usually have been followed by mean-reversion.
8 September 2017 Jobless Claims will be Elevated for Some Time, Payroll hit Uncertain (Publication Centre)
The 62K jump in jobless claims for the week ended September 2 is a hint of what's to come. Claims usually don't surge until the second week after major hurricanes, because people have better things to do in the immediate aftermath, so we are braced for a further big increase next week.
20 December 2016 The IFO Points to a Strong Finish for the German Economy to 2016 (Publication Centre)
Yesterday's IFO survey capped a fine Q4 for German business survey data. The headline business climate index climbed to a 34-month high of 111.0 in December, from 110.4 in November. An increase in the "current assessment" index was the main driver of the gain, while the expectations index rose only trivially.
20 December 2017 Single-Family Permits Hit a Cycle High, Q1 Construction Set to Jump (Publication Centre)
The single most important number in the housing construction report is single-family permits, because they lead starts by a month or two but are much less volatile.
9 April 2018 Hard Data Suggest that the German Economy Stalled in Q1 (Publication Centre)
Friday's industrial production report in Germany capped a miserable week for economic data in the Eurozone's largest economy.
07 Jan. 2016 Uncertainty Over China's Currency Intentions Set to Persist (Publication Centre)
The 2.4% depreciation of the yuan over the past month has not been quite as big as the 3.0% move on August 11, and it's not a big enough shift to make a material difference to aggregate U.S. export performance. Market nerves, then, seem to us to be largely a reflection of fear of what might come next. China's real effective exchange rate--the trade-weighted index adjusted for relative inflation rates--has risen relentlessly over the past decade, and to restore competitiveness to, say, its 2011 level, would require a 20%-plus devaluation.
8 September 2017 Production Likely Jumped in July, but it Won't Drive a Q3 Revival (Publication Centre)
The consensus that industrial production increased by just 0.2% month-to-month in July looks too cautious.
8 Sept. 2015 The German Manufacturing Sector is Still Stuck in Neutral (Publication Centre)
Industrial production in Germany had a decent start to the third quarter. Output rose 0.7% month-to-month in July, less than we and the consensus expected, but the 0.5% upward revision to the June data brings the net headline almost in line with forecasts. Rebounds of 2.8% and 3.2% month-to-month in the capital goods and construction sectors respectively were the key drivers of the gain, following similar falls in June. A 3.2% fall in consumer goods production, however, was a notable drag.
8 October 2018 Bright Spots, and Some Warning Signs, in Japan's Wage Data (Publication Centre)
Japan's average monthly labour earnings growth tumbled to 0.9% year-over-year in August, from 1.6% in July. This is not a disaster.
24 June 2019 Capex and Stock Market Fears Explain the Fed's Itchy Trigger-Finger (Publication Centre)
The apparent softness of business capex is worrying the Fed.
8 November. 2016 Rate Cuts are Coming in the Andes, Uncertainty Will Ease Soon (Publication Centre)
Inflation pressures are easing rapidly in Colombia, according to October's CPI report, released on Saturday. Inflation fell to 6.5% year-over-year in October, down from 7.3% in September; the consensus expectation was 6.7%.
8 May 2019 Where Current MMT Prescriptions Fall Short for Japan... and China (Publication Centre)
In our Friday Monitor, we came to the conclusion that prescriptions arising from Modern Money Theory have been designed primarily with the U.S. in mind.
24 Mar. 2016 EZ Consumers' Spending Is Slowing, but Won't Collapse (Publication Centre)
All the evidence indicates that growth in Eurozone consumers' spending is slowing. We think data today will show that the advance GfK consumer sentiment index in Germany was unchanged at 9.5 in April, but the headline index does not correlate well with spending. The "business expectations" index is better, and while it likely will increase slightly, our first chart shows that it continues to signal a slowdown in consumers' spending growth.
8 November. 2016 Weather--not Brexit--is Culpable for Production and Retail Sales Swings (Publication Centre)
It would be a mistake to conclude much about the economic impact of the Brexit vote from today's official industrial production figures for September, and the British Retail Consortium's figures for retail sales in October.
24 July 2018 GDP Growth in Korea Likely Slipped in Q2, on Cooler Domestic Demand (Publication Centre)
GDP data for Q2 are due July 26; we expect the report to show a marginal dip in growth, to a seasonally adjusted 0.8% quarter-on-quarter, from 1.0% in Q1.
24 April 2017 Take None of Last Week's Data at Face Value -- Distortions Abound (Publication Centre)
The gap between the hard and soft data from the industrial economy appeared to widen still further last week. But we are disinclined to take the data--the official industrial production report for March, and the first survey evidence for April--at face value.
24 January 2019 Slower Growth won't Necessarily Loosen the Labor Market Much (Publication Centre)
One of the arguments we hear in favor of an endless Fed pause--in other words, the cyclical tightening is over--is that GDP growth is set to slow markedly this year, to only 2% or so.
24 July 2017 Asian Trade Dragged Down by Chinese Slump (Publication Centre)
Korean exports are often a useful gauge of Asian and global trade; the country sits near the beginning of the global supply chain. It also happens to publish early in the data cycle and provides a measure of exports in the first 20 days of the month.
24 January 2017 LatAm Currencies Enjoying a Moment of Calm, but Risks Remain (Publication Centre)
Most LatAm currencies traded higher against the USD yesterday, adding to the gains achieved after Donald Trump's inauguration last Friday. The MXN, which was the best performer during yesterday's session, was up about 0.8%; it was followed by the CLP, and the BRL. The positive performance of most LatAm currencies, especially the MXN, is related to positioning and technical factors.
07 Mar. 2016 Brazil's Economy Collapsed in 2015 - No Sign of Quick Recovery (Publication Centre)
Brazil's economic news remained grim at the headline level last week, but some of the details were less bad than in recent months. Industrial production fell by 13.8% year-over-year in January, down from the 12.1% drop in December and the worst performance on this basis since mid-2009.
08 Jan. 2016 Sterling, Not EM Weakness, Will Hold Exports Back (Publication Centre)
The Chancellor argued in a speech on Thursday that the U.K.'s economic recovery is threatened by a "dangerous cocktail" of overseas risks, including slowing growth in the BRICs--Brazil, Russia, India, and China--and escalating tensions in the Middle East. Exports are set to struggle this year, but the strong pound, not weakness in emerging markets, will be the main drag.
9 January 2017 The Eurozone Economy Likely Finished 2016 With a Bang (Publication Centre)
The slew of EZ economic data on Friday supports our view that the economy ended 2016. The Commission's economic sentiment index jumped to 107.8 in December from a revised 106.6 in November. The headline strength was due to a big increase in "business climate indicator" and higher consumer sentiment. In individual countries, solid numbers for German construction and French services sentiment were the stand-out details.
9 January 2017 Mexico Trembles Before Trump Tweets, Expect More Volatility Soon (Publication Centre)
For the MXN, last year was especially harsh. The currency endured extreme volatility, plunging 17% against the USD. So far, this year is off to a rocky start too. The MXN fell close to 2.5% during the first week of 2017.
9 February 2018 Hard Data Point to a Slowdown in Q4 German GDP Growth (Publication Centre)
In contrast to the strong December trade numbers in France--see here--yesterday's German data were soft. The seasonally adjusted trade surplus dipped to €21.5B in December, from €22.3B in November.
08 May. 2015 Brazil's Weak Growth Not Sufficient to Stop the Tightening Process (Publication Centre)
This week's hard data confirmed the bleak situation of Brazil's industrial sector, signalled over the last few months by key leading indicators such as the PMI manufacturing and the CNI business confidence surveys. March industrial production fell by 0.8% month-to-month and 3.5% year-over-year, following a downwardly-revised 9.4% contraction in February.
23 January 2017 Threats to Make Britain a Corporate Tax Haven Lack Credibility (Publication Centre)
Both the Prime Minister and Chancellor last week threatened to cut business taxes aggressively to persuade multinationals to remain in Britain in the event of hard Brexit. But these threats lack credibility, given the likely lingering weakness of the public finances by the time of the U.K.'s departure from the EU and the scale of demographic pressures set to weigh on public spending over the next decade.
23 February 2017 Q4 GDP Flatters to Deceive, a Consumer-led Slowdown is Coming (Publication Centre)
Taken at face value, the GDP data continue to suggest that the Brexit vote has had no adverse consequences for the economy. The official estimate of quarter-on-quarter GDP growth in Q4 was revised up yesterday to 0.7%, from 0.6%. The revision had been flagged earlier this month by stronger industrial production and construction output figures.
23 February 2017 The IFO Agrees with the PMI: German GDP Growth to Rise in Q1 (Publication Centre)
Yesterday's German IFO survey broadly confirmed the bullish message from the PMIs earlier this week. The headline business climate index rose to 111.0 in February from a revised 109.9 in January, boosted by increases in both the current assessment and the expectations index.
23 Jan. 2015 Brazil Continues to Combat Expectations for Surging Inflation (Publication Centre)
Brazil's central bank is finally decisively facing its demon, persistently high inflation. The eight-member policy board, known as Copom, decided unanimously on Wednesday to increase the Selic rate by 50bp to 12.25%, the highest level in more than three years, in line with the consensus.
23 January 2017 ECB: Can the Eurozone Consumer Keep Up the Good Work in 2017? (Publication Centre)
The Eurozone has come under the spotlight for its growing external surplus, but domestic households have been doing the heavy lifting for GDP growth in this business cycle. During the last four quarters, consumers' spending has boosted year-over-year GDP growth by an average of 1.0 percentage points, in contrast to a 0.4pp drag from net exports.
23 March 2017 Warm Weather Points to Upside Risk for February New Home Sales (Publication Centre)
New home sales are much more susceptible to weather effects -- in both directions -- than existing home sales. We have lifted our forecast for today's February numbers above the 575K pace implied by the mortgage applications data in recognition of the likely boost from the much warmer-than-usual temperatures.
9 February 2017 Weak December Production to Raise Spectre of GDP Revision (Publication Centre)
Figures due on Friday likely will show that the increase in industrial production in December was much smaller than the 0.6% month-to-month assumed by the ONS in its preliminar y Q4 GDP estimate. We expect a 0.2% rise, which would leave production down 0.1% quarter-on-quarter, rather than up 0.1% as the ONS initially estimated.
20 December 2017 The IFO Signals a Solid Q4 in Germany, Despite December Dip (Publication Centre)
German survey data did something out of character yesterday; they fell. The IFO business climate index declined to 117.2 in December from a revised 117.6 in November.
20 April 2017 Don't Miss Today's Soaring Eurozone Construction Data (Publication Centre)
Markets tend to ignore Eurozone construction data, but we suspect today's report will be an exception to that rule. Our first chart shows that we're forecasting a 8.5% month-to-month leap in February EZ construction output, and we also expect an upward revision to January's numbers.
23 Sept. 2015 Slow Growth in China is a Risk, but Not the Whole Story in the EZ (Publication Centre)
Expectations that the ECB will respond to weakening growth in China with Additional stimulus mean that survey data will be under particular scrutiny this week. The consensus thinks the Chinese manufacturing PMI--released overnight--will remain weak, but advance PMIs in the Eurozone should confirm that the cyclical recovery remained firm in Q3. We think the composite PMI edged slightly lower to 54.0 in September from 54.3 in August, consistent with real GDP growth of about 0.4% quarter-on-quarter in Q3.
9 April 2019 PBoC Resists RMB Weakness, Despite Exports Threat (Publication Centre)
We aren't convinced that China's recovery is in train just yet.
23 November. 2016 Brazil's Current Account De cit is Stabilizing, Improvement Ahead (Publication Centre)
Brazil's external deficit fell marginally in October, but most of the improvement is now likely behind us. The unadjusted current account deficit dipped to USD3.3B, from USD4.3B in October 2015. The trend is stabilizing, with the 12-month total rolling deficit easing to USD22B--that's 1.2% of GDP--from USD23B in September.
23 November 2018 Economic Growth in France Should Maintain Momentum in Q4 (Publication Centre)
Yesterday's barrage of survey data in France, tentatively suggest that business sentiment is stabilising following a string of declines since the start of the year.
23 May 2018 New Home Sales Appear to have Peaked - Downside Risk for April? (Publication Centre)
The monthly new home sales numbers are so volatile that just about anything can happen in any given month.
23 May 2019 Did the Main EZ Survey Data Take a Further Tumble in May (Publication Centre)
Today's EZ calendar is a busy one.
23 May. 2016 Does the Fed Funds Laffer Curve Explain Sluggish Growth? (Publication Centre)
Like just about everyone else, we have struggled in recent years to find a convincing explanation for the persistent sluggishness of growth even as the Fed has cut rates to zero and expanded its balance sheet to a peak of $4.2T. Sure, we can explain the slowdown in growth in 2010, when the post-crash stimulus ended, and the subsequent softening in 2013, when government spending was cut by the sequester.
9 Dec. 2015 Chile's Imacec Consistent With Weak But Stable GDP Growth (Publication Centre)
Economic activity data in Chile have been soft and uneven this year, due mainly to the hit from low commodity prices and uncertainty surrounding the reform agenda, which has badly damaged consumer and investor sentiment. The latest Imacec index, a proxy for GDP, increased just 1.7% year-over-year in October, down from the 2.7% gain in September, and below the 2.2% average seen during Q3 as a whole.
23 September. 2016 The MXN Will Remain a Victim of Collateral Risk This Year (Publication Centre)
The risk of higher US rates put LatAm currencies under pressure during the first half of the week, before the US FOMC meeting on Wednesday. But they recovered some ground yesterday, following the Fed's decision to leave rates on hold.
24 Mar. 2016 Mexico's Domestic Sector Still Resilient - a Good Start to the Year (Publication Centre)
Mexico's CPI rose just 0.1% in the first half of March, due to higher core prices. The increase was broadbased within this component, with goods prices increasing by 0.2% and core services 0.4%. Core services prices were driven by temporary factors, including vacation packages and higher airfare tickets. Non-core prices, meanwhile, fell 0.5%, due mainly to falling fresh food prices.
25 January 2017 Brazil's Current Account Gap is Shrinking, but not for Much Longer (Publication Centre)
Brazil's external accounts were the bright spot last year, once again, but the ne ws will soon take a turn for the worse. The current account deficit fell to just USD24B last year, or 1.3% of GDP, from USD59B in 2015. The improvement was driven by the trade surplus, which rose to USD48B, the highest since 1992, when the comparable data series begins. A 20% plunge in imports, coupled with a mere 3% dip in exports, explain the rising trade surplus.
8 July. 2016 Muted Headline Inflation in Mexico, but Core has Hit Banxico's Target (Publication Centre)
Favourable inflation conditions in Mexico remain in place with June consumer prices increasing just 0.1% month-to-month, unadjusted, better than expected. A modest gain in core prices was largely offset by falling non-core prices, so year-over-year inflation edged down to 2.5% from 2.6% in May.
25 January 2019 How Would an Extension of Article 50 Affect the MPC's Rate Hike Plans? (Publication Centre)
MPs look set to take a decisive step next Tuesday towards removing the risk of a calamitous no-deal Brexit at the end of March.
25 July 2017 The July PMIs Provide a Dose of Reality on the Eurozone Economy (Publication Centre)
Yesterday's PMIs kicked off a busy week for Eurozone data on a downbeat note. The composite EZ PMI fell to a five-month low of 55.8 in July, from 56.3 in June; it was constrained by a 0.6 point dip in the manufacturing index to 56.8.
25 July 2018 Threats Posed by Brexit and Trump Stymie Manufacturing Investment (Publication Centre)
The CBI's Industrial Trends Survey, for July and Q3, supplied encouraging evidence yesterday that the manufacturing upswing still has momentum.
06 Jan. 2016 Chile's Economic Recovery is Still Fragile And China-Dependent (Publication Centre)
Chile's economic outlook is still clouded, due mostly to the slowdown in China and low copper prices. But the steady, slow increase in the Imacec index, a monthly proxy for GDP, supports our view of a sustained but modest economic recovery this year. The index increased 1.8% year-over-year in November, marginally up from the meagre 1.5% gain in October, but below the 2.2% average seen during Q3 as a whole. November's gain was driven by an increase in services activity, offsetting weakness in mining. Services have been the key engine of growth in the current cycle and likely will remain so in H1.
25 February 2019 The IFO is still Bleak, but the German GDP Data are Nuanced (Publication Centre)
Friday's economic data in Germany left markets with a confused picture of the Eurozone's largest economy.
25 April 2018 Mortgage Demand Faltering in the Face of Higher Rates (Publication Centre)
Today brings new housing market data, in the form of the weekly applications numbers from the MBA. The weekly data are seasonally adjusted but are still very volatile, especially in the spring.
25 April 2018 Brazil's Labour Market Recovery Has Lost Momentum, but it will Improve (Publication Centre)
In Brazil, last week's formal payroll employment report for March was decent, with employment increasing by 56K, well above the consensus expectation for a 48K gain.
25 April 2018 A Warning From the IFO (Publication Centre)
The April IFO business sentiment survey increased the degree of uncertainty over the German economy, following stabilisation in the PMIs earlier this week.
25 Feb. 2016 Huge Upside Risk for Durable Orders as Aircraft Sales Rebound (Publication Centre)
Today's headline durable goods orders number for January is likely to blast through the consensus forecast, +2.7%. We expect a 6.5% jump, comfortably reversing December's 5.0% drop.
25 February 2019 Is Banxico Ready to Consider Rate Cuts in the Near Term? (Publication Centre)
The minutes of the Banxico's monetary policy meeting on February 7, when the board unanimously voted to keep the reference rate on hold at 8.25%, were consistent with the post-meeting statement.
8 July. 2016 June Payrolls Should be Better than May, but no Return to Trend Yet (Publication Centre)
We have had a modest rethink of our June payroll forecast and have nudged up our number to 150K, still below the 180K consensus. Our forecast has changed because we have re-estimated some of our models, not because of the 172K increase in the ADP measure of private payrolls. ADP is a model-based estimate, not a reliable survey indicator.
25 June 2018 Banxico Hikes Preventively, the Next Move Will Depend on the MXN (Publication Centre)
Mexican policymakers voted unanimously last Thursday to hike the main rate by 25bp to 7.75%, the highest since early 2009.
05 Feb. 2016 The Strong Dollar is Supporting Mexico's Domestic Economy (Publication Centre)
Mexico's structural reforms, robust fundamentals, and its close ties to the U.S. should have conferred a degree of protection from the turmoil in EMs over the past year. But its markets have been hit as hard as other LatAm countries by the sell-off in global markets in recent weeks. The MXN fell about 5% against the USD in January alone, and has dropped by 20% over the last year.
25 Nov. 2015 Privatisations Conceal Underlying Health of Public Finances (Publication Centre)
The Chancellor is likely to announce plans for additional public sector asset sales in today's Autumn Statement, to help arrest the unanticipated rise in the debt-to-GDP ratio this year. But privatisations rarely improve the underlying health of the public finances, partly because assets seldom are sold for their full value. And the Chancellor is running out of viable assets to privatise; the low-hanging, juiciest fruits have already been plucked.
8 February 2017 German Manufacturing Data Threw a Tantrum in December (Publication Centre)
German manufacturing data are all over the place at the moment. Earlier this week, data showed that new orders jumped toward the end of 2016, but yesterday's industrial production report was a shocker. Output plunged 3.0% month-to-month in December, pushing the year-over-year rate down to -0.7% from a revised +2.3% in November.
8 February 2017 Banxico to Hike Rates Tomorrow, but its Tone Likely Will be Softened (Publication Centre)
Banxico's likely will deliver the widely-anticipated rate hike this Thursday. Policymakers' recent actions suggests that investors should expect a 50bp increase, in line with TIIE pric ing and the market consensus. The balance of risks to inflation has deteriorated markedly on the back of the "gasolinazo", a sharp increase in regulated gasoline prices imposed to raise money and attract foreign investment.
8 December 2017 Production Likely Was Neither Strong Nor Stable in October (Publication Centre)
The 0.7% month-to-month rise in industrial production in September marked the sixth consecutive increase, a feat last achieved 23 years ago.
8 February 2018 Is the Acceleration in German Manufacturing Output Over? (Publication Centre)
Industrial production in Germany stumbled at the end of Q4. Data yesterday showed that output fell 0.6 month-to-month in December, though this drop has to be seen in light of the downwardly-revised 3.1% jump in November.
25 Nov. 2015 Do September's Weak Sales Data Signal Trouble in Mexico? (Publication Centre)
Improving fundamentals have supported private spending in Mexico during the last few quarters. This week's soft retail sales report does not change the picture of a strong underlying trend in consumption. Sales were weaker than expected, falling 1.1% month-to-month in September, but this followed a 1.5% jump in August, and average gains of 1.1% in the previous three months. Mexican retail sales are much more volatile than in most developed economies, and we have been expecting mean reversion following rapid gains during the first half of the year and most of Q3.
8 July. 2015 Evidence, so far, Points to Strong Q2 GDP Print in Germany (Publication Centre)
German GDP growth likely accelerated in the second quarter, following a disappointing 0.3% quarter-on-quarter expansion in Q1. Growth in the manufacturing sector remains modest, and the trend in consumers' spending remains solid. Industrial production was unchanged in May, pushing year-over-year growth to 2.1% from a revised 1.1% in April.
8 July 2019 Will the Weakness of Mexican Capex and Consumption Continue? (Publication Centre)
Data released last week confirmed that Mexico's economy stumbled in the first half of the year, hurt by a temporary shocks in both the industrial and services sectors, and heightened political uncertainty, due to policy mistakes at the outset of AMLO's presidency.
8 July 2019 Incomplete Rebound in GDP in May to Confirm Stagnation Likely in Q2 (Publication Centre)
Odds-on, the consensus forecast for May's GDP report, released on Wednesday, will miss the mark.
25 May. 2016 Trade Deficit Set for April Rebound, but the Future Looks Brighter (Publication Centre)
A widening core trade deficit is the inevitable consequence of a strengthening currency and faster growth than most of your trading partners. Falling oil prices have limited the headline damage by driving down net oil imports, but the downward trend in core exports since late 2014 has been steep and sustained, as our first chart shows. The deterioration meant that trade subtracted an average of 0.3 percentage points from GDP growth in the past three quarters.
25 April 2017A Government Shutdown Would Say More About Politics Than Economics (Publication Centre)
A shutdown of the federal government, which could happen as early as this weekend, is a political event rather than a macroeconomic shock. But if it happens--if Congress cannot agree on even a shortterm stop-gap spending measure in order to keep the lights on after the 28th--it would demonstrate yet again that the splits in the House mean that the prospects of a substantial near-term loosening of fiscal policy are now very slim.
25 April 2017 Are Further Tax Rises After the Election Inevitable? (Publication Centre)
The Prime Minister's refusal last week to reaffirm her party's 2015 election pledge not to raise income tax, National Insurance or VAT has fuelled speculation that taxes will rise if the Conservatives are re-elected on June 8. Admittedly, Mrs. May asserted that her party "believes in lower taxes", and the tax pledge s till might appear in the Conservatives' manifesto, which won't be published for a few weeks.
2 October 2018 Money Data Indicate the Recent Revival in Retail Sales Can't Last (Publication Centre)
August's money and credit figures show that households' incomes remain under pressure, indicating that the recent pick-up in growth in consumers' spending likely won't last.
24 May 2019 A Little bit of Everything in the May EZ Survey Data (Publication Centre)
Yesterday's barrage of survey data were a mixed bag. The composite EZ PMI edged higher in May to 51.6, from 51.5 in April, but the details were less upbeat, and also slightly confusing.
8 March 2019 January's GDP Report to Reassure that Recession Risks Remain Low (Publication Centre)
The sharp 0.4% month-to-month fall in GDP in December and the slump in the Markit/CIPS PMIs towards 50 have created the impression the economy is on the cusp of recession.
8 March 2018 Look for Slight Change in the ECB's Guidance on QE Today (Publication Centre)
The build-up to today's ECB meeting has drowned in the focus on Italy's new political situation and the rising risk of a global trade war.
24 May. 2016 The Weaker Dollar Will Lift Nominal Retail Sales Growth (Publication Centre)
The recent run of grim sales and earnings numbers from major national retailers, including Kohl's, Nordstrom, and Macy's, reflects two major trends. The first is obvious; the rising market share of internet sales is squeezing brick and mortar retailers, as our first chart shows. We have no idea how far this trend has yet to run but it shows no signs yet of peaking.
8 March 2019 Payrolls Constrained by Reversals of Weather and Shutdown Boosts (Publication Centre)
Our below-consensus 125K forecast for today's February payroll number is predicated on two ideas.
24 May 2017 Soft Inflation Data Puts Pressure on BCB, Despite Brazil's Political Mess (Publication Centre)
Inflation pressures in Brazil are still easing rapidly. The mid-May unadjusted IPCA- 15 index rose just 0.2% month-to-month, much less than the 0.6% historical average for the month. Base effects pushed the year-over-year rate down to 3.8% from 4.1% in April. Food prices, healthcare and personal costs were the main drivers of the modest month-to-month increase.
1 September 2017 Interest Rate Changes Act Faster than the MPC's Hawks Argue (Publication Centre)
MPC member Michael Saunders, who has voted to raise interest rates at the last two MPC meetings, argued in a speech yesterday that tighter monetary policy is required now partly because it affects the economy with a long lag.
8 May 2018 Brazil's Q1 Looks Poor - we Expect a Rebound Soon, but Risks Remain (Publication Centre)
Brazil's March industrial production report, released on Thursday last week, was weaker than we and the markets were expecting, while the recent deterioration in sentiment surveys highlights the downside risks to the rather fragile economic recovery.
2 September. 2016 Temer Says the Worst is Over for Brazil - but Big Challenges Remain (Publication Centre)
Brazil's President Dilma Rousseff was removed from office on Wednesday, following an impeachment trial triggered by allegations that Ms. Rousseff used "creative" accounting techniques to disguise Brazil's growing budget deficit, ahead of her re-election in 2014. The Senate voted 61-20 to convict Ms. Rousseff; only 54 votes were needed to oust her. For Ms. Rousseff's leftist Workers' Party, her removal marks the end of 13 years in power.
24 March 2017 TLTROs Finish with a Bang, but it Probably does not Mean Much (Publication Centre)
Robust demand in the ECB's final TLTRO auction was the main story in EZ financial markets yesterday. Euro area banks--474 in total-- took up €233.5B in the March TLTRO, well above the consensus forecast €110B. To us, this strong demand is a sign that EZ banks are taking advantage of the TLTROs' incredibly generous conditions.
2 Sept. 2015 Chile's Economic Recovery Stutters, Risks To Growth Increase (Publication Centre)
Chile's activity numbers at the beginning of Q3 were mediocre, suggesting that the economy remains sluggish. The industrial production index--comprising mining, manufacturing, and utility output--fell by 1.7% year-over-year in July, reversing a 1.6% expansion in June. A disappointing 4.5% year-over-year contraction in mining activity depressed the July headline index, following a 1.4% increase in June. The moderation in output growth was due to maintenance-related shutdowns at key processing plants, and disruptions from labor strikes, especially a three-week strike by contract workers at Codelco--the state-owned mining firm--which badly hit production.
24 May. Sterling's Rally After a "Bremain" Vote Will Fall Flat (Publication Centre)
Sterling is well below its $1.57 average of the last five years, despite rallying this month to about $1.45, from a low of $1.38 in late February. But hopes that cable will bounce back to its previous levels, after a vote to remain in the E .U., likely will be dashed.
24 Nov. 2015 Q3 Growth Will be Revised Up, but 2015 Will Fall Short (Publication Centre)
An array of data today will be mostly positive, and even the most likely candidate for a downside surprise--the October advance trade numbers--is very unlikely to change anyone's mind on the Fed's December decision. On the plus side, the first revision to third quarter GDP growth should see the headline number dragged up into almost respectable territory, at 2.4%, from the deeply underwhelming 1.5% initial estimate.
24 September 2018 How can the Fed Slow the Economy when the Private Sector is so Strong? (Publication Centre)
The big difference between economic cycles in developed and emerging markets is that recessions in the former tend to be driven by the unwinding of imbalances only in the private sector, usually in the wake of a tightening of monetary policy.
24 September 2018 Battle Lines are Drawn Between the EU and U.K. over Brexit (Publication Centre)
EU negotiations tend to go down to the wire; and last week's summit in Salzburg, and Theresa May's statement on Friday, suggest that the Brexit negotiations will do just that.
24 September 2018 The Prime Minister has Doubled Down on a Weak Hand (Publication Centre)
Theresa May doubled down on her Brexit stance last week, despite European Council President Donald Tusk stating clearly that her proposed framework for economic cooperation "will not work" because it risks undermining the single market.
8 June. 2016 Colombia's Inflation Picture Still Ugly, but it Will Improve (Publication Centre)
Brazil's interim government has been trying to put the kibosh on the vicious circle of recession, capital outflows, and political pandering that has dogged the country for so long. In his first few weeks at the helm, despite the political turmoil, Mr. Temer has started to tackle Brazil's fiscal mess, the country's biggest headache.
25 Apr. 2016 Growth Will Rebound in Q2, But Brexit Fears Will Constrain the Fed (Publication Centre)
We are revising our forecast for Fed action this year, taking out two of the four hikes we had previously expected. We now look for the Fed to hike by 25bp in September and December, so the funds rate ends the year at 0.875%. The Fed's current forecast is also 0.875%, but the fed funds future shows 0.6%.
8 June. 2016 EZ Domestic Demand Rose Solidly in Q1, but Will Slow in Q2 (Publication Centre)
The third estimate of euro area growth in the first quarter provides clear evidence that measuring GDP is not an exact science. Real GDP rose 0.6% quarter-on-quarter in Q1, accelerating from 0.4% in Q4. This latest estimate is higher than the previous estimate, 0.5%, but in line with the first calculation. Eurostat and all the large Eurozone economies now provide early estimates of GDP, before data for the full quarter is available.
8 June. April Production to Underline Poor Prospects for Q2 GDP Growth (Publication Centre)
April's production data, released today, look set to indicate that the industrial sector's recession--its third in the last eight years--deepened in the second quarter. We think the consensus expectation that industrial production held steady in April is too upbeat. We look for a 0.3% month-to-month drop.
24 November. 2016 EZ PMIs Rise Further in November- The Outlook is Good for Q4 GDP (Publication Centre)
The PMIs are telling an increasingly upbeat story for the EZ economy in Q4. The composite PMI in the euro area rose to an 11-month high of 54.1 in November, from 53.3 in October. The uptick was driven by strong new business growth across all private sectors, and employment also increased in response to higher work backlogs.
8 March 2017 Brazil's Economy Struggled Late Last Year, Will it Grow in Q1? (Publication Centre)
Markets have been positively surprised by Brazil's rapid disinflation, the efforts at fiscal reform, and the prospect of growth in the economy this year. The Ibovespa index is now above its pre-crisis high and the real has approached the key level of three per USD in recent months. But the latest GDP report, released yesterday, showed that the economy struggled in Q4. Real GDP fell 0.9% quarter-on-quarter, worse than the revised 0.7% drop in Q3.
24 October 2017 China's Property Slowdown Intensifies, More to Come (Publication Centre)
In his opening speech at the Party Congress, President Xi received warm applause for his comment that houses are "for living in, not for speculation".
24 October 2017 The Real Income Squeeze has been More Intense than Wage Data Imply (Publication Centre)
It is often argued that the average weekly earnings--AWE--figures exaggerate the severity of the squeeze on households' incomes.
23 February 2017 Fiscal Easing Could Boost Growth Substantially, but not for Long (Publication Centre)
The White House budget proposals, which Roll Call says will be released in limited form on March 14, will include forecasts of sustained real GDP growth in a 3-to-3.5% range, according to an array of recent press reports.
23 Feb. 2015 What if the Terminal Rate is Higher than the Fed Thinks? (Publication Centre)
A thought, ahead of Chair Yellen's Testimony tomorrow. Conventional wisdom has it that the terminal Fed funds rate in this cycle will b e much lower than in the past--the Fed thinks 3¾%, compared to 5.25% in 2007, and 6.5% in 2000--reflecting the long-lasting legacy of the crash, particularly in household balance sheets.
20 March 2017 February's Above-Target Inflation Rate won't be the Last (Publication Centre)
February's consumer price report, released tomorrow, likely will show that CPI inflation has breached the MPC's 2% target for the first time since November 2013. Indeed, we think the headline rate jumped to 2.2%, from 1.8% in January, exceeding the 2.1% rate expected by the MPC and the consensus.
21 May 2019 EZ Capital Outflows Should Pick Up in Q2, Mainly in Debt Markets (Publication Centre)
The Eurozone's external surplus fell further at the end of Q1, and has now fully reversed the jump at the start of the year.
21 May. 2015 Greece Needs EU Bailout Funds to Pay the IMF Next Month (Publication Centre)
The day of reckoning in Greece has been continuously postponed in the past three months, but government officials told national TV yesterday that the country cannot meet its IMF payment of €300M June 5th, without a deal with the EU. The urgency was echoed by the joint statement earlier this week by German Chancellor Merkel and French President Hollande that Greece has until the end of this month to reach a deal.
1 June 2018 Money Data Cast Doubt on Q2 Recovery in Consumers' Spending (Publication Centre)
A rebound in quarter-on-quarter growth in households' spending in Q2, following the slowdown to just 0.2% in Q1, looks less likely following April's money data.
21 November. 2016 Is Germany Exploiting the Rest of the EZ? (Publication Centre)
Data on Friday showed that the EZ current account surplus fell to €25.3B in September, from a revised €29.2B in August. The trade and services surpluses were unchanged, but the income balance slipped after rising in the previous months.
21 May 2018 China's $200B Offer is Long-run Unviable, Short-run Problematic (Publication Centre)
China reportedly has offered President Trump a $200B reduction in its annual trade surplus with the U.S., engineered by increasing imports of American products, among other steps.
20 May. 2015 Chile is Recovering, But Colombia Faces Further Near-Term Softness (Publication Centre)
Colombia, the third largest economy in LatAm, has not been immune to the headwinds of the global economy since the financial crisis in 2008, though it remains one of the fastest growing economies in the region. GDP growth slowed sharply to just 1.7% in 2009, but that was still much better than the 1.2% contraction of the region as a whole.
ASIAN DATA WRAP 31 May 2019 (Publication Centre)
China's manufacturing PMI was poised for major disappointment... the trade war impact is clear. Don't be fooled by the relative stability of China's non-manufacturing PMI. Japan's March unemployment uptick was early; April was payback. Japan's CPI inflation has peaked. Japan's industrial production ticks up after extreme weakness; don't hold your breath for the recovery. Japan's consumers in poor shape, but maybe it's not that bad. The upswing in Korean industrial production likely to take a breather this month. The BoK holds firm, despite rising calls for a rate cut.
21 June 2018 As Trade Tensions Mount, will the PBoC Stabilise the RMB Basket (Publication Centre)
As promised, Mr. Trump retaliated earlier this week against China's weekend retaliation, after his refusal to back down on the initial tariffs on $50B-worth of imports of Chinese goods, on top of the steel and aluminium tariffs first announced back in March.
ASIAN DATA WRAP 18 June 2019 (Publication Centre)
China's housing recovery faces headwinds.
Our caution over China's March industrial production spike was justified. Chinese retail sales growth hits lows. Chinese FAI growth suggests private sector policy loosening isn't working. Japan's M2 growth upturn is a welcome break, but needs to be sustained. Korean unemployment jumps in April, showing the limits of the government's hiring spree.
Japan's trade surplus deterioration not as bad as official stats suggest, but more to come
1 June 2018 China's PMIs Signal Another Rise in PPI In ation in May (Publication Centre)
The return of Chinese PPI inflation in 2016 helped to stabilise equities after the boom-bust of the previous year.
21 October. 2016 Do September Retail Sales Mark the Start of a Weaker Trend? (Publication Centre)
Retail sales volumes held steady in September, undershooting the consensus, 0.3%, and they were unchanged in August too. At this stage, evidence of a slowdown in retail sales growth is only tentative, but the trend will weaken decisively when retailers raise prices sharply next year.
22 April 2019 So Much for the Q1 Rollover: GDP Appears to have Breached 2% (Publication Centre)
The U.S. consumer is back on track, almost. We have argued in recent months that the sharp slowdown in the rate of growth of consumption is mostly a story about a transition from last year's surge, when spending was boosted by the tax cuts and, later, by falling gas prices, to a sustainable pace roughly in line with real after-tax income growth.
1 July. 2016 The MPC Likely Will Dash Expectations of Substantial Easing (Publication Centre)
Mark Carney's assertion that "...some monetary policy easing will likely be required over the summer" is a clear signal that an interest rate cut is in the pipeline. But easing likely will be modest, due to the much higher outlook for inflation following sterling's precipitous decline.
1 November 2018 Does the MPC Need to Talk Up Rate Hike Expectations Today (Publication Centre)
The MPC's new inflation forecasts usually take centre stage on "Super Thursday" and provide a numerical indication of how close the Committee is to raising interest rates again.
9 October 2017 Inflation Surprises in September, but Will Central Banks Care? (Publication Centre)
Recent inflation numbers across LatAm have surprised, in both directions. On the upside, Brazil's IPCA index rose 0.2% month-to-month in September, above the market consensus forecast of 0.1%.
1 July 2019 Fresh Evidence of Pre-Tax Front- Loading in Japan... All for Naught? (Publication Centre)
Japan's industrial production data for May carried more evidence that the economy is getting a lift--at least temporarily--from the front-loading of activity ahead of the scheduled sales tax increase in October.
9 October 2017 Japan's Wages Continue to Grow, the Party of Hope Reveals Policy (Publication Centre)
Japanese average regular wages increased at an annualised rate of 0.6% in the three months to August compared with the previous three months, matching the rate in July.
9 October 2017 Did German Manufacturing Pick up the Pace in Q3? (Publication Centre)
Friday's German new orders data were sizzling. Factory orders jumped 3.6% month-to-month in August, pushing the year-over-year rate up to a nine-month high of 7.8%, from an upwardly-revised 5.4% in July.
1 June 2017 Money Data Suggest Q1's Slowdown Won't be Short-lived (Publication Centre)
April's money and credit figures suggest that GDP growth has remained sluggish in Q2. Households' broad money holdings increased by just 0.3% month-to-month in April.
1 June 2017 Dovish EZ CPI Data Take the Sting out of Next Week's ECB Meeting (Publication Centre)
Yesterday's advance EZ CPI report bolstered the ECB doves' case for only marginal adjustments to the language on forward guidance at next week's meeting. Inflation in the euro area fell to 1.4% in May, from 1.9% in April, constrained by almost all the key components.
21 September 2018 The EZ Consumer is Still in Good Shape (Publication Centre)
Consumer sentiment in the euro area has slipped this year, though the headline indices remain robust overall.
9 October 2018 German Manufacturing Slowed Sharply in Q3, Denting Growth (Publication Centre)
Yesterday's industrial production data in Germany were better than we feared. Output slipped 0.3% month-to-month in August, depressing the year- over-rate to -0.4% from 1.6% in July, a minor fall given evidence of a big hit from weakness in the auto sector ahead of the EU emissions tests.
21 June 2017 Q3 LatAm FX Will be Driven by Fundamentals and Commodities (Publication Centre)
LatAm investors' concerns about U.S. monetary policy expectations and the broad direction of the USD should on the back burner until the Fed hikes again, likely in September. This will leave room for country-specific drivers to take centre stage. That should support Mexico's MXN, which already has risen 14% year-to-date against the USD, erasing its losses after the US election last November.
21 July. 2016 Upside Risk for July Existing Home Sales - Price Gains Should Rebound (Publication Centre)
A very light week for U.S. data concludes today with four economic reports, which likely will be mixed, relative to the consensus forecasts. The recent run of clear upside surprises and robust-looking headline numbers is likely over, for the most part.
20 October. 2016 Are Jobless Claims Really at a 43-Year Low? (Publication Centre)
The recent jobless claims numbers have been spectacularly good, with the absolute level dropping unexpectedly in the past two weeks to a 43-year low. The four-week moving average has dropped by a hefty 14K since late August.
20 October 2017 The Spanish Economy is Resilient to the Chaos in Catalonia, for Now (Publication Centre)
The Spanish economy has been punching above its weight in the current business cycle. Real GDP growth has trended at about 0.8% quarter-on-quarter since 2015, far outpacing the other major EZ economies.
20 September 2017 Construction in the Eurozone Will Continue to Lift GDP Growth in Q3 (Publication Centre)
Construction in the Eurozone had a decent start in the third quarter. Output rose 0.5% month-to- month in July, pushing the year-over-year rate down to 1.9% from 2.8% in June.
20 September. 2016 Homebuilders Need to Catch up to Rising Sales - Expect a Q4 Surge (Publication Centre)
The information available to date--which is still very incomplete--suggests that new housing construction will decline in the third quarter. This would be the second straight decline, following the 6.1% drop in Q2. We aren't expecting such a large fall in the third quarter, but it is nonetheless curious that housing investment--construction, in other words--is falling at a time when new home sales have risen sharply.
21 Apr. 2016 Argentina Returns to the Bond Market After 15 Years of Isolation (Publication Centre)
After a 15 year hiatus, Argentina returned to the global credit markets yesterday with the sale of a USD16.5B sovereign bonds, the largest ever dollar offering by a developing country. Argentina boosted the size of its offering to USD16.5B from USD15B after attracting orders worth USD70B. The country sold four tranches: 10-year debt at 7.5%, three- and five year yielding 6.25% and 6.875%, respectively, and 30-year paper at 8.0%.
20 October 2017 September's Retail Sales Slump Highlights Consumers' Caution (Publication Centre)
Retail sales fell sharply in September, highlighting that consumers still are spending only cautiously amid high economic uncertainty and falling real wages.
20 November 2017 Terrible Timing for Tax Cuts -- if they Pass, the Fed Will Hike More Quickly (Publication Centre)
The passage of the House tax cut bill does not guarantee that the Senate will follow suit with its own bill, still less that both chambers will then be able to agree on a single bill which can then b e signed into law. As
20 Oct. 2015 Slowdown in U.K. GDP Growth to Dent EZ Exports Next Year? (Publication Centre)
Our new Chief U.K. economist, Samuel Tombs, initiated his coverage yesterday with a sombre, non-consensus, message on the economy. Headwinds from fiscal tightening and net trade will weigh on GDP growth next year, but the BoE will likely have to look through such cyclical weakness, and hike as inflation creeps higher. An intensified drag from net trade in the U.K. will, other things equal, benefit the Eurozone. But a slowdown in U.K. GDP growth still poses a notable risk to euro area headline export growth, especially in the latter part of next year.
20 October 2017 Domestic Fundamentals Remain Positive for Brazilian Markets (Publication Centre)
Recent economic indicators in Brazil have undershot consensus in recent weeks, but the economy nonetheless continues to recover.
20 November 2018 The Eurozone Economy's Global Liquidity Pump is Sputtering (Publication Centre)
The EZ's current account surplus was stung at the end of Q3, falling to a three-year low of €16.9B in September, from a revised €23.9B in August.
20 October 2017 September Existing Home Sales Likely Fell, but the Outlook is Bright (Publication Centre)
Usually, we forecast existing home sales from the pending sales index, which captures sales at the point contracts are signed.
1 November 2017 2017 Eurozone Macroeconomic Data Don't get Much Better than this (Publication Centre)
Yesterday was a nearly perfect day for investors in the Eurozone. The Q3 GDP data were robust, unemployment fell, and core inflation dipped slightly, vindicating markets' dovish outlook for the ECB.
1 March 2018 China PMIs Trend Down but the February Dip is an Overshoot (Publication Centre)
China's PMIs surprised the consensus forecasts to the downside for February. The manufacturing PMI dropped to 50.3 in February from 51.3 in January, while the non-manufacturing PMI fell to 54.4 from 55.3 in January.
21 July 2017 Q2 Consumption will be Weak, Despite the Pickup in Retail Sales (Publication Centre)
On the face of it, June's retail sales figures suggest that households have splurged in Q2, re-energising GDP growth after its slowdown in Q1. Sales volumes rose by 0.6% month-to-month in June, completing a 1.5% quarter-on-quarter jump in Q2.
ASIAN DATAWRAP 8 May 2019 (Publication Centre)
China's trade surplus falls unexpectedly in April, thanks partly to a bump in imports. Japan's services PMI falls despite holiday boost. The BoJ remains in a holding pattern. Korea's current account surplus rose in March, but its overall downtrend remains intact.
ASIAN DATA WRAP 9 May 2019 (Publication Centre)
Not giving up on China's stimulus yet. China's PPI inflation will head higher this month. China's CPI inflation will peak soon.
21 July. 2015 The Eurozone is Adding to Global Current Account Imbalances (Publication Centre)
The Eurozone's current account surplus plunged to €18.0B in May from €24.0B, the biggest monthly fall since July 2013, but an upward revision to the April data makes the headline look worse than it is. These numbers are volatile, even after seasonal adjustments, and revisions have been larger than normal this year, so we need to smooth the data to get the true story.
21 July. 2016 The Retail Sales Surge Likely Met an Abrupt End in June (Publication Centre)
Household spending has been the sole source of growth in the economy so far this year, amid worsening investment and net trade. Today's official retail sales figures, however, look set to show that consumers suffered the Brexit blues in June.
21 Jan. 2015 - Spending Not Yet Surging in the Wake of Cheaper Gas, But it Will (Publication Centre)
So far, the surge in retail spending promised by the plunge in gasoline prices has not materialized. The latest Redbook chain store sales numbers dipped below the gently rising trend last week, perhaps because of severe weather, but the point is that the holiday season burst of spending has not been maintained.
21 February 2019 Will the Real Story in French Services Please Stand Up (Publication Centre)
Today's data dump will deliver the advance PMIs and the French INSEE business sentiment indices for February, all of which will be examined closely for signs of stabilisation in the wake of recent evidence that EZ growth is slowing quicker than markets and the ECB have been expecting.
21 December 2017 China's Government Bond Issuance to Rise. Japan's is Slated to Fall (Publication Centre)
The details of next year's Japanese budget are not yet official and the Chinese budget remains unknown. But the main figures of the Japanese budget are available, while China's Economic Work Conference, which concluded yesterday, has set out the colour of the paint for the budget, if not the actual brush strokes.
1 March 2017 The Soaring Trade Deficit is set to Constrain First Quarter Growth (Publication Centre)
Yesterday's wall of data told us a bit about where the economy likely is going, and a bit about how it started the first quarter. The January trade and inventory data were disappointing, but the February Chicago PMI and consumer confidence reports were positive.
21 February 2018 Downside Risk for January Home Sales, but Expect a Decent Spring (Publication Centre)
Today's housing market data likely will look soft, but will probably not be representative of the underlying story, which remains quite positive.
1 March 2017 The Chancellor will Bank Most of the £20B Borrowing Windfall (Publication Centre)
At next Wednesday's Budget, the Chancellor will have the rare pleasure of announcing lower-than- anticipated near-term borrowing forecasts. But hopes that he will prevent the fiscal tightening from intensifying when the new financial year begins in April look set to be dashed, just as they were at the Autumn Statement in November.
22 Dec. 2015 Miserable Economic And Political News Keeps Coming For Brazil (Publication Centre)
Brazil's recent political and economics news has shifted the near-term outlook from bad to worse. President Rousseff on Friday replaced hawkish Finance Minister Joaquim Levy, appointed just over a year ago, with a close partner, Planning Minister Nelson Barbosa. Mr. Levy resigned after continued conflicts with the government, including frustration by the Congress of his attempts to rein in the fiscal mess. Mr. Barbosa is known to be less market friendly, and will likely defend countercyclical measures, delaying any rapid fiscal consolidation. The appointment will deteriorate investors' confidence even further, placing the markets under enormous strain.
9 November. 2016 With Trump the Likely winner, what next for policy and Markets? (Publication Centre)
The verdict is not yet definitive, but prudence dictates we must now assume victory for Donald Trump. The immediate implication of President Trump is global risk-off, with stocks everywhere falling hard, government bonds rallying, alongside gold and the Swiss franc. The dollar is the outlier; usually the beneficiary when fear is the story in global markets, it has fallen overnight because the risk is a U.S. story.
22 November. 2016 Trade Data are Improving in the Andes... Better Still in 2017? (Publication Centre)
Colombia's trade deficit continued to narrow in Q3; a postive development now that EM are back in the firing line. Assuming no revisions, the marginal year-over-year dip in the September trade deficit means that the third quarter deficit was USD3.1B, down from US4.6B a year ago.
20 July 2018 Japan's Trade Balance Continues to Whipsaw Where is it Going Next (Publication Centre)
Japan's trade surplus has whipsawed recently. Sharp changes are to be expected in January and February, due to the shifting timing of Chinese New Year.
20 July 2018 Improving Political, External Conditions in Mexico How Long Will it Last (Publication Centre)
Mexican president-elect Andrés Manuel López Obrador, known as AMLO, has set out the first points of his austerity plan, two weeks after his overwhelming victory at the polls.
20 July 2018 Further Downside for the Euro in the Second Half of the Year (Publication Centre)
EURUSD has been battered in recent months, falling just over 6% since the end of April, but almost all indicators we look at suggest that the it will weake further towards 1.10, in the second half of the year.
1 October 2018 The 14-year High in the ISM Likely Can't Hold, Expect a Correction (Publication Centre)
The case for believing that August's unexpected 14-year high in the ISM manufacturing index was a fluke is pretty straightforward, and it has both short and medium-term elements.
22 November 2017 Core Capital Goods Orders Rising Strongly, Further Gains Ahead? (Publication Centre)
Today brings a wave of data, some brought forward because of Thanksgiving. We are most interested in the durable goods orders report for October, which we expect will show the upward trend in core capital goods orders continues.
26 April 2018 March Trade and Durable Orders Data to Boost Q1 GDP Forecasts? (Publication Centre)
The key data today, covering March durable goods orders and international trade in goods, should both beat consensus forecasts.
1 October 2018 Data Confirm Softer Q3 in Disaster- Hit Japan, but it's not all Bad News (Publication Centre)
A firmer picture is emerging of how Japan's economy fared in Q3, in light of the latest slew of data for August.
1 Dec. 2015 Plunging Oil Prices Shift Income to Consumers From Producers (Publication Centre)
The big story in global macro over the past 18 months or so has been the gigantic transfer of income from oil producers to oil consumers. The final verdict on the net impact of this shift--worth nearly $2T at an annualized rate--is not yet clear, because the boost to consumption takes longer than the hit to oil firms ' capex, which began to collapse just a few months after prices began to fall sharply. But our first chart, which shows oil production by country as a share of oil consumption, plotted against the change in real year-over-year GDP growth between Q2 2014 and Q2 2015, tells a clear story.
9 March 2018 January's Production Rebound will Conceal a Manufacturing Slowdown (Publication Centre)
The industrial sector went from strength to strength in 2017. Year-over-year growth in production picked up to 2.1%--its highest rate since 2010--from 1.3% in 2016.
22 May. 2015 Brazil, Overshadowed by Mexico During The First Quarter--Again (Publication Centre)
Mexico's economy stuttered at the start of the year. Real GDP rose 0.4% quarter-on-quarter in the first quarter, after a solid 0.7% in the fourth quarter. Q1 activity was supported by the services sector, rising 0.5%, offsetting the 0.2% contraction in industrial activity.
20 January 2017 Mid-month Inflation Data Supports BCB's Front-loading Strategy (Publication Centre)
Brazilian inflation is off to a good start this year, and we think more good news is coming. The January mid-month IPCA-15 index rose an unadjusted 0.3% month-to-month, a tenth less than expected. This was the smallest gain for January since 1994 and the sixth consecutive month in which the number came in below expectations.
9 Mar. 2015 A Strong Consumer is Helping to Lift GDP Growth in the Eurozone (Publication Centre)
The second estimate of Eurozone GDP confirmed that the economy grew 0.3% quarter-on-quarter in the final three months of last year, up slightly from 0.2% in the third quarter. Gross fixed capital formation and household consumption both rose 0.4%, but the improving trend in euro area GDP growth is almost exclusively driven by consumer spending.
9 July 2018 No Tariff Hit in the Payroll Numbers Yet, but Some Surveys are Wobbling (Publication Centre)
The recent softening in the ISM employment indexes failed to make itself felt in the June payroll numbers, which sailed on serenely even as tariff-induced chaos intensified at the industry and company level.
20 Feb. 2015 Colombia's Strong Domestic Activity is Neutralizing Oil Price Hit (Publication Centre)
Colombia's oil industry--one of the key drivers of the country's economic growth over the last decade--has been stumbling over recent months, raising concerns about the country's growth prospects. But the recent weakness of the mining sector is in stark contrast with robust internal demand and solid domestic production.
09 Feb. 2016 Investors Should Brace for Poor German GDP Data this Week (Publication Centre)
German Q4 GDP data this week will give little comfort to investors searching for signs of a resilient economy in the face of increased market volatility. The consensus expects unchanged GDP growth of 0.3% quarter-on-quarter, consistent with solid and stable survey data. But downbeat industrial production and retail sales data point to notable downside risk.
1 March 2019 Slightly Disappointing Brazil Q4 GDP Data Point to Greater Slack (Publication Centre)
Brazil's GDP growth slowed to just 0.1% quarter- on-quarter in Q4, from a downwardly-revised 0.5% in Q3.
23 Feb. 2016 Falling Stock Prices Won't Kill Consumers Enjoying Cheap Gas (Publication Centre)
Dire warnings that the plunge in s tock prices would depress consumers' confidence and spending have not come to pass. It's too soon to draw a definitive conclusion--the S&P hit its low as recently as the 11th--but peoples' end-February brokerage statements are on track to look less horrific than the end-January numbers, provided the market doesn't swoon again over the next few days.
9 July 2019 Did the Rising China Tariffs and the Mexico Threat Scare Small Firms? (Publication Centre)
Small business sentiment and activity, as reported by the NFIB survey, has recovered exactly half the drop triggered by the rollover in stock prices in the fourth quarter. This matters, because most people work at small firms, which are responsible for the vast bulk of net job growth.
20 February 2018 Everyone is Talking About Current Accounts Again (Publication Centre)
The euro area's current account surplus stumbled at the end of 2017, falling to €29.9B in December from an upwardly-revised €35.0B in November.
9 June 2017 Bank C&I Lending has Levelled-off, Expect a Second-Half Rebound (Publication Centre)
The rollover in bank lending to commercial and industrial companies probably is over. On the face of it, the slowdown has been alarming, with year-over-year growth in the stock of lending slowing to just 2.6% in April, from a sustained peak of more than 10% in the early part of last year.
22 September 2017 Don't Expect a Giveaway Budget, Despite low Borrowing this year (Publication Centre)
Public borrowing was below consensus expectations in August, fuelling speculation that the Chancellor might pare back the remaining fiscal tightening in the Autumn Budget on November 22.
9 July 2019 The German Economy Hit a Brick Wall in the Second Quarter (Publication Centre)
Yesterday's headline economic data in Germany were decent enough. Industrial output edged higher by 0.3% month-to-month in May, lifted primarily by rising production of capital and consumer goods.
20 Jan. 2016 Falling Gas Prices Can't Hide Upward Pressure on Core Inflation (Publication Centre)
Gasoline prices dropped sharply last month, but the 4½% seasonally adjusted fall we expect to see in the December CPI report today was rather smaller than the 9% collapse in December 2014, so the year-over-year rate of change of gas prices will rise, to -20% from -24% in November. This means headline inflation will rise too, though the extent of the increase also depends on what happens to the core rate.
22 May 2017 LatAm Markets Under Renewed Pressure, but Hold on, for Now (Publication Centre)
LatAm's relatively calm market environment has been thrown into disarray over the last few weeks.New fears of a slowdown in China, political turmoil in the U.S. and, most importantly, the serious corruption allegations facing Brazil's President, Michel Temer, have triggered a modest correction in asset markets and have disrupted the region's near-term policy dynamics.
9 May 2017 Does the Economy Thrive Under "Strong and Stable" Government? (Publication Centre)
The Prime Minister has argued repeatedly during the general election campaign that Britain will prosper under a "strong and stable" Conservative government with a large majority. "Division in Westminster," she argued when calling the election last month, "...will risk our ability to make a success of Brexit and it will cause damaging uncertainty and instability to the country."
22 Jan. 2015 Should We Be Scared by the Flattening Curve? (Publication Centre)
The flattening of the curve in recent months has been substantial, but in our view it is telling us little, if anything, about the outlook for growth. More than anything else, investors in longer Treasuries care about inflation, and the likely path of headline inflation clearly has been lowered by the plunge in oil prices.
20 June 2018 Monetary Policy Divergence Will Boost the EZ Current Account (Publication Centre)
The Eurozone's current account surplus slipped at the start of Q2, falling to €28.4B in April from an upwardly-revised €32.8B in March.
22 Jan. 2016 Brazil's Central Bank on Hold, And Rate Hikes are Now Less Likely (Publication Centre)
Brazil's decision to keep interest rates at 14.25% on Wednesday was a surprise. The consensus forecast immediately before the meeting was for a 25bp increase. As recently as Tuesday, though, most forecasters expected a 50bp increase, following hawkish comments from Board members since the last meeting in November, and rising inflation expectations. But the day before the meeting, the IMF revised its forecast for 2016 GDP to -3.5%, much worse than the 1% drop it predicted in October.
22 Jan. 2016 How Long Will the Inventory Correction Last? (Publication Centre)
We're expecting a substantial inventory hit in the fourth quarter, subtracting about 1¼ percentage points from headline GDP growth. Businesses very likely added to their inventories in Q4, in real terms, but the we reckon the increase was only about $30B, annualized, compared to the $85.5B jump in the third quarter. Remember, the contribution to GDP growth is the change in the pace of inventory-building between quarters.
20 June 2018 Existing Home Sales are Struggling May Activity Likely Dipped (Publication Centre)
Today brings more housing data, in the form of the May existing home sales numbers.
1 February 2017 Sharp Slowdown in Money Growth Consistent with Weaker 2017 GDP (Publication Centre)
December's money data brought clear signs that the economy's growth spurt in the second half of 2016 is about to come to an abrupt end. Growth in households' money holdings and borrowing slowed sharply in December, and the pick-up in corporate borrowing shortly after the MPC cut interest rates and announced corporate bond purchases, in August, has run out of steam already.
20 June 2018 Today's Brexit Bill Vote is a Close Call, but Bigger Decisions Lie Ahead (Publication Centre)
The vote in the House of Commons today on whether MPs should effectively take control of Brexit negotiations, if Theresa May can't strike a deal by mid-January, looks finely balanced.
22 Feb. 2016 The Fed is Ahead of the Curve but Behind the Economy (Publication Centre)
Here's something we didn't expect to write: The CPI measure of goods prices, excluding food and energy, rose in the three months to January, compared to the previous three months. OK, the increase was marginal, a mere 0.3%, but conventional wisdom has assumed for some time that the strong dollar would push goods prices down indefinitely.
20 March 2017 If Fundamental Tax Reform Fails, What Happens to Fiscal Policy? (Publication Centre)
The White House Budget for fiscal 2018, released last week, has no chance of becoming law in anything like its current form, so we don't propose to spend much time dissecting it. But we do need to set out our view on what might actually happen to fiscal policy over the next few months, because it potentially could make a material difference to the pace, and ultimate extent, of Fed tightening.
22 February 2017 The MXN Probably is Undervalued, but it Could Move Even Lower in Q2 (Publication Centre)
With the MXN up more than 7% since the low of 21.9 against the dollar in January, investors are pondering just how high the Mexican currency can go. We believe that the MXN will continue to hover around its recent range, 20.1-to-20.5, in the near term, but will come under pressure again as protectionist policies in the U.S. take real shape in the spring or summer.
22 February 2017 Q4 GDP Likely to be Revised up, but Momentum won't Endure (Publication Centre)
We expect the official estimate of quarter-on-quarter GDP growth in Q4 to be revised up to 0.7% today, from last month's preliminary estimate of 0.6%. The consensus forecast is for no revision, so the data likely will boost interest rate expectations and sterling, if we're right.
22 January 2018 External Factors for LatAm are Positive, but Vary Across Countries (Publication Centre)
Recent global developments lead us to intensify our focus on trade in LatAm.
22 January 2019 Commodity Prices are Edging Higher, Improving LatAm's Outlook (Publication Centre)
9 May 2018 Chinese Import Growth is Flattered by Price Effects (Publication Centre)
China's trade data looked more normal in April. The trade balance rebounded to a surplus of $28.8B in April, from a deficit of $5.0B in March. Exports also bounced back, rising 12.9% year-over-year in April, after a 2.7% decline in March.
9 May 2018 Faster Productivity Growth and Higher Inflation will Lift Wage Gains (Publication Centre)
We just can't get away from the deeply vexed question of wages; specifically, why the rate of growth of nominal hourly earnings has risen only to just over 2.5%, even though the historical relationship between wage gains and the tightness of the labor market points to increases of 4%-plus.
22 March 2018 Wage Growth Still Lacks Momentum, Giving the MPC Time (Publication Centre)
Slack in the labour market no longer is being absorbed and wage growth still is struggling for momentum, placing little pressure on the MPC to rush the next rate rise.
20 June 2017 China Property is Slowing, Prices now Depend on Mortgage Rates (Publication Centre)
House price inflation in tier-one cities has been crushed by China's most recent monetary tightening. This is a sharp turnaround from the overheating mid-way through last year. Unlike in previous cycles, interest rates are probably more important for house prices than broad money growth.
20 June 2017 EZ Construction Upturn Signals Upside Risks to GDP Growth (Publication Centre)
We continue to see signs of a strengthening upturn in Eurozone construction. Output in construction rose 0.3% month-to-month in April, pushing the year-over-year rate down to 3.2%, from an upwardly revised 3.8% in March.
1 December 2017 Will the Improvement in Brazil's External Accounts Continue? (Publication Centre)
External conditions continue to favour Brazil. The recovery in domestic demand in the world's major economies, particularly the rebound in business investment, has driven a gradual revival of global exports.
9 May 2019 A Solid Q1 in the Bag for Germany Now a Q2 Correction Looms (Publication Centre)
Industrial production data in Germany continued to defy the signal of doom and gloom from leading indicators.
9 Nov. 2015 Investors Should Brace for a Poor German Q3 GDP Report (Publication Centre)
Friday's industrial production data capped another dreadful week for German manufacturing. Output fell 1.1% month-to-month in September, pushing the year-over-year rate lower to 0.2%, from a revised 2.9% in August. The 0.6% upward revision of the previous month's data makes the data slightly less awful than the headline, but the details showed weakness across all core sectors. The underlying trend in production is stable at about 1.2% year-over-year, but downbeat new orders suggest it will weaken in the fourth quarter.
22 June 2017 Are we headed toward an extension of the U.K.'s EU membership? (Publication Centre)
The EU has had a better start to the Brexit negotiations than its counterpart across the Channel. The risk of disagreement within the EU on the details with of the U.K.'s exit is high, but the Continent has presented a united front so far, mainly because Mr. Macron and Mrs. Merkel agree on the broad objectives. They have no interest in punishing the U.K., but they are also keen to show that exiting the EU has costs for a country which leaves.
9 May 2019 China's Imports are U-Turning, but Exports Still Face Major Headwinds (Publication Centre)
China's trade surplus collapsed unexpectedly in April, to $13.8B, from a trivially-revised $32.4B in March.
22 June 2018 Survey Data Suggest that French Manufacturing will Rebound in Q2 (Publication Centre)
Yesterday's barrage of French business sentiment data suggest that confidence in the industrial sector was a little stronger than expected in Q2.
9 July 2018 Evidence is Mounting that German Manufacturing did Well in Q2 (Publication Centre)
Friday's industrial production data in Germany added to the manufacturing optimism following the sharp rise in new orders--see here--reported earlier in the week.
26 September 2017 Another Marginal Dip in the IFO, and Murky Politics in Germany (Publication Centre)
Yesterday's IFO survey in Germany sent a marginally more downbeat message than the strong PMIs last week. The IFO business climate index fell to 115.2 in September, from 115.9 in August, its second straight monthly dip.
30 April 2019 High Political Risk in Argentina Offsetting Upbeat Economic News (Publication Centre)
Argentina's financial markets and embattled currency have been under severe pressure in recent weeks, with the ARS hitting a new record low against the USD and government bonds sinking to distress levels.
30 April 2019 Q1 Data have Spooked Japanese Policymakers is it Temporary (Publication Centre)
Japan's Q1 is coming more sharply into focus.
6 December. 2016 PMI Data Signal a Solid End to 2016 for the EZ Economy (Publication Centre)
The final EZ PMI data for November yesterday confirmed that the composite index in the Eurozone rose to an 11-month high of 53.9, from 53.3 in October. The key driver was an improvement in services, boosted by stronger data in all the major economies. Manufacturing activity also improved, though, and the details showed that new business growth was robust in both sectors.
6 December 2018 No Real Signs of the Slowdown Story in the Labor Market Data (Publication Centre)
Behind all the talk of slowdowns and Fed pauses, we see no sign that the labor market is loosening beyond a very modest uptick in jobless claims, and even that looks suspicious.
6 December 2017 Retail Sales in the EZ Plunged in October, but Will Improve Soon (Publication Centre)
Consumers' spending in the Eurozone stalled at the start of Q4. Retail sales slid 1.1% month-to-month in October, pushing the year-over-year rate down to a four-year low of 0.4%, from an upwardly-revised 4.0% jump in September.
6 Feb. 2015 Chilean Growth Is Improving, But China's Slowdown Is A Worry (Publication Centre)
Chilean GDP growth hit bottom in August, but activity is now picking up and will gather speed over the coming quarters. The tailwinds from lower oil prices and fiscal stimulus will soon be visible in the activity data.
3 October 2018 Mixed Activity Data in Brazil Ahead of a Contested Presidential Election (Publication Centre)
Brazil's industrial production surprised to the downside in August, suggesting that manufacturing is struggling to gather momentum over the second half of the year.
3 November 2017 Brazilian Manufacturing Continued to Support the Recovery in Q3 (Publication Centre)
Brazil's industrial sector continued to support the economy in Q3. The underlying tr end in output is rising and leading indicators point to further growth in the near term.
3 November. 2016 MPC to Catch Out Markets Again with Lingering Dovish Tone (Publication Centre)
Markets are pricing-in just a 10% chance of the MPC cutting interest rates again within the next six months, odds that look too low given the strong likelihood that the economic recovery loses more pace.
3 October 2017 EZ Manufacturing is Helping to Propel the Cyclical Upturn (Publication Centre)
Manufacturing in the Eurozone remained a strong driver of GDP growth in the third quarter. The headline EZ manufacturing PMI rose to 58.1 in September, from 57.4 in August, only a tenth below the initial estimate 58.2.
3 October 2018 Investment is Dropping, but Don't Rule out a Rebound Next Year (Publication Centre)
One of the more disheartening aspects of the Q2 national accounts, released last week, was the downward revision to business investment. Quarteron-quarter growth was revised to -0.7%, from +0.5% previously.
30 January 2017 Mexico's Trade Gap is Shrinking, but Medium-Term Outlook is Cloudy (Publication Centre)
Mexico's trade balance shrank slightly last year, to USD13B, from USD14.6B in 2015. An improvement in the non-energy deficit was the main driver, while the energy gap worsened.
30 January 2017 Real M1 Indicates a Solid Start to 2017, but What Happens Next? (Publication Centre)
The business cycle upturn in the Eurozone likely will remain resilient in the first half of 2017. Friday's money supply data showed that headline M3 growth increased to 5.0% in December, from 4.9% in November.
30 May 2017 How Durable is the Euro's Rally Against the Dollar? (Publication Centre)
Fiscal stimulus, partly financed by a border adjustment tax, and Fed rate hikes, were supposed to be a powerful cocktail driving a stronger dollar in 2017. But so far only the Fed has delivered--we expect another rate hike next month--while Mr. Trump has disappointed in the White House.
30 March 2017 How will French Consumers React to Lower Real Wage Growth? (Publication Centre)
Leading indicators for consumers' spending in France are sending conflicting signals. Survey data suggest that households are in a spendthrift mood. Data yesterday showed that the headline consumer sentiment index was unchanged in March at 100, the cycle high.
30 May 2018 ADP Likely to Report Solid Gain in May Payrolls (Publication Centre)
The models which generate the ADP measure of private payrolls will benefit in May from the strength of the headline industrial production, business sales and jobless claims numbers.
5 September 2018 Order Books Point to a Q3 Rebound in Korean Construction Activity (Publication Centre)
Headline GDP growth in Korea was revised down, to a seasonally-adjusted 0.6% quarter-on-quarter in Q2, from 0.7% in the preliminary report.
5 September 2018 Manufacturing in Brazil and Mexico is Stabilizing, but Threats Remain (Publication Centre)
Yesterday's Brazilian industrial production data were relatively upbeat.
30 Mar. 2015 Same Old Song - The Fed and the MXN are key factors for Banxico (Publication Centre)
Mexico's central bank left its main interest rate unchanged last week, citing the need for cautious monetary policy as the economy has lost some momentum during the first months of the year, despite the risk of inflation pass-though effects from the weaker MXN.
30 June. 2015 Slowing Aircraft Orders Holding Back Chicago PMI - No Hit to ISM (Publication Centre)
The seasonal adjustment problems which tend to drive up the national ISM manufacturing survey in late spring and summer are more or less absent from the Chicago PMI, which will be released today. As far as we can tell, the biggest short-term influence on the Chicago number is variations in the order flow for Boeing aircraft; the company moved its headquarters to the city from Seattle in 2001.
30 January 2017 Will the Inflation Report Support Markets' 2017 Rate Hike View? (Publication Centre)
Markets' expectations for official interest rates have shifted up over the last fortnight, and the consensus view now is that the MPC will hike rates before the end of this year. As our first chart shows, the implied probability of interest rates breaching 0.25% in December 2017 now slightly exceeds 50%.
30 January 2018 Mexico's Trade Gap Shrank in 2017, Helped by NAFTA-Related Fears (Publication Centre)
Mexico's trade balance shrank slightly last year, to USD11B, from USD13B in 2016. The main driver was a big swing in the non- energy balance, to a record USD8.0B surplus, following a USD0.4B deficit in 2016.
30 June 2017 Q1 National Accounts Won't Meet the Governor's Rate Hike Criteria (Publication Centre)
Markets will be extremely sensitive to economic data in the run-up to the MPC's next meeting on August 3, following signals from several Committee members that they think the cas e for a rate rise has strengthened.
30 June 2017 Temer's Fate Carries Risks, but a Currency Meltdown Isn't One (Publication Centre)
Brazil's unadjusted current account surplus soared to USD2.9B in May, its highest level since 2006, from USD1.1B in May 2016.
3 November 2017 Asian Policy Divergence Can't Continue. PBoC to Fold First (Publication Centre)
The two major central banks in Asia currently have hugely different aims, causing a policy divergence that won't survive the 2018 rise in external yields.
6 February 2019 Don't Worry About the Tightening of Bank C&I Lending Standards (Publication Centre)
We are not concerned by the very modest tightening in business lending standards reported in the Fed's quarterly survey of senior loan officers, published on Monday.
3 April 2017 Eurozone Consumers Likely had a Slow Start to 2017 (Publication Centre)
We fear that private spending in the EZ slowed in Q1, despite rocketing survey data. This fits our view that household consumption will slow in 2017 after sustained above-trend growth in the beginning of this business cycle.
29 September 2017 China's Pending Targeted RRR cut Implies SMEs are Struggling (Publication Centre)
China is set to ease reserve requirements for banks lending to small businesses. In a statement after the State Council meeting yesterday, Premier Li Keqiang said that commercial banks would receive a cut in their RRR , from 17% currently, based on how much they lend to businesses run by individuals.
3 April 2017 Q4 Consumers' Spending Spree Will End Abruptly This Year (Publication Centre)
The national accounts for the fourth quarter showed that the economy relied on households slashing their saving rate to a record low in order to spend more. Now, growth in consumer spending will have to fall back in line with real incomes, which will increasingly be impaired by rising inflation.
6 June. 2016 Mr. Temer Begins Brazil's Fiscal Overhaul, Despite Political Unrest (Publication Centre)
3 Dec. 2015 Low Inflation Expectations Won't Become Self-Fulfilling (Publication Centre)
Households' inflation expectations have fallen again over the last few months, but we doubt they will constrain the forthcoming rebound in actual inflation. Past experience shows that inflation expectations are more of a coincident than a leading indicator of inflation. In addition, inflation is weakest right now in sectors where demand is relatively insensitive to price changes, so, when retailers' costs rise, they won't pay much heed to households' expectations.
29 September 2016 What to Look Out for During Friday's Data Deluge (Publication Centre)
The estimate of services output for the first month of the current quarter usually gets lost among the deluge of national accounts and balance of payments data released for the previous quarter.
29 September 2016 Consumers' Spending Growth in Germany is Slowing, Modestly (Publication Centre)
Survey data in the Eurozone were mixed yesterday. In Germany, the advance GfK consumer sentiment index slipped to 10.0 in October, from 10.2 in September, marginally below consensus forecasts. The details, reported for September, also were soft.
29 November 2017 Unemployment in Mexico Keeps Falling, but Risks Have Increased (Publication Centre)
Yesterday's October labour market data in Mexico showed that the adjusted unemployment rate rose a bit to 3.4%, from 3.3% in September.
6 Mar. 2015 The BCB Hikes Again But The Tightening Cycle is Not Quite Over (Publication Centre)
The Brazilian industrial sector started this year on a very downbeat note, despite a 2% month-to-month jump in output. The underlying trend in activity is still very weak. Production fell 5.2% year-over-year.
29 Oct. 2015 Will the Chancellor Ease Next Year's Fiscal Squeeze? (Publication Centre)
The defeat in the House of Lords of the Government's plans to cut spending on tax credits by £4.4B next year is not a barrier to their implementation. But it has prompted speculation that the Chancellor will reduce the size of the fiscal consolidation planned for next year. The plans may be tweaked in the Autumn Statement on 25 November, but we think the economy will still endure a major fiscal tightening next year.
29 Sept. 2015 Don't Believe Case-Shiller Home Price Data - Prices are Rising (Publication Centre)
Today's Case-Shiller report on existing home prices will likely show that August prices were little changed, month-to-month, for the fourth straight month. The slowdown in the pace of price gains since the first quarter, when price gains averaged 1.0% per month, has been startling. In all probability, though, the apparent stalling is a reflection of the quality of the data rather than the underlying reality in the housing market.
6 June 2019 Even GOP Senators have Limits Tariffs on Mexico Cross the Line (Publication Centre)
The pushback from within the President's own party against the proposed tariffs on Mexican imports has been strong; perhaps strong enough either to prevent the tariffs via Congressional action, or by persuading Mr. Trump that the idea is a losing proposition.
3 December 2018 Brazil's Solid Q3 GDP Data Pave the Way for an Upbeat 2019 (Publication Centre)
Data released last week confirm that Brazil's recovery has continued over the second half of the year, supported by steady household consumption and rebounding capex.
3 June 2019 The Trade War Deepens, Mexico's Economy is Under Heavy Fire (Publication Centre)
President Trump's volatile diplomatic style is one of the biggest risks facing the Mexican economy in the near term, as we have discussed in previous Monitors.
3 July 2019 ADP Set for Clear Rebound, but it Likely will Understate Payrolls (Publication Centre)
Today brings an array of economic data, including the jobless claims report, brought forward because July 4 falls on Thursday.
6 July 2018 How will the E.U. Respond to the Prime Minister's Latest Brexit Plan? (Publication Centre)
The U.K.'s dysfunctional cabinet will meet at the Prime Minister's country retreat today to agree--finally--on a set of proposals for how Britain will trade outside of the E .U.'s customs union and single market.
3 May 2017 EZ Q1 GDP Growth Likely won't Live up to the Soaring Surveys (Publication Centre)
Survey data point to a very strong headline, 0.6%-to-0.7% quarter-on-quarter, in today's Q1 advance Eurozone GDP report. But the hard data have been less ebullient than the surveys. A GDP regression using retail sales, industrial production and construction points to a more modest 0.4% increase, implying a slowdown from the upwardly-revised 0.5% gain in Q4.
3 May 2018 Can the Prime Minister Fight off the Brexiteers in her Party? (Publication Centre)
The pressure on Theresa May from Brexiteers within her own party intensified yesterday, when 60 Conservative MPs signed a letter arguing that they could not back a proposal for a "customs partnership".
3 July 2017 National Accounts Expose Britain's Economic Fragility (Publication Centre)
Last week's national accounts confirmed that the economy lost momentum abruptly in Q1, with net trade and investment failing to offset weaker growth in households' spending.
*Dec. 2016 - U.S. Economic Chartbook* (Publication Centre)
Brace for the Fed's Pushback...But only when Fiscal Easing is in front of Congress
6 June 2018. Q2 Rebound on Track, Giving the MPC a Brief Window to Hike Rates (Publication Centre)
Business surveys released over the last week have made us more confident in our call that quarter-on- quarter GDP growth will recover to about 0.4% in Q2, from Q1's weather-impacted 0.1% rate.
6 June 2017 May Services PMI Dents Second Quarter Rebound Hopes (Publication Centre)
The fall in the services PMI to 53.8 in May, from 55.8 in April, is a setback for hopes that the slowdown in GDP growth in Q1 will be fleeting. Both business activity and orders rose at their slowest rates since February.
6 July. 2016 ISM Non-manufacturing Jobs Should Rebound, but How Far? (Publication Centre)
The shock of the weak May payroll report means that the June numbers this week will come under even greater scrutiny than usual. We are not optimistic that a substantial rebound is coming immediately. The headline number will be better than in May, because the 35K May drag from the Verizon strike will reverse.
3 January 2019 China's PMIs Deteriorate What are the Positives Amid the Gloom (Publication Centre)
China's Caixin manufacturing PMI doused hopes of turning over a January new leaf; it dropped to 49.7 in November, from 50.2 in December.
30 Nov. 2015 South American Central Banks Still Worrying About Inflation (Publication Centre)
Colombia's peso has been one of the most battered currencies in LatAm this year, due mainly to the sharp fall in oil prices, the country's primary export. The COP has dropped about 23% this year against the USD. At the same time, other temporary factors, most notably the impact of El Niño on food prices, have done a great deal of inflation damage too. October's food prices increased 1.4% month-to-month, pushing the year-over-year rate up to 8.8% from an average of 6.6% in the first half of the year. Overall inflation has jumped to 5.9% in October from 3.8% in January, forcing BanRep's board to act aggressively.
30 Nov. 2015 Stress Tests Should Underline Greater Resilience of U.K. Banks (Publication Centre)
The resilience of the U.K. financial system will be in focus this week. On Tuesday, the Bank of England's Prudential Regulation Authority, the PRA, will publish the results of stress tests of the U.K.'s seven largest banks. Concurrently, the Bank's Financial Policy Committee, the FPC, will publish its semi-annual Financial Stability Report and announce whether it will deploy any of its macroprudential tools.
5 July 2017 The ECB Needs a Weaker Euro in Q3 to Keep its Core CPI Forecast (Publication Centre)
Currency markets often make a mockery of consensus forecasts, and this year has been no exception. Monetary policy divergence between the U.S. and the Eurozone has widened this year; the spread between the Fed funds rate and the ECB's refi rate rose to a 10-year high after the Fed's last hike.
4 Mar. 2015 Brazil's Central Bank Set to Respond As Inflation Fails to Slow (Publication Centre)
Brazil is now paying the price of President Rousseff's first term, which was characterized by unaffordable expansionary policies. As a result, inflation is now trending higher, forcing the BCB to tighten at a more aggressive pace than initially intended--or expected by investors--depressing business and investment confidence.
5 July 2017 The Consumer Slowdown will Ripple out to the Services Sector Soon (Publication Centre)
The slowdown in quarter-on-quarter growth in households' real spending to 0.4% in Q1--just half 2016's average rate--was driven entirely by a 0.1% fall in purchases of goods. Households' spending on services, by contrast, continued to grow briskly. Indeed, the 0.8% quarter-on-quarter rise in households' real spending on services exceeded 2016's average 0.5% rate.
4 May 2018 A Solid Start to the Year for Chile's Economy, Will the Trend Continue? (Publication Centre)
This week's March economic activity reports in Chile have been relatively strong, with the industrial sector expanding briskly and retail sales solid.
4 May 2018 April Payrolls Likely Were Solid, but is Trouble Brewing for late Spring? (Publication Centre)
April payroll growth likely will be reported at close to 200K. Overall, the survey evidence points to a stronger performance, but they don't take account of weather effects, and April was a bit colder and snowier than usual. We're not expecting a big weather hit, but some impact seems a reasonable bet.
4 June 2018 Trump's Tariffs are a Bad Omen for NAFTA Talks, Trade-War Risk Rising (Publication Centre)
Rising political risks and NAFTA-related threats have put the MXN under pressure last month, driving it down 4.9% against the USD, as shown in our first chart.
4 July 2017 Will Firms Run Down Their Huge Cash Stockpiles Soon? (Publication Centre)
British firms have adopted a cautious mindset since the Brexit vote and are saving a huge share of their earnings, even though high profit margins make a strong case for investing more. Firms likely will run down their cash stockpiles when they become more confident about the medium-term economic outlook, potentially boosting GDP growth powerfully.
4 January 2017 Stronger Surveys Should Not Foster Optimism about Manufacturing (Publication Centre)
A cluster of surveys suggest that the manufacturing sector finished 2016 with a flourish, after a dismal performance for most of the year. But momentum will drain away from the sector's recovery in 2017, as higher oil prices make low value-added work unprofitable again and resurgent inflation causes domestic consumer demand to crumble.
4 January 2018 2018-to-2019 will Expose Asian Imbalances, Hurting GDP Growth (Publication Centre)
Let's say we are right, and global yields go up this year. Somewhere in the world, imbalances will be exposed, causing financial ructions and damaging GDP growth.
5 July. 2016 Can We be Sure The Labor Market is Tight Enough to Boost Wage Gains? (Publication Centre)
We have argued consistently for some time that the next year will bring a clear acceleration in U.S. wage growth, because the unemployment rate has fallen below the Nairu and a host of business survey indicators point to clear upward wage pressures. Nominal wage growth has been constrained, in our view, by the unexpected decline in core inflation from 2012 through early 2015, which boosted real wage growth and, hence, eased the pressure from employees for bigger nominal raises.
4 January 2019 No Need to Lower 2019 Economic Forecasts for Equity Market Drama (Publication Centre)
The 15% fall in the FTSE 100 since its May 2018 peak undoubtedly is an unwelcome development for the economy, but past experience suggests we shouldn't rush to revise down our forecasts for GDP growth.
5 July 2017 Cyclical Improvement in Brazil's Trade Balance is Nearly Over (Publication Centre)
Brazil's external position continue to improve, but we are sticking to our view that further significant gains are unlikely in the second half, given the stronger BRL. For now, though, we still see some momentum, with the unadjusted trade surplus increasing to USD7.2B in June, up from USD4.0B a year earlier. Exports surged 24% year-over-year but imports rose only 3%.
5 January 2018 The Plodding Economy Will Enable the MPC to Take its Time (Publication Centre)
December's Markit/CIPS surveys for the manufacturing, construction and services sectors suggest that the economy ended 2017 on a lacklustre note.
4 September 2018 EZ Manufacturing PMIs are Soft, but Base Effects will Lift Q3 data (Publication Centre)
Survey data in EZ manufacturing remain soft. Yesterday's final PMI report for August confirmed that the index dipped to 54.6 in August, from 55.1 in July, reaching its lowest point since the end of 2016.
4 September 2018 Colombia's Recovery Continues, and the Fundamentals are Sound (Publication Centre)
Activity data from Colombia over the past quarter have been strong. Real GDP expanded by a relatively robust 2.8% year-over-year in Q2, and is on track to post a 3.2% increase in Q3.
5 April 2017 The Brazilian Economy is Improving: Expect a Modest Q1 GDP Recovery (Publication Centre)
Brazilian February industrial production data, released yesterday, were relatively positive. Output rose 0.1% month-to-month, pushing the yearover- year rate down to -0.8% from 1.4% in January. Statistical quirks were behind February's year-over-year fall, though.
5 December 2016 Mexico's PMIs Fell in November, Q4 GDP Outlook is Poor (Publication Centre)
The MXN came under pressure last week as news broke that Banxico Governor Agustin Carstens plans to resign next year. Mr. Carstens has led the bank since 2010; during his term, Banxico cut interest rates to record low levels and managed to keep inflation under control.
5 December 2018 "Tariff Man" Doesn't Understand Tariffs that's Unfortunate (Publication Centre)
The key data originally scheduled for today--ADP employment and the ISM non-manufacturing survey, and the revised Q3 productivity and unit labor costs-- have been pushed to Thursday because the federal government will be closed for the National Day of Mourning for president George H. W. Bush.
5 January 2018 LatAm FX Started 2018 Strongly, but Risks Remain, Particularly in H1 (Publication Centre)
LatAm financial markets have performed solidly in the first sessions of the year, with most regional currencies trading more strongly against the USD.
5 January 2018 Time to Talk Chinese New Year Already, Ignore the PMI Jumps (Publication Centre)
The Caixin services PMI jumped sharply to 53.9 in December from 51.9 in November. All the PMIs picked up significantly, but we find this hard to believe and suspect seasonality is to blame, though the adjustment is tricky.
4 Nov. 2015 Why Has the Supply of Homes For Sale Fallen so Much? (Publication Centre)
The current momentum in house prices partly reflects a dearth of homes offered for sale by existing homeowners. This scarcity reflects a series of constraints, which we think will ease only gradually. Further punchy gains in house prices therefore look sustainable and we expect average prices to rise by about 8% next year.
4 November. 2016 Inflation Concerns Now Dominate on the MPC (Publication Centre)
The MPC surprised markets and ourselves yesterday by the extent to which it abandoned its previous stance and is now emphasising inflation over growth risks.
4 October 2017 BoJ QE Programme Slows to a Trickle but Reflation on the Cards (Publication Centre)
The rapidity with which the BoJ's QE programme has been scaled back is dramatic. Growth in the monetary base slowed to 15.6% year-over-year in September from 16.3% in August.
4 October 2017 Survey Data Suggest Recoveries in Brazil and Mexico are on Track (Publication Centre)
The Brazilian economy has been recovering at a decent pace in recent months. The labor market is on the mend, with the unemploymen t rate falling rapidly to 12.5% in August from 14% at the end of Q1.
5 June 2017 The Election Race is Still Tightening, Setting up Sterling for More Volatility (Publication Centre)
The Conservatives' opinion poll lead continued to decline over the last week, suggesting that a landslide victory on Thursday no longer is likely. Indeed, the Tories' average lead over Labour in the 10 most recent opinion polls has fallen to just 6%, down from a peak of nearly 20% a month ago.
4 December 2018 Manufacturing Still Treading Water, Despite the Slightly Stronger PMI (Publication Centre)
The recovery in the Markit/CIPS manufacturing PMI to 53.1 in November, from 51.1 in October, propelled it well above the consensus, and the equivalent reading for the Eurozone, 51.8, for only the second time in the last 19 months.
5 Oct. 2015 Less Bad Than Expected Data in Brazil, But the Crisis is Not Over (Publication Centre)
Brazil's economic and fiscal outlook has worsened in recent months, and economic activity will likely contract even further in the short-term. Some of last week's economic reports, however, were a bit less bad than of late. The latest industrial production data were less bad than expected in August, but the picture is still very grim. Industrial output plunged 1.2% month-to-month, above the consensus, and allowing the annual rate to stabilize at -9% year-over-year.
5 October 2017 Consumers' Spending in the Eurozone Slowed in Q3 (Publication Centre)
Yesterday's economic reports in the Eurozone will rekindle the debate on hard versus soft data. The final composite PMI rose to 56.7 in September, from 55.7 in August, in line with the first estimate.
5 Nov. 2015 A Rebound in German New Orders? But the Trend is Subdued (Publication Centre)
Factory orders in Germany probably jumped in September, following a string of losses in the beginning of Q3. We think new orders rose 1.0% month-to-month, pushing the year-over-year rate slightly lower, to 1.8% from 2.0% in August. A rebound in non- Eurozone export orders likely will be the key driver of the monthly gain, following a 14.8% cumulative plunge in the previous two months. The rise will be concentrated in capital and consumer goods, and should be enough to offset a fall in export orders within the euro area. Our forecast is consistent with new orders falling 2.0% quarter-on-quarter in Q3, partly reversing the 3.0% surge in the second quarter, and raising downside risks for production in Q4.
5 May. Mortgage Lending Concerns Will Ensure the MPC Doesn't Cut Rates (Publication Centre)
Barclays hit the headlines yesterday with an announcement that it is bringing back no-deposit mortgages for first-time buyers and raising its maximum loan-to-income ratio for borrowers with an income of more than £50K to 5.5, from 4.4. With other lenders likely to follow suit and the supply of homes for sale still extremely low, house price inflation likely will remain brisk this year.
31 March 2017 Q4 National Accounts will Show Stronger, but Fragile, Growth (Publication Centre)
The national accounts look set to show that GDP growth in the fourth quarter was even stronger than previously estimated. Earlier this month, quarter-on-quarter growth in construction output in Q4 was revised up to 1.2%, from 0.2%. As a result, construction's contribution to GDP growth will rise by 0.07 percentage points.
5 October 2017 Japan's Domestic Demand Slowed in Q3 as Consumers Pulled Back (Publication Centre)
Japan's Nikkei services PMI dropped to 51.0 in September from 51.6 in August, continuing the downtrend since June. For Q3 as a whole, the headline averaged 51.5, down from 52.8 in Q2; that's a clear loss of momentum.
30 October 2017 Is China's Profits Surge Driving up Developers' Short-term Borrowing? (Publication Centre)
Chinese industrial profits continue to surge, rising 27.7% year-over-year in September, up from 24.0% in August.
30 November 2018 EZ Inflation Likely Fell More than Markets Expected in November (Publication Centre)
Yesterday's November inflation reports from Germany and Spain suggest that today's data for the Eurozone as a whole will undershoot the consensus.
30 November 2018 Will AMLO Make a Defiant "Mexico First" Inauguration Pledge (Publication Centre)
We have witnessed a dramatic shift in just a few weeks in perceptions of Mexico as an investment destination.
5 September 2017 Services PMI set to Show Economy Still Struggling in Q3 (Publication Centre)
August's Markit/CIPS services survey, released today, likely will show that the economy's biggest sector is continuing to slow. We think that the PMI fell to just 53.0--its lowest level since it plunged immediately after the Brexit vote--from 53.8 in July, below the consensus, 53.5.
30 November. 2016 Recovery in Lending Unlikely to Maintain October's Momentum (Publication Centre)
October's money data show that households and firms have regained the appetite for borrowing that they lost immediately after the referendum. But the recent rise in swap rates and the deterioration in consumers' confidence likely will cut short the revival in consumer lending, while persistent Brexit uncertainty likely will continue to subdue firms' investment intentions.
31 May 2018 Recovering Consumer Confidence Won't Lift Spending, Much (Publication Centre)
The widespread view, which we share, that GDP will rebound in Q2 following the disruption caused by bad weather in Q1, was supported yesterday by the E.C.'s Economic Sentiment survey.
31 October 2018 Mexico's Airport Cancellation will Damage the Economic Outlook (Publication Centre)
Mexico's financial markets and risk metrics plunged early this week, following the AMLO government's decision to cancel the construction of the new airport in Mexico City, after a public consultation held in the previous four days.
5 June 2019 Don't Overlook the Construction Sector's Hidden Supports (Publication Centre)
The flow of downbeat business surveys continued yesterday, with the release of the Markit/CIPS construction survey.
5 June 2018 Eurozone Investors Haven't Been this Gloomy Since 2012 (Publication Centre)
If you were looking just at investor sentiment in the Eurozone, you would conclude that the economy is in recession.
4 December 2017 Britain Will be Forever Stuck in the Brexit Departure Lounge (Publication Centre)
Sterling strengthened last week to its highest tradeweighted level since mid-May, amid hopes that the U.K. government will concede more ground to ensure that the European Council deems, at its December 14 meeting, that "sufficient progress" has been made in Brexit talks for trade discussions to begin
4 December 2018 China and U.S. Agree a Truce Exports Still Face Headwinds (Publication Centre)
Following the much-anticipated meeting between Presidents Xi and Trump over the weekend, the U.S. will now leave existing tariffs on $200B of Chinese goods at 10%, rather than increasing the rate to 25% in January, as previously slated.
4 Dec. 2015 Brazil's Economic Mess Worsens Amid Deepening Political Crises (Publication Centre)
Industrial production data yesterday confirmed downside risks to Q4's GDP data in Brazil. Output fell 0.7% month-to-month in October, the fifth consecutive decline, pushing the year-over-year rate down to -11.2%, from -10.9% in September. This was the biggest drop since April 2009, when output collapsed by 14.2% during the global financial crisis. The October details were even worse than the headline, as all three broad-measures fell sharply.
4 April 2019 The Economy is Struggling, but not to the Extent Implied by the PMIs (Publication Centre)
All the main surveys of business activity in Q1 now have been released and they present a uniformly downbeat picture.
31 October. 2016 Q3 Growth Likely Wasn't 2.9%, Headwinds in Q4 (Publication Centre)
We are struggling to make sense of the third quarter GDP numbers. The reality is that the massive surge in soybean exports--which we estimate contributed 0.9 percentage points, gross, to GDP growth--mostly came from falling inventory, because the soybean harvest mostly takes place in Q4.
5 March 2018 Whatever the Problem is, Tariffs aren't the Answer (Publication Centre)
The apparently imminent imposition of 25% tariffs on imported steel and 10% on aluminum does not per se constitute a serious macroeconomic shock.
5 March 2018 Consumers' Spending in Germany Probably will Rebound in Q1 (Publication Centre)
Friday's economic data in Germany suggest that households had a slow start to the year.
4 April 2017 The Spanish and U.K. Navies won't Have to Fight over Gibraltar (Publication Centre)
The EU's negotiations with the U.K. over Brexit are off to a bad start. The position in Brussels is that negotiations on a new relationship can't begin before the bill on the U.K.'s existing membership is settled. But this has been met with resistance by Westminster; the U.K. does not recognise the condition of an upfront payment to leave.
29 November 2017 The Profit Share in GDP is set to Fall Sharply as Wage Growth Picks up (Publication Centre)
It doesn'tt matter if third quarter GDP growth is revised up a couple of tenths in today's third estimate of the data, in line with the consensus forecast.
29 May. 2015 Foreign Trade Chaos Hurt Q1 GDP Growth - Expect Hefty Q2 Unwind (Publication Centre)
The biggest single driver of the downward revision to first quarter GDP growth, due this morning, will be the foreign trade component. Headline GDP growth likely will be pushed down by a full percentage point, to -0.8% from +0.2%, with trade accounting for about 0.7 percentage points of the revision.
27 January 2017 Q4 Growth Likely Hit by Foreign Trade, Temporarily (Publication Centre)
We expect to learn today that the economy expanded at a 1.7% rate in the fourth quarter. At least, that's our forecast, based on incomplete data, and revisions over time could easily push growth significantly away from this estimate. The inherent unreliability of the GDP numbers, which can be revised forever--literally--explains why the Fed puts so much more emphasis on the labor market data, which are volatile month-to-month but more trustworthy over longer periods and subject to much smaller revisions.
7 November 2018 China's Q3 BoP Data Confirm Trade War-Related Capital Flight (Publication Centre)
China's unadjusted current account surplus widened to $16.0B in the preliminary report for Q3, from $5.3B in Q2.
27 January 2017 GDP Growth Will Slow This Year as Consumers Retrench (Publication Centre)
The preliminary estimate of GDP showed that the economy finished 2016 on a strong note. Output increased by 0.6% quarter-on-quarter, the same rate as in the previous two quarters. The year-over-year growth rate of GDP in 2016 as a whole--2.0%--was low by pre-crisis standards, but it likely puts the U.K. at the top of the G7 growth leaderboard. We cannot tell how well the economy would have performed had the U.K. not voted to leave the EU in June, but clearly the threat of Brexit has not loomed large over the economy.
27 January 2017 Trump's Plans Will Collide With Reality, But Mexico Will Suffer (Publication Centre)
U.S. President Trump on Wednesday signed an executive order aimed at delivering on his campaign pledge to build a wall on the U.S.-Mexico border. The executive order also includes measures to boost border patrol forces and increase the number of immigration enforcement officers. As previous U.S. presidents have discovered, however, signing an executive order is one thing and fulfilling it is something else. President Obama, for instance, signed an executive order to close the Guantanamo detention facility on his second day in office.
27 July 2017 GDP Growth Will Remain Weak in 2017, Keeping the MPC Inactive (Publication Centre)
GDP rose by 0.3% quarter-on-quarter in Q2, according to the ONS' preliminary estimate, confirming that the economy has fundamentally slowed since the Brexit vote. The modest growth has reduced further the already-small risk that the MPC will raise interest rates at its next meeting on August 3.
27 Jan. 2015 Don't Panic over Greece, a solution between the Troika and Syriza will be found (Publication Centre)
The landslide victory by anti-austerity party Syriza in Greece this weekend will increase uncertainty in coming months. The coalition between Syriza and the Independent Greeks will prove a tough negotiating partner for the EU as both parties are strongly in favor of pushing the Troika to significant concessions on any future bailout terms this year.
27 February 2018 The Trend in Mortgage Lending is Downward, Despite January's Jump (Publication Centre)
House purchase mortgage approvals by the main street banks jumped to 40.1K in January, from 36.1K in December, fully reversing the 4K fall of the previous two months, according to trade body U.K. Finance.
27 April 2017 How Much Further Can Mortgage Rates Fall? (Publication Centre)
Growth in households' disposable incomes has been supported in recent years by falling debt servicing costs. The proportion of households' incomes absorbed by interest payments fell to a record low of 4.5% in Q4 last year, down from 4.7% a year ago and a peak of 10% in 2008.
27 February 2017 Will the Surge in Equity Prices Support Consumption? (Publication Centre)
Last week's GDP figures illustrated that the economy is extremely vulnerable to a slowdown in households' spending. Our chart of the week, on page three, shows that consumers were alone in making a significant positive contribution to GDP growth last year.
7 November 2018 Sentiment Surveys are Deteriorating in Mexico Texcoco Airport Effect (Publication Centre)
Recently released data in Mexico are sending weak signals for the business outlook, and the Texcoco airport saga won't help.
27 February 2017 Banxico Faces Real Pressures, but bad News is Priced-In to the MXN (Publication Centre)
Mexico's policymakers are battling two opposing forces. First, inflation pressures are rising, on the back of the one-time increase in petrol prices and the lagged effect of the MXN's sell-off in Q4. These factors are pushing short-term inflation expectations higher, even though the MXN has remained relatively stable since President Trump took office and has risen by about 6% against the USD year-to-date.
7 November 2017 Car Sales are Falling Rapidly, with no End in Sight (Publication Centre)
The downturn in car sales is showing no sign of abating. Data released yesterday by the Society of Motor Manufacturers and Traders showed that private registrations fell 10.1% year-over-year in October, much worse than the 6.6% average drop in the previous 12 months.
03 October. 2016 ISM Unlikely to Rebound Much, but Manufacturing is Not Shrinking (Publication Centre)
Today's September ISM manufacturing survey is one of the most keenly-awaited for some time. Was the unexpected plunge in August a one-time fluke--perhaps due to sampling error, or a temporary reaction to the Gulf Coast floods, or Brexit--or was it evidence of a more sustained downshift, possibly triggered by political uncertainty?
27 October. 2016 Consumers' Spending in Germany will Continue to Slow, Modestly (Publication Centre)
Yesterday's consumer confidence report in Germany was soft, in contrast to surging business sentiment data earlier in the week.
7 July. 2016 June ADP Set to be Constrained by Weak May Payroll Data (Publication Centre)
We have argued frequently that the ADP employment report is not a reliable advance payroll indicator--see our Monitor of May 4, for example-- so for now we'll just note that it is generated by a regression model which includes a host of nonpayroll data and the official jobs numbers from the previous month. It is not based solely on reports from employers who use ADP for payroll processing, despite ADP's best efforts to insinuate that it is.
01 Mar. 2016 Rising Consumer Debt Puts Pressure on the Bank to Act (Publication Centre)
British households are back to their old ways and are piling on debt again. With borrowing costs still falling, consumer confidence high and banks willing to lend, indebtedness will only increase unless the Bank of England acts.
27 September 2017 A Stable and Solid Outlook for Private Investment in France (Publication Centre)
French business sentiment cooled marginally at the end of Q3. The headline manufacturing confidence index dipped to 110 in September, from 111 in August, though the overall business sentiment gauge was unchanged at 110.
27 September 2018 Fed Confirms December Rate Hike (Publication Centre)
The Fed is on course to hike again in December, with 12 of the 16 FOMC forecasters expecting rates to end the year 25bp higher than the current 2-to-21⁄4%; back in June, just eight expected four or more hikes for the year.
27 November 2017 Is it a Bird? Is it a Plane? No, It's the German IFO Survey (Publication Centre)
We are happy to report that the laws of gravity have been temporarily suspended in the German survey data.
7 June 2017 The Slowing in Consumer Credit Demand is Good News (Publication Centre)
Today's consumer credit report for April likely will show that the stock of debt rose by about $15B, a bit below the recent trend. The monthly numbers are volatile, but the underlying trend rate of increase has eased over the past year-and-a-half, as our first chart shows. The slowdown has been concentrated in the non-revolving component, though the rate of growth of the stock of revolving credit--mostly credit cards--has dipped recently, perhaps because of weather effects and the late Easter.
03 Mar. 2016 Construction Slowdown is Symptomatic of Wider Malaise (Publication Centre)
The revival in the construction sector is slowing on all fronts as the fiscal squeeze intensifies, business confidence fades and the recovery in housebuilding loses momentum. These headwinds are likely to ensure that construction output only holds steady this year, thereby contributing to the broader economic slowdown.
27 March 2019 Mortgage Lending Still is Heading for a Roller Coaster Year (Publication Centre)
The mortgage market still is defying gravity. U.K. Finance initially reported yesterday that house purchase mortgage approvals by the main high street banks collapsed to 35.3K in February, from 39.6K in January.
7 March 2017 Can Italy's Economy Overcome Weak Real Wage Growth in 2017? (Publication Centre)
The Italian economy slowed at the end 2017, and it continues to underperform other major EZ economies. Real GDP rose 0.2% quarter-on-quarter in Q4, a bit slower than the 0.3% gain in Q3, pushing full-year growth up to a modest 1.0%. This compares poorly, though, with growth of 1.6% in the euro area as a whole.
7 June 2019 Did Mr. Draghi Inadvertently Snub Expectations for a Q4 Rate Cut (Publication Centre)
It says a lot about investor expectations that markets' reaction to yesterday's policy announcement by the ECB was marked by slight "disappointment," with EURUSD rallying and EZ bond yields rising.
7 Sept. 2015 Mexico's Recovery In Place But Constrained By External Headwinds (Publication Centre)
Growth momentum in Mexico has improved marginally over the last few months after the soft patch during the first quarter, with business and households gaining confidence in the economic recovery. But the upswing has been rather modest, due to the volatility in global financial markets and the challenging external environment. The outlook for the global economy has deteriorated over recent months due to China's problems, and commodity prices remain under pressure. All these factors are now weighing on investors' confidence and hurting EM across asset classes.
7 September 2018 Low Inflation Means Policymakers to Stay Steady in Brazil and Colombia (Publication Centre)
Brazil's benchmark inflation index, the IPCA, fell 0.1% month-to-month unadjusted in August, below market expectations.
04 Jan. 2016 Further Slowdown Won't Prevent the MPC Raising Rates in 2016 (Publication Centre)
Markets were on the right side of the argument with economists about the outlook for monetary policy in 2015, but we doubt history will repeat itself this year. The consensus among economists a year ago was for interest rates to rise to 0.75% from 0.5% by the end of 2015, in contrast to the markets' view that an increase was unlikely.
26 July 2018 The Climate Still isn't Right for Mortgage Lending to Recover (Publication Centre)
House purchase mortgage approvals by the main high street banks continued to recover in June, rising to a nine-month high of 40.5K, from 39.5K in May. June approvals, however, merely matched their postreferendum average, and the chances of a more substantial recovery are slim.
26 June 2018 Low Inventory Still Lifting Home Prices Ignore So Case Shiller Data (Publication Centre)
Today brings more housing market data, in the form of the Case-Shiller home price report for April.
26 June 2018 The German Economy is No Longer Firing on All Cylinders (Publication Centre)
The verdict from the German business surveys is in; economic growth probably slowed further in Q2.
26 June 2019 Durable Goods Orders Under Pressure, but no Meltdown (Publication Centre)
I need to ask your indulgence today, because the release of the durable goods and advance international trade reports coincides with my elder daughter's college graduation ceremony.
26 July 2017 Preliminary GDP to Confirm Growth Remained Sluggish in Q2 (Publication Centre)
Today's preliminary estimate of GDP likely will show that the economy continued to struggle in response to high inflation, further fiscal austerity and Brexit uncertainty.
26 July 2017 National Surveys are Not Bogged Down by Disappointing PMIs (Publication Centre)
Yesterday's national business surveys provided an optimistic counterbalance to the underwhelming PMIs on Monday, although they all suggest that the euro area economy is in good form.
04 October. 2016 EZ Manufacturing Continues to Punch Above its Weight (Publication Centre)
Yesterday's survey data tell a story of resilient manufacturing in the Eurozone. The headline EZ PMI rose to 52.6 in September, from 51.7 in August, lifted by a rise in new orders to a three-month high.
26 Jan. 2016 The Collapse in Oil Prices Won't Reinvigorate the Economy in 2016 (Publication Centre)
The response of U.K. producers and consumers to lower oil prices could not have been more different to those on the other side of the Atlantic. Counter-intuitively, U.K. oil production has grown strongly over the last year, while investment hasn't collapsed to the same extent as in the U.S., yet. Meanwhile, U.K. households have thrown caution to the wind and already have spent the windfall from the previous drop in oil prices, unlike their more prudent--so far--U.S. counterparts. With the costs still to come but most of the benefits already enjoyed, lower oil prices will be neutral for 2016 U.K. GDP growth, at best.
26 January 2017 GDP Growth Remained Brisk in Q4, but Headwinds are Building (Publication Centre)
Today's preliminary estimate of Q4 GDP likely will show that the Brexit vote has not caused the economy to slow yet. But growth at the end of last year appears to have relied excessively on household spending, which has been increasingly financed by debt. GDP growth likely will slow decisively in Q1 as the squeeze on households' real incomes intensifies.
26 January 2017 The IFO Points to Solid GDP Growth in Germany, Despite Dip (Publication Centre)
The trend of consensus-beating EZ economic data was brought to a halt yesterday. The IFO business climate index in Germany slipped to a five-month low of 109.8 in January, from 111.0 in December, mainly due to a fall in the expectations index. But we are not alarmed. The dip in the headline comes after a run of strong data, and the IFO remains consistent with GDP growth of about 1.6% year-over-year.
26 June 2019 Services and Construction Will Lift French Capex in Q2, and in H2 (Publication Centre)
The INSEE's manufacturing sentiment data in France are slightly confusing at the moment.
26 Mar. 2015 How Far Will Capital Goods Orders Fall as the Oil Sector Shrinks? (Publication Centre)
The rollover in core capital goods orders in recent months has been startling. In the three months to February, compared to the previous three months, orders for non-defense capital goods fell at a 7.6% annualized rate.
26 October. 2016 Consumer Energy Price Rises Are in the Pipeline (Publication Centre)
Sharp falls in energy prices have been a boon for consumers, freeing up considerable funds for discretionary purchases. Domestic energy and motor fuel absorbed just 4.7% of consumers' spending in Q2, the lowest proportion for 12 years and well below the 6.7% recorded three years ago.
7 September. 2016 Copom Minutes Suggest that October Easing is Very Much Alive (Publication Centre)
The recent less-bad growth and inflation data in Brazil are encouraging news and are setting the stage for easing in October. The minutes of the Copom's August 31 monetary policy meeting, released yesterday, were less hawkish than in previous months, indicating that policymakers are gauging the possibility of cutting rates.
04 Feb. 2016 EZ Consumers' Spending Stalled in Q4, but Should Rebound in Q1 (Publication Centre)
Data yesterday suggest Eurozone consumers' spending rebounded towards the end of Q4. Retail sales rose 0.3% month-to-month in December, pushing the year-over-year rate down to 1.4%, from a revised 1.6% in November. A +0.3 percentage point net revision to the month-to-month data added to the optimism, but was not enough to prevent a slowdown over the quarter as a whole.
2 October 2018 U.S. Manufacturing Outperforms as the Global Cycle Peaks (Publication Centre)
The inevitable--more or less--correction from August's 14-year high is no big deal.
26 September 2017 Brazil's Labor Market is on the Mend, But Challenges Persist (Publication Centre)
The Brazilian labour market is slowly healing following the severe recession of 2015-16. The latest employment data, released last week, showed that the economy added 35K net jobs in August, compared to a 34K loss in August 2016.
26 October 2018 Plunging Korean Investment Activity Cancels-out Gains Elsewhere in Q3 (Publication Centre)
Korea's GDP growth in Q3 was a miss. Quarter- on-quarter growth was unchanged at 0.6%, below the consensus for a 0.8% rise.
26 October 2017 The Capex Rebound Promised by the NFIB is Reaching the Hard Data (Publication Centre)
After three straight 1.3% month-to-month increases in core capital goods orders, we are becoming increasingly confident that the upturn in business investment signalled by the NFIB survey is now materializing.
8 April 2019 Don't Rule Out a 2019 Rate Hike, if the Brexit Extension is Long (Publication Centre)
The point when businesses and households can breathe a sigh of relief about Brexit looks set to be delayed again this week.
26 May. Second Estimate of Q1 GDP to Highlight Brexit Risk Damage (Publication Centre)
This morning's second estimate of Q1 GDP likely will restate the preliminary estimate of a 0.4% quarter-on-quarter rise, confirming that the economic recovery has lost momentum since last year. Meanwhile, the new expenditure breakdown is set to show that growth remained extremely dependent on households and will bring more evidence that businesses held back from investing, ostensibly due to Brexit concerns.
8 Apr. 2016 Net Exports Likely Weighed on French GDP Growth Again in Q1 (Publication Centre)
External demand in France probably weakened in the first quarter. The trade deficit widened sharply to €5.2B in February, from a revised €3.9B in January, pushing the current account deficit to an 18-month high. It is tempting to blame the stronger euro, but that wasn't the whole story.
8 Apr. 2015 Slowly does it for upturn in the German manufacturing sector (Publication Centre)
German factory orders probably bounced a modest 0.3% month-to-month in February, equivalent to a 0.5% decline year-over-year. We expect private investment growth to have picked up in the first quarter, but leading indicators for the industrial sector in Germany are sending conflicting signals.
27 September 2018 Mortgage Lending will Keep Trending Down as Brexit Nears (Publication Centre)
August's mortgage lending data from the trade body U.K. Finance provided more evidence that the pick-up in housing market activity in Q2 simply reflected a shift from Q1 due to the disruptive weather, rather than the emergence of a sustainable upward trend.
01 Feb. 2016 Mexico's Mining Sector Still a Drag, Services Doing the Work (Publication Centre)
Mexico's economy lost some momentum in Q4, due mainly to weakness in industrial and agricultural activity, but this was partly offset by the strength of the services sector as consumers' spending again carried the economic recovery. Real GDP rose 0.6% quarter-on-quarter in Q4, after a 0.8% expansion in Q3, the tenth consecutive increase. Year-over-year growth dipped marginally to 2.5% from 2.6% in Q3, but the underlying trend remains stable. In 2015 as a whole the economy expanded by 2.5%, up from 2.3% in 2014.
29 Apr. 2015 Upbeat French consumers, but unemployment is a dark spot (Publication Centre)
Household sentiment in France continues to improve, consistent with tailwinds from low energy prices and accommodative monetary policy. INSEE's measure of consumer confidence rose to 94 in April, up from 93 in March, the highest since November 2010.
6 September 2018 Does the Caixin Services PMI Pick up Activity Missing from GDP (Publication Centre)
The Caixin services PMI fell to 51.5 in August, from 52.8 in July.
29 Apr. 2016 Brazil's Central Bank Lays The Groundwork for a Rate Cut in Q3 (Publication Centre)
Brazil's macroeconomic scenario is becoming easier to navigate for the central bank. Both actual inflation and expectations are slowing rapidly, as shown in our first chart. And since the March BCB monetary policy meeting, the BRL has appreciated about 10% against the USD, while commodity prices and EM sentiment have also improved markedly.
6 September 2017 Harvey set to Distort Chainstore, MBA Data Today, but no hit on ISM (Publication Centre)
Last Friday's August auto sales numbers were overshadowed by the below-consensus payroll report and the six-year high in the ISM manufacturing index, but they are the first data to reflect the impact of Hurricane Harvey.
29 Jan. 2016 EZ Core Inflation is Rising, but Weak Oil Prices are Still a Wildcard (Publication Centre)
German data yesterday indicate that inflation pressures have, so far, been resilient in the face of the recent collapse in oil prices. Inflation rose to 0.5% year-over-year in January from 0.3% in December, partly due to base effects pushing up the year-over-year rate in energy prices, but core inflation rose too. The detailed state data indicate that almost all key components of the core index contributed positively, lead by leisure and recreation and healthcare.
6 September. 2016 Chile's Economy Still Under Strain, but Recession Will be Avoided (Publication Centre)
Chile's economy remains under pressure, at least temporarily. After signs of recovery in Q1, activity deteriorated in Q2 and at the start of the third quarter. The sluggish global economy--especially China, Chile's main trading partner--is exacerbating the domestic slowdown, hit by low business and consumer confidence.
6 September. 2016 Payrolls Will Revive, but not Immediately, Ignore "So" AHE (Publication Centre)
Over the past six months, payroll growth has averaged exactly 150K. Over the previous six months, the average increase was 230K. And in the six months to August 2015--a fairer comparison, because the fourth quarter numbers enjoy very favorable seasonals, flattering the data--payroll growth averaged 197K.
7 Apr. 2016 Real Economic Data Point to an Upbeat German GDP Story in Q1 (Publication Centre)
Yesterday's German industrial production data were poor, but better than we expected. Output fell 0.5% month-to-month in February, pushing annual growth down to 1.3% from a revised 1.8% in January. In addition, net revisions to the month-to-month data were a hefty -1.0%, but this is not enough to change the story of a Q1 rebound in industrial production.
6 September. 2016 Too Soon to Breathe a Sigh of Relief on Recession Risk (Publication Centre)
The improvement in the August services PMI has generated hyperbolic headlines suggesting the U.K. is on a tear despite the Brexit vote. Taken literally, however, the PMIs suggest that the revival in business activity in August only partially reversed July's decline. Meanwhile, the impact of sterling's sharp depreciation on the purchasing power of firms and consumers has only just begun to be felt.
28 September 2016 Strong EZ Money Supply Data, but Lending Details Mixed (Publication Centre)
Yesterday's money supply data in the Eurozone were solid across the board. Growth in headline M3 rose to 5.1% year-over-year in August, up from a 4.9% increase in July. A rebound in narrow money growth was the key driver of the gain, with seasonally- and calendar-adjusted M1 rising 8.9% year-over-year, up from July's 8.4%.
28 September 2017 A Slowdown in Unsecured Lending will Hurt More than the Bank Thinks (Publication Centre)
The risk posed by consumer borrowing was once again the focus of the Financial Policy Committee's discussion last week.
29 January 2019 A Guide to Today's Key Brexit Votes in Parliament (Publication Centre)
Votes in the House of Commons to day likely will mark the start of MPs stamping their collective will on the Brexit process, following the Prime Minister's botched attempt at getting the current Withdrawal Agreement--WA--and Political Declaration through parliament earlier this month.
29 January 2019 Is it a Good Idea for Markets to Ignore Poor Macro Data in the EZ (Publication Centre)
In the last few weeks markets have been treated to the news that euro area industrial production crashed towards the end of Q4, warning that GDP growth failed to rebound at the end of 2018 from an already weak Q3.
29 March 2017 Banxico to Hike Tomorrow Despite the MXN's Rebound this Year (Publication Centre)
LatAm currencies have risen against the USD so far this year, easing the upward pressure on imported good prices and allowing most central banks to cut interest rates. The first direct effects of stronger currencies should be felt by firms which import high-turnover intermediate or final goods.
29 June. 2015 Mexican Recovery is Stuttering, but Better Days Ahead? (Publication Centre)
Mexico's economy hit a sticky patch in the first quarter, with confidence slipping, employment growth slowing and the downward trend in unemployment stalling. Indeed, the headline unemployment rate rose to 4.5% in May from 4.3% in April. The seasonally adjusted rate, though, was little changed at 4.4%, with a stable participation rate.
6 Nov. 2015 Woeful German Manufacturing Data Curbs Optimism for Q4 (Publication Centre)
German manufacturing data continues to offer a sobering counterbalance to strong services and consumers' spending data. New orders plunged 1.7% month-to-month in September, well below the consensus, pushing the year-over-year rate down to a 1.0% fall from a revised 1.7% increase in August. These data are very volatile, and revisions probably will lift the final number slightly next month, but the evidence points to clear risks of a further decline in the underlying trend of production.
29 May 2018 Capex Starts the Second Quarter Strongly, Further Gains Ahead? (Publication Centre)
The newly-revised data on capital goods orders, released on Friday, support our view that sustained strength in business capex remains a good bet for this year.
29 May 2019 Will Consumers Save Less this Year, in Order to Spend More (Publication Centre)
While businesses--and farmers--fret over the damage already wrought by the trade war with China and the further pain to come, consumers are remarkably happy.
6 October 2017 China's Debt Ratio Stabilised in 2016, but only Cyclically (Publication Centre)
We've written in previous Monitors about the stabilisation of China's debt ratio. In this Monitor we look at whether this stabilisation is cyclical or a sign that China really has managed to change the structure of its economy to be less reliant on debt.
6 October 2017 The Mining Recovery is Driving Chile's Rebound, Will it Last? (Publication Centre)
Chile's growth dynamics were robust in August, according to the latest data. Production rose and consumption remained strong during most of Q3. Indeed, industrial output increased 5.1% year-over- year, up from an already strong 3.1% increase in July, and contrasting sharply with the 2% fall in Q2.
29 July. 2016 Brace for Downside Surprise in Today's Advance Q2 EZ GDP Data (Publication Centre)
Today's Eurozone data schedule is very hectic, but attention likely will focus on advance Q2 GDP data. France, Austria and Spain will report advance data separately ahead of the EZ aggregate estimate, which is released 11.00 CET. This report will include a confidential number from Germany.
29 June 2017 A Single Rate Hike Would Risk a Harmful Rise in Rate Expectations (Publication Centre)
The MPC's hawks are framing the interest rate increase they want as a "withdrawal of part of the stimulus that the Committee had injected in August last year", arguing that monetary policy still would be "very supportive" if rates rose to 0.5%, from 0.25%.
6 September 2017 Chinese Service PMI Still Stable but Glosses Over Subsector Divergence (Publication Centre)
The services sector in China is notoriously difficult to track, with the major aggregate statistics published only on a quarterly or even annual basis.
29 June 2018 Trade Tensions Unveil Chinese Financial Fragility (Publication Centre)
In previous Monitors, we have outlined our base case that the direct impact of tariffs on Chinese GDP will be minimal this year.
28 Oct. 2015 Budget Deal Means Fiscal Policy Will Ease Slightly Next Year (Publication Centre)
The two-year budget deal agreed between the administration and the Republican leadership in Congress will avert a federal debt default and appears to constitute a modest near-term easing of fiscal policy. The debt ceiling will not be raised, but the law imposing the limit will be suspended through March 2017, leaving the Treasury free to borrow as much as necessary to cover the deficit. As a result, the presidential election next year will not be fought against a backdrop of fiscal crisis.
28 November. 2016 Banxico's Balancing Act is Becoming Harder and More Risky (Publication Centre)
Banxico's decisions throughout the past year have been guided by external forces, dominated by the persistent decline of the MXN against the USD and its potential impact on inflation. The MXN has fallen by almost 17% year-to-date and has dropped by an eye-watering 37% since 2014.
28 Jan. 2016 Preliminary GDP Likely to Provide Another Downside Surprise (Publication Centre)
We expect today's preliminary estimate of Q4 GDP growth to surprise the consensus to the downside, underscoring our view that the economic recovery has shifted down to a much slower gear.
28 Jan. 2015 Economic Momentum Means no Easing in Mexico this Year (Publication Centre)
Mexico's central bank, Banxico, will hold its first monetary policy meeting of this year tomorrow. It will break with tradition, holding the meeting on Thursday at 1:00 p.m, local time, instead of the previous 9:00 a.m slot.
7 February 2019 Korea's December was Good, not Great Expect Revisions to Q4 GDP (Publication Centre)
Following the publication of Korea's preliminary Q4 GDP report last month--see here--we said the consensus-beating print would be susceptible to downgrades, unless the economy had a miraculous end to 2018
7 February 2017 Q1 Growth to Disappoint, Again? (Publication Centre)
The obvious answer to the question posed in our title is that it's far too early to tell what will happen to first quarter growth. More than half the quarter hasn't even happened yet, and data for January are still extremely patchy, with no official reports on retail sales, industrial production, housing, capex, inventories or international trade yet available. For what it's worth, the Atlanta Fed's GDPNow model signals growth of 3.4%, though we note that it substantially overstated the first estimate of growth in the fourth quarter.
28 July 2017 The Eurozone is in fine form, as we start our summer break (Publication Centre)
This is the final report before your scribe disappears into the Scottish Highlands for a few weeks, and we are leaving you with a Eurozone economy in fine form. The calendar will be relatively light in our absence and will tell us what we already know; namely that the euro area economy maintained its strong momentum in Q2.
28 February 2018 Retail Sales in Mexico Ended 2017 Badly, but Spending Will Rebound (Publication Centre)
Retail sales in Mexico plunged at the end of Q4, but we think households' spending will continue to contribute to GDP growth in the first quarter.
28 February 2017 What Will the President say About Taxes and Spending? (Publication Centre)
It seems pretty clear from press reports that the White House budget, which reportedly will be released March 14, will propose substantial increases in defense spending, deep cuts to discretionary non- defense spending, and no substantive changes to entitlement programs. None of this will come as a surprise.
27 September. 2016 Jobs Seen as Plentiful, but Payroll Gains Will Remain Low (Publication Centre)
In contrast to surveys of manufacturing activity and sentiment, the Conference Board's measure of consumer confidence rose sharply in August, hitting an 11-month high. People were more upbeat about both the current state of the economy and the outlook, with the improving job market key to their optimism. The proportion of respondent believing that jobs are "plentiful" rose to 26%, the highest level in nine years.
7 January 2019 Chile's Economic Upturn Stuttered in Q4, Risks to Growth are Rising (Publication Centre)
Chile's economic outlook is still positive, but clouds have been gradually gathering since mid-year, due mostly to the slowdown in China, low copper prices and falling consumer and business confidence.
28 April 2017 Current Account in Brazil Still Improving, But not for Long (Publication Centre)
Brazil's recovery has been steady in recent months, and Q1 likely will mark the end of the recession. The gradual recovery of the industrial and agricultural sectors has been the highlight, thanks to improving external demand, the lagged effect of the more competitive BRL, and the more stable political situation, which has boosted sentiment.
28 April 2017 Preliminary GDP Estimate Likely to Reveal Q1 Slowdown (Publication Centre)
The preliminary estimate of Q1 GDP looks set to show that the economy started 2017 on a weak footing. We share the consensus view that quarter-on-quarter GDP growth slowed to 0.4%, from 0.7% in Q4.
7 December 2018 GDP to Stagnate Again in October, but Markets are Braced for the Worst (Publication Centre)
October's GDP report, released on Monday, might just manage to break through the wall of noise coming from parliament ahead of the key Brexit vote on Tuesday.
28 July. 2016 EZ M1 Growth Slips Further, Signalling Lower Growth in 2017 (Publication Centre)
The headline in yesterday's EZ money supply report gave the illusion that monetary conditions are stable, but the details tell a different story. M3 growth accelerated marginally to 5.0% year-over-year in June, from 4.9%, but momentum in narrow money fell further. M1 growth slowed to 8.5% year-over-year, from 9.0% in May due to a fall in overnight deposits and currency in circulation.
28 March 2019 China Profits will Bounce Back in March Proper Recovery is Coming (Publication Centre)
China's industrial profits tanked in January/ February, falling 14.0% year-to-date year-over-year, after a 1.9% drop year-over-year in December.
28 May 2019 Count on Consumers to Drag the Economy Through the Brexit Mess (Publication Centre)
The Prime Minister's resignation and the stillborn launch of the Withdrawal Agreement Bill last week has forced us to revise our Brexit base case, from a soft E.U. departure on October 31 to continued paralysis.
28 May 2019 The Trade War: What we Know, What we Believe, and What we Don't Know (Publication Centre)
The trade war with China is a macroeconomic event, whose implications for economic growth and inflation can be estimated and measured using straightforward standard macroeconomic tools and data.
28 November 2017 Chinese Profits Headline Overstates Growth. Private Firms Struggling (Publication Centre)
Chinese industrial profits growth officially edged down to 25.1% year-over-year in October, from 27.7% in September. This is still very rapid but we think the official data are overstating the true rate of growth.
28 March 2017 Could a Rebounding Eurozone Prevent a U.K. Slowdown? (Publication Centre)
Business surveys coming out of the Eurozone have been remarkably strong recently. The composite PMI for the Eurozone jumped to 56.7 in March--its highest level since April 2011--from 56.1 in February. Germany's IFO business climate index leaped to a 67-month high in March.
28 March 2017 Full-Scale Tax Reform Likely is Dead (Publication Centre)
The failure of House Republicans to support Speaker Ryan's healthcare bill has laid bare the splits within the Republican party. The fissures weren't hard to see even before last week's debacle but the equity market has appeared determined since November to believe that all the earnings-friendly elements of Mr. Trump's and Mr. Ryan's agendas would be implemented with the minimum of fuss.
28 June 2017 Chinese Profits Growth to Decelerate, That's a Good Thing (Publication Centre)
Chinese industrial profits growth rose to 16.7% year-on-year in May, from 14.0% in April. But this headline is highly misleading. Profits growth data are about as cyclical as they come so taking one point in the year and looking back 12 months is very arbitrary. Moreover, the data are very volatile over short periods.
28 June 2017 Mexico's Trade Balance Stalled in May, but Trend Remains Positive (Publication Centre)
The upturn in Mexico's trade balance in recent months stalled in May, but the underlying trend is still improving. Data yesterday showed that the seasonally adjusted deficit rose to USD700M in May, after a USD15M gap in April. Imports rose 2.9% month-to-month, offsetting a mere 0.7% increase in exports.
28 June 2019 Consumers' Confidence Still Points to Steady Growth in Spending (Publication Centre)
The latest E.C. survey shows the gap between firms' and households' confidence levels has remained substantial.
28 June. 2016 New Government in Spain Will be Given Time to Cut its Deficit (Publication Centre)
okThe weekend's election result in Spain provided relief for investors anxiously looking for another "surprise." Exit polls on Sunday showed a big majority for the anti-establishment party Podemos, but in the end Spanish voters opted for safety. The incumbent Partido Popular, PP, was the election's big winner compared with the elections six months ago, gaining 15 seats.
26 April 2019 First Quarter Growth Likely was Very Respectable, Q2 Should be Good too (Publication Centre)
We're expecting to learn today that the economy expanded at a 2.6% annualized rate in the first quarter, rather better than we expected at the turn of the year--our initial assumption was 1-to-2%--and above the consensus, 2.3%.
9 November 2018 Stockbuilding Won't Temper the Near-Term Slowdown (Publication Centre)
A flawed theory still is circulating that the economy might outperform over the next two quarters because firms will stockpile goods due to the risk of a no-deal Brexit.
17 January 2017 Will Brexit and Mr. Trump Dent EZ Exports to the U.S. and the U.K? (Publication Centre)
Net exports in the euro area likely rebounded in Q4. The headline EZ trade surplus rose to €22.7B in November from €19.7B in October. Exports jumped 3.3% month-to-month, primarily as a result of strong data in Germany and France, offsetting a 1.8% rise in imports. Over Q4 as a whole, we are confident that net exports gave a slight boost to eurozone GDP growth, adding 0.1 percentage points to quarter-on-quarter growth.
17 January 2017 Peru's Growth is Solid, Will Copper Prices Offer More Support in 2017? (Publication Centre)
Yesterday's economic activity data from Peru signalled that the relatively firm business cycle continues. The monthly GDP index accelerated to 3.6% year-over-year in November, rising from 2.1% in October, but marginally below the 4.4% on average in Q3. Growth continued to be driven by mining output, including oil and gas, which rose 15% year-over- year. The opening of several new mines explains the upturn, and we expect the sector to remain key for the Peruvian economy this year.
17 January 2018 Severe Weather Likely Depressed Homebuilders' Sentiment (Publication Centre)
At the end of last year, U.S. homebuilders were more optimistic than at any time in the previous 18 years, according to the monthly NAHB survey.
U.S. H1 2017 Outlook - Inflation Pressure is Building, Even Before Fiscal Easing (Publication Centre)
The U.S. faces greater uncertainty now than at the start of any previous year in recent memory...
11 October 2018 Italy's Government is Picking a Fight with Both Markets and the EU (Publication Centre)
Base effects were the key driver of yesterday's upbeat industrial production headline in Italy.
17 February 2017 Slowing Real Incomes Threaten Spending (Publication Centre)
The rate of growth of real personal incomes is under sustained downward pressure, slowing to 2.1% year-over-year in December from 3.4% in the year to December 2015. In January, we think real income growth will dip below 2%, thanks to the spike in the headline CPI, reported Wednesday. Our first chart shows that the 0.6% increase in the index likely will translate into a 0.5% jump in the PCE deflator, generating the first month-to-month decline in real incomes since January last year.
11 September 2017 Will the MPC Step up its Rhetoric to Support the Pound? (Publication Centre)
The key question for the MPC at this week's meeting is whether it is prepared to tolerate the consequences for inflation of sterling's further depreciation since its last meeting in August.
16 September. 2016 Mexican Peso in the Firing Line, Volatility will Remain High (Publication Centre)
The Mexican peso and the Mexican stock market were hit this week after a poll showed that the Republican presidential candidate, Mr. Donald Trump, is leading in Ohio, a bellwether state in US presidential elections. After the poll's release, the MXN, which has been trading at about 18.9 to the USD, shot up to around 19.2.
12 April 2017 Don't Worry About the Weakness in C&I Lending, it will Rebound (Publication Centre)
Friday's weekly report on the assets and liabilities of U.S. commercial banks will complete the picture or March and, hence, the first quarter. It won't be pretty. With most of the March data already released, a month-to-month decline in lending to commercial and industrial companies of about 0.7% is a done deal. That would be the biggest drop since May 2010, and it would complete a 1% annualized fall for the first quarter, the worst performance since Q3 2010. The year-over-year rate of growth slowed to just 5.0% in Q1, from 8.0% in the fourth quarter and 10.3% in the first quarter of last year.
17 April 2018 The Manufacturing Rebound Continues, but Expect a Soft March (Publication Centre)
Over the past 18 months, the year-over-year rate of growth of manufacturing output has swung from minus 2.1% to plus 2.5%.
11 September 2018 July's Strong-Looking GDP Growth Rate Will Be This Year's Peak (Publication Centre)
Markets rightly interpreted yesterday's above consensus GDP report as having little impact on the outlook for monetary policy.
11 September 2017 Inflation in Mexico Looks Scary but Soon will Start to Fall Rapidly (Publication Centre)
Mexico's inflation nudged up to a fresh 16-year high in August, but the details of the report confirmed that underlying pressures are easing, in line with our core view.
17 July 2019 Punchy Wage Gains are Tying the MPC's Hands (Publication Centre)
Labour costs are rising so quickly that the MPC cannot justify an "insurance" cut in Bank Rate to counteract the impending damage from Brexit uncertainty in the run-up to the October deadline.
17 July. 2015 Will June Core Inflation Reflect the Upside Surprise in the PPI? (Publication Centre)
June's headline CPI, due this morning, will be boosted by the rebound in gasoline prices, but market focus will be on the core, in the wake of the startling, broad-based jump in the core PPI, reported Wednesday. Core PPI consumer goods prices jumped by 0.7% in June, with big incr eases in the pharmaceuticals, trucks and cigarette components, among others. The year-over-year rate of increase rose to 3.0%, up from 2.1% at the turn of the year and the biggest gain since August 2012. Then, the trend was downwards.
11 October 2017 Hard Data Suggest German GDP Growth Slowed Slightly in Q3 (Publication Centre)
Germany's nominal external surplus rebounded smartly over the summer, but real net trade looks set to be a drag on Q3 GDP growth, again. The seasonally adjusted trade surplus increased to €21.6B in August from a revised €19.3B in July.
17 March 2017 February's Manufacturing Data Flattered by Warm Weather? (Publication Centre)
The latest survey evidence strongly supports our view that momentum is building in the industrial economy, but the official production data continue to lag. Yesterday's March Philly Fed survey was remarkably strong, with the correction in the headline sentiment index -- inevitable, after February's 33-year high -- masking increases in all the subindexes.
17 May 2017 With the MXN Stable, Banxico Likely Won't Hike this Week (Publication Centre)
Mexico's central bank likely will pause its monetary tightening on Thursday, keeping the main rate at 6.5%. A hike this week would follow five consecutive increases, totalling 350bp since December 2015, when policymakers were first overwhelmed by the MXN's sell-off.
17 May. 2016 Core Inflation is Still Trending Higher - Expect Rebound Today (Publication Centre)
The year-over-year rate of core CPI inflation rose steadily from a low of 1.6% in January 2015 to 2.3% in February this year. At that point, the three-month annualized rate had reached a startling 3.0%. You could be forgiven, therefore, for thinking that the dip in core inflation back to 2.2% in March was an inevitable correction after a period of unsustainably rapid gains, and that the underlying trend in core inflation isn't really heading towards 3%.
11 Nov. 2015 Strong Finish to Q3 for French Manufacturing to Boost GDP? (Publication Centre)
French industrial production data surprised to the upside yesterday. Output rose 0.1% month-to-month in September, a solid gain following an upwardly-revised 1.7% rise in August, and also higher than the consensus, forecast for a 0.4% fall. The details, however, were less upbeat than the headline. Transport equipment fell, as expected, following production being pushed forward ahead of the Summer holidays. But this story was overshadowed by a 22.5% month-to-month jump in oil refining-- included in manufacturing--as refineries resumed full production following maintenance over the summer.
17 Mar. Fiscal Squeeze Still Set to Intensify, Despite the Economic Slowdown (Publication Centre)
The Chancellor chose in his Budget to increase the total size of the forthcoming fiscal consolidation, to ensure that the Office for Budget Responsibility continues to forecast that a budget surplus will be obtained in 2019/20.
17 Mar. 2015 Plunging Temperatures Boost Utilities, Depress Manufacturing (Publication Centre)
The February industrial production numbers were flattered by an enormous 7.3% jump in the output of electricity and gas utility companies, thanks to a surge in demand in the face of the extraordinarily cold weather. February this year was the coldest since at least 1997, when comparable data on population weighted heating degree days begin.
17 June 2019 Peak Trade War Might Already be Past, but Strong Nerves Needed (Publication Centre)
When economic historians look back at the bizarre trade war of 2018-to-19, we think they will see Tuesday June 4 as the turning point, after which the threats of fire and brimstone were taken much less seriously, and markets began to ponder life after tariffs.
11 October 2017 Weak GDP Growth in Q3 Suggests a November Hike isn't a Done Deal (Publication Centre)
The Office for National Statistics yesterday released the last major batch of output data before the preliminary estimate of Q3 GDP is published on October 25, just one week before the MPC's key meeting.
17 June. 2015 FOMC to Acknowledge Rebound, but Rate Dots Likely Unchanged (Publication Centre)
The tone of today's FOMC statement likely will be different to the gloomy April missive, which began with a list of bad news: "...economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated... underutilization of labor resources was little changed. Growth in household spending declined... Business fixed investment softened, the recovery in the housing sector remained slow, and exports declined."
17 June. 2016 Surging Growth in Eurozone Car Registrations Won't Last (Publication Centre)
The market for new cars in the Eurozone remained red-hot last month. New registrations surged 18.4% year-over-year in May, up from a 9.4% rise in April, and pushing the 12-month average level of registrations to a post-crisis high of 843K units. Accelerating growth in Italy and France was the key driver.
16 October 2017 MXN to Remain under Strain due to NAFTA and Political Risks (Publication Centre)
The Mexican peso and spreads have recently come under severe pressure. Last week, for instance, the MXN plummeted 2% against the USD to 18.9, the weakest level since May, as our first chart shows.
16 October 2017 China's Import Rebound Overstates Domestic Demand Strength (Publication Centre)
The Chinese trade surplus was reasonably stable on our seasonal adjustment in September, falling to $27.5B from $29.7B in August.
16 Mar. 2015 Temporary Reversal - Bad Numbers for Mexico, Good for Brazil (Publication Centre)
Two key points can be extracted from the minutes of the last BCB meeting, when policymakers increased the Selic interest rate by 50bp to 12.75%. First, the bank recognized that the balance of risks to inflation has deteriorated, due to the huge adjustment of regulated prices and the BRL's depreciation, but it specifically referred only to "this year" in the communiqué.
16 Mar. 2015 Legacy of the Crisis Still Holding Back Loan Growth in the Periphery (Publication Centre)
Consumers' spending has staged an impressive recovery in the Eurozone, and remains the key driver of accelerating GDP growth. Outside Germany, however, households have struggled, and are still faced with tight credit conditions.
12 Jan. 2016 Drop in November Production to Set the Tone for Q4 GDP (Publication Centre)
November's industrial production figures, released today, look set to surprise the consensus to the downside, underscoring our view that the economic recovery is continuing to lose momentum. Moreover, with sterling remaining uncompetitive, despite depreciating over recent weeks, and lower oil prices making extracting oil from the North Sea unprofitable, the industrial sector likely will impede the economic recovery further in 2016.
12 Jan. 2015 Recent Data Point to Downside Risks for the Brazilian Economy (Publication Centre)
Economic growth in Brazil is not likely to improve significantly this year. Our pessimism was underscored by the November industrial production data last week, showing a contraction of 0.7%, and pushing output to its lowest level since June.
12 February 2019 Mexican Manufacturing set to Struggle in the First Half (Publication Centre)
The Mexican industrial sector is struggling. December industrial output fell 0.4% month-to-month, the third consecutive drop, driven mainly by a similar decline in mining/oil output.
16 June. 2015 Manufacturing is Struggling, but it Won't Get the Fed off the Hook (Publication Centre)
Another month, another sluggish performance in the manufacturing sector. Even a third straight big jump in auto output was unable to rescue the May numbers, and aggregate output fell by 0.2%. The trend in output has been broadly flat over the past six months or so, and we see little prospect of any sustained near-term recovery.
16 June. 2015 EZ External Demand on Track for Healthy Rebound in Q2 (Publication Centre)
Net exports should come roaring back as a driver of Eurozone GDP growth in the second quarter. The euro area trade surplus leapt to €24.3B in April, a new all-time high, up from a revised €19.9B in March. A 1.7% month-to-month fall in imports--mean-reversion from a 3.9% increase in March--was a big contributor to the higher surplus.
12 January 2017 GDP Growth Likely Edged Down in Q4, Despite November's IP Surge (Publication Centre)
Yesterday's industrial production, construction output and trade data for November collectively suggest that the economy lost a little momentum in the fourth quarter. GDP growth likely slowed to 0.5% quarter-on-quarter in Q4, from 0.6% in Q3. Growth remains set to slow further this year, as inflation shoots up and constrains consumers.
16 June 2017 Chinese Growth to Slump Under the Burden of Deleveraging (Publication Centre)
Wednesday's money data confirmed that Chinese households have continued to borrow into Q2 but at a slower rate than in 2016. The slowdown will really set in during the second half, and into 2018. Households have done a sterling job of taking over the borrowing baton from corporates, but they can't do everything.
12 Jan. 2016 Stable Eurozone GDP Growth and Higher Inflation in 2016? (Publication Centre)
The recent cyclical upturn in the EZ began in the first quarter of 2013. GDP growth has accelerated almost uninterruptedly for the last two years to 1.5% year-over-year in Q3, despite the Greek debt crisis and slower growth in emerging markets. Overall we think the recovery will continue with full-year GDP growth of about 1.6%. But we also think the business cycle is maturing, characterised by stable GDP growth and higher inflation, and we see the economy slowing next year.
16 June 2017 Why is France not Pulling its Weight in EZ Inflation Data? (Publication Centre)
It's hard for a central bank presiding over an ageing economy to achieve a core inflation target of close to 2%. In yesterday's Monitor, we showed that German core inflation has averaged a modest 1.3% in this business cycle, despite solid GDP growth. The picture isn't much better for the ECB if we look at France.
16 March 2018 Colombia's Consumption and Investment are Strengthening (Publication Centre)
Colombia's economy defied rising political uncertainty at the start of the year. Retail sales growth jumped to plus 6.2% year-over-year in January, up from -3.8% in December and -1.8% in Q4.
16 May 2017 Manufacturing is Recovering, Despite the Hard and Soft Data Gap (Publication Centre)
The over-hyped mystery of the gap between the hard and soft data in the industrial economy has largely resolved itself in recent months.
16 November. 2016 Look Behind Falling Utility Output to See the Manufacturing Gain (Publication Centre)
Falling demand for utility energy, thanks to yet another very warm month, relative to normal, will depress the headline industrial production number for October, due today. We look for a 21⁄2% drop in utility energy production, enough to subtract a quarter point from total industrial output.
16 November 2017 Retail Sales to Surprise to the Downside Again in October (Publication Centre)
The consensus view that today's retail sales data will show volumes increased by 0.2% month-to-month in October is too sanguine.
12 April 2018 Q1 Slowdown Leaves a May Rate Hike Hanging in the Balance (Publication Centre)
February's industrial production and construction output data leave us little choice but to revise down our forecast for quarter-on-quarter GDP growth in Q1 to 0.2%, from 0.3% previously.
16 Oct. 2015 Goods Prices Aren't Falling Fast Enough to Offset Services Gains (Publication Centre)
The strong dollar is pushing down goods prices, but not very quickly. As a result, the sustained upward pressure on rents is gradually nudging core CPI inflation higher. It now stands at 1.9%, up from a low of 1.6% in January, and even relatively modest gains over the third quarter will push the rate above 2% by year-end. We can't rule out core CPI inflation ending the year at a startling 2.3%.
12 April 2018 A Much-Needed Reality Check on the Eurozone Economy (Publication Centre)
Today's industrial production data in the Eurozone will extend the run of soft headlines at the start of the year.
16 November 2017 Core CPI Mean-Reverts, but Base Effects Mean Sub-2% Until March (Publication Centre)
The average month-to-month increase in the core CPI in the past three months is a solid 0.20, much firmer than the 0.05% average over the previous five months, stretching back to the first of the run of downside surprises, in March.
16 Nov. 2015 Slightly Disappointing Q3 GDP Data Likely Enough for ECB Doves (Publication Centre)
Eurozone GDP data on Friday were better than we expected, but were still soft compared to upbeat market expectations. Real GDP rose 0.3% quarter-onquarter in the third quarter, down slightly from 0.4% in Q2, and lower than the consensus forecast for another 0.4% gain. These data are not a blank check for ECB doves, but they probably are enough to push through further easing in December. This looks odd given growth in the last four quarters of an annualised 1.6%--the strongest since 2011--and probably slightly above the long-run growth rate.
16 May 2019 Chinese Activity Comes Back Down to Earth--and Then Some--in April (Publication Centre)
Official industrial production growth in China plunged to 5.4% year-over-year in April, from 8.5% in March.
12 Feb. 2016 Collapse in Equity Prices Still Not a Convincing Signal of Recession (Publication Centre)
The downturn in equity prices deepened yesterday, with the FTSE 100 index closing at 5,537, 22% below its April 2015 peak. We remain unconvinced, however, that financial market turmoil is set to push the U.K. economy into a recession. We continue to take comfort from the weakness of the past relationship between equity prices and economic activity.
12 Feb. 2015 Still waiting for growth in Italy (Publication Centre)
In yesterday's Monitor, we lamented the lack of growth in the French economy. The outlook is not much brighter in Italy. We think Italian GDP was unchanged quarter-on-quarter in Q4, slightly better than the -0.1% consensus but still very soft.
12 December 2018 Is Britain now at the Steep Part of the Phillips Curve? (Publication Centre)
The sudden jump in the headline, three-month average, growth rate of average weekly wages to a 10-year high of 3.3% in October, from just 2.4% four months earlier, might indicate that the U.K. has reached the sharply upward-sloping part of the Phillips Curve.
17 May. Wage Growth to Continue to Rise, Despite Jobs Slowdown (Publication Centre)
The 21K rise in the headline, three-month average, unemployment rate between November and February confirmed last month that the U.K.'s period of fantastically strong growth in employment has ended. Timelier indicators, however, suggest unemployment is stabilising, not on the cusp of a major increase.
17 Nov. 2015 Core Inflation Creeping Stealthily Higher - Soon, Markets Will Notice (Publication Centre)
The upturn in core CPI inflation this year has passed by almost unnoticed in the markets and media. In the year to September, the core CPI rose 1.9%, up from a low of 1.6% in January. But that's still a very low rate, and with core PCE inflation unchanged at only 1.3% over the same period, it's easy to see why investors have remained relaxed. In our view, though, things are about to change, because a combination of very adverse base effects and gradually increasing momentum in the monthly numbers, is set to lift both core inflation measures substantially over the next few months.
18 January 2019 Manufacturing Output Likely Jumped in December Don't be Deceived (Publication Centre)
The monthly industrial production numbers are collected and released by the Fed, rather than the BEA, so today's December report will not be delayed by the government shutdown.
18 January 2019 December's Retail Sales Report Will Be a Clanger (Publication Centre)
The consensus forecast for retail sales in December has been consistently too upbeat in recent years and we think most analysts are too sanguine yet again.
11 Feb. 2015 Will private investments in France ever pick up? (Publication Centre)
The French industrial sector ended last year on an upbeat note, but the underlying trend in activity is still weak. Industrial production rose 1.5% month-to-month in December, equivalent to a 0.1% fall year-over-year.
11 Feb. 2015 Chile's Outlook Improving Slowly - Oil Price are a Clear Tailwind (Publication Centre)
The resilience and adaptability that the Chilean economy has shown over previous cycles has been tested repeatedly over the last year. Uncertainty on the political front, falling metal prices, and growing concerns about growth in China have been the key factors behind expectations of slowing GDP growth.
11 December 2018 Probably No Help From Net Exports for German GDP in Q4 (Publication Centre)
German net exports were treading water at the start of the fourth quarter. The seasonally adjusted trade surplus slipped to €17.4B in October, from a revised €17.7B in September, constrained by a 1.3% month-to-month rise in imports, which offset a 0.7% increase in exports.
11 February 2019 Net Exports Probably Boosted German GDP Growth in Q4 (Publication Centre)
German exports flatlined for most of 2018, driving the trade surplus down by 7.3% amid still-solid growth in imports.
11 Jan. 2016 Did German GDP Growth Slow Significantly in Q4? (Publication Centre)
Industrial production and trade data on Friday ended last week on a downbeat note, amid otherwise solid economic reports. In Germany, industrial output fell 0.3% month-to-month in November, pushing the year-over-year rate down to 0.1% from a revised 0.4% in October. The details, however, were better than the headline. Production was hit by a 3.3% plunge in capital goods output, offsetting gains in all other key sectors, and net revisions added 0.3% to the October data.
11 January 2017 Slowdown in C&I Loan Growth Worrisome? (Publication Centre)
On the face of it, the slowdown in bank loan growth to commercial and industrial companies over the past two years looks alarming. In the year to November, the stock of loans outstanding rose by 8.0%, the smallest gain since January 2014. A further decline in the year-over-year rate, taking it below the rate of growth of nominal GDP--we expect 4.7% in the first quarter--for the first time in six years, is now a fair bet. The three- and six-month annualized growth rates of C&I lending in November were just 6.2% and 4.7% respectively, and still falling.
18 December 2018 A Conservative Budget Plan Eases Fears About AMLO's Credentials (Publication Centre)
AMLO unveiled on Saturday Mexico's budget plan for 2019, calling for a moderate increase in spending, focused mainly on social programs, without raising taxes or the country's debt.
11 January 2017 Black Friday Drove Sales Higher in Brazil, is a Hangover Coming? (Publication Centre)
Brazil's consumer recession finally eased in November. Retail sales jumped 2.0% month-to- month, following an upwardly-revised 0.3% drop in October, and the year-over-year rate rose to -3.5% from -8.1%. November's astonishing performance probably reflects seasonal adjustment problems related to Black Friday discounting. Sales have climbed in the last four Novembers, suggesting that consumers' pre-Christmas spending patterns have shifted permanently.
18 Feb. 2016 How to Read the Jobless Claims Numbers, Wherever They Go (Publication Centre)
The question of what's really happening to the pace of layoffs is still unanswered, despite the apparent upturn over the past couple of months. The weekly jobless claims numbers are only just emerging from the fog of the usual holiday season chaos. The pattern of pre-holiday hiring and post-holiday layoffs is broadly the same each year, but Christmas and New Year's Day fall on a different day each year, making seasonal adjustment difficult.
11 December 2017 The EU and the U.K. Have a Deal, Now Comes the Difficult Bit (Publication Centre)
The 16-page document--see here--detailing the agreement allowing the EU and the U.K. to move forward in the Brexit negotiations is predictably tedious.
18 June 2018 Colombia and Argentina, Facing Different Near-Term Prospects (Publication Centre)
Polls suggest that Ivan Duque has comfortably beat Gustavo Petro to become Colombia's president.
11 Dec. 2014 French Economy Stumbles, as Market Looks Towards 2nd TLTRO (Publication Centre)
An upbeat third quarter for GDP growth in France and slightly better sentiment data have offered at least some hope that the economy could stage a comeback into year-end. But yesterday's disappointing industrial production data poured cold water on that idea.
18 May 2018 Did Markets Jump the Gun on Japan's Recovery? (Publication Centre)
Downward revisions to Japan's Q4 real GDP growth, published on Wednesday, lead us to revisit our main worry over the durability of the recovery; namely, that monetary conditions appear to be signalling a slowdown.
18 Nov. 2015 Colombia's Central Bank is Not Finished Tightening Yet (Publication Centre)
Colombia's worrying inflation picture suggests the Central Bank will likely hike rates at least once more before the end of the year, attempting to anchor expectations. The October 30th BanRep minutes, in which the board surprised the market by hiking the main rate by 50bp to 5.25%--consensus was a 25bp increase--made it clear that the decision was based on fear of increased inflation risks, coupled with an improving domestic demand picture. The 50bp hike was not agreed unanimously, with dissenters arguing that the bank should adopt a more gradual approach due the high degree of uncertainty over the global economy. In addition, those favoring a 25bp hike argued that it would be better to move at a predictable pace to avoid possible market turmoil.
18 October 2018 FOMC Members won't be Easily Deflected from Raising Rates (Publication Centre)
You'd be hard-pressed to read the minutes of the September FOMC meeting and draw a conclusion other than that most policymakers are very comfortable with their forecasts of one more rate hike this year, and three next year.
10 September 2018 No Need for the MPC to Rock the Boat This Week (Publication Centre)
Lacklustre economic data and persistent no deal Brexit risk mean that the MPC won't rock the boat at this week's meeting.
18 May 2018 Are Valuations a Silver Lining for Eurozone Equities Into Year-End? (Publication Centre)
"Disappointing" is probably the word that most EZ equity investors would use to describe their market so far this year.
18 March 2019 Mexico's Manufacturing is Offsetting the Oil Drag, Risks Remain (Publication Centre)
Hard data on Mexico's industrial sector for the last couple of months have highlighted major divergences across sectors.
18 June 2018 The U.S. Will Blink Before Imposing Tariffs on Chinese Consumer Goods (Publication Centre)
The imposition of 25% tariffs on $50B-worth of imports from China, announced Friday, had been clearly flagged in media reports over the previous couple of weeks.
18 Mar. 2016 Are Markets and the ECB Behind the Curve on Inflation Risks? (Publication Centre)
Barring a disaster, the four-year cyclical upturn in the euro area will continue in the coming quarters. Inflation is a lagging indicator and therefore should rise, and investors should be adjusting their mindset to higher interest rates. But the reality today looks very different. Final inflation data confirmed that the Eurozone inflation slipped to -0.2% year-over-year in February, from 0.2% in January.
18 Mar. Don't Believe Reports that the Fiscal Squeeze Has Been Eased (Publication Centre)
Media reports allege that the Chancellor's Budget pared back the fiscal squeeze planned for the next couple of years. The Director of the Office for Budget Responsibility, Robert Chote, even compared the Chancellor to Saint Augustine, who supposedly said "make me pure, but not yet."
18 March 2019 BoJ Plays Hedgehog, but Groundwork is Being Laid for an Exit (Publication Centre)
Japan's inflation target came under heavy fire yesterday, as Finance Minister Taro Aso suggested that "things will go wrong if you focus too much on 2%."
11 January 2018 Slower Chinese PPI Inflation Doesn't Get the U.S. Off the Hook (Publication Centre)
If the CPI measure of core consumer goods inflation were currently tracking the same measure in the PPI in the usual way, core CPI inflation would now be at 2.3%, rather than the 1.7% reported in November.
18 December 2017 Has Plunging Healthcare Inflation Held Down Nominal Wage Gains? (Publication Centre)
The shortfall in nominal wage growth, relative to measures of labor market tightness, remains the single biggest mystery of this business cycle.
11 March 2019 Chinese Authorities are Right to be Increasingly Worried about Exports (Publication Centre)
China's unadjusted trade surplus collapsed in February, to just $4.1B, from $39.2B in January.
11 May 2018 Core Inflation is Still Set To Rise, April's Softness won't be Repeated (Publication Centre)
The undershoot in the April core CPI wasn't a huge surprise to us; the downside risk we set out in yesterday's Monitor duly materialized, with used car prices dropping by a hefty 1.6% month-to-month, subtracting 0.05% from the core index.
17 October 2018 The MPC Needn't Accelerate its Tightening Plans to Tame Wages (Publication Centre)
The stand-out news from August's labour market report was the pick-up in the headline three-month average rate of year-over-year growth in average weekly wages, excluding bonuses, to 3.1%--its highest rate since January 2009--from 2.9% in July.
17 October. 2016 Eurozone Car Registrations Slowed Significantly in Q3 (Publication Centre)
Growth in new EZ car sales remained brisk last month, growth slowed in Q3. New registrations rose 9.4% year-over-year in September, marginally lower than the 9.6% increase in August. Growth in France fell most, sliding to 2.5% from 6.7% in August, but sales in Germany picked up to 9.4%, from 8.3%.
17 October. 2016 Retail Sales are Noisy, but the Trend in Consumption Looks Solid (Publication Centre)
In the wake of the September retail sales report, we can be pretty sure that real consumers' spending rose at a 2¾% annualized rate in the third quarter, slowing from the unsustainable 4.3% jump. That would mean consumption contributed 1.9 percentage points to headline GDP growth.
11 May. 2015 Net Trade Signals Slight Downside Risk for German Q1 GDP (Publication Centre)
March data for retail sales and manufacturing have tempered our optimism for the advance Q1 GDP estimate in Germany next week. Industrial production fell 0.5% month-to-month in March, equivalent to a mere 0.1% increase year-over-year, mainly as a result of weakness in core manufacturing activities.
17 October 2017 Manufacturing Sector set for Modest Post-Hurricane Rebound? (Publication Centre)
The first October survey evidence from the industrial economy, in the form of the Empire State report, is remarkably strong.
17 Nov. 2015 The Market is Underestimating How Quickly EZ Inflation is Rising (Publication Centre)
Final October inflation data surprised to the upside yesterday, consistent with our view that inflation will rise faster than the market and ECB expect in coming months. Inflation rose to 0.1% year-over-year in from -0.1% in September, lifted mainly by higher food inflation due to surging prices for fruits and vegetables. This won't last, but base effects will push the year-over-year rate in energy prices sharply higher into the first quarter, and core inflation is climbing too. Core inflation rose to 1.1% in October from 0.9% in September, higher than the consensus forecast, 1.0%.
11 May. 2016 German GDP Growth Likely Rose Strongly in the First Quarter (Publication Centre)
Yesterday's industrial production data in Germany were downbeat. Output fell 1.3% month-to-month in March, pushing the year-over-over rate down to 0.3%, from 2.0% in February. Production was held back by weakness in manufacturing and a plunge in construction, Meanwhile, energy output rebounded slightly following last month's fall. Over Q1 as a whole, though, the industrial sector performed strongly.
17 November 2017 Respite for Consumers from Price Rises will be Short-Lived (Publication Centre)
October's retail sales figures confirm that consumers have adopted a more cautious mindset since the summer, when retail sales increased at a faster rate than incomes.
17 November. 2016 Inflation Risks Building, Despite Soft PPI (Publication Centre)
Higher gasoline prices will lift today's headline October CPI, which should rise by 0.3%. Unfavorable rounding could easily push it to 0.4%, though, and year-over-year headline inflation should rise to 1.6% or 1.7%, from 1.5% in September and just 0.2% a year ago.
11 Mar. 2015 Eurozone GDP growth on track for strong Q1 (Publication Centre)
The latest evidence of firming economic momentum comes from France, where industrial production rose 0.4% month-to-month in January, equivalent to a 0.6% increase year-over-year. Combined with strong consumer spending data in January, this points to a solid first quarter for the French economy.
11 June. 2015 Fall in Energy Output Will Weigh on French GDP growth in Q2 (Publication Centre)
Swings in energy output continue to add volatility to French manufacturing data. Industrial production fell 0.9% month-to-month in April, equivalent to a 0.1% fall year-over-year. This was a weak report, even if we factor in the 0.3% upward revision to the March numbers,but it was also he avily tainted by a 10.8% month-to-month collapse in oil refining.
18 Dec. 2015 Macri Starts the Clean-up Job, Starting with the Overvalued Peso (Publication Centre)
The new Argentinian president has started to clean up the mess left by his predecessor, Cristina Fernandez de Kirchner. President Mauricio Macri lifted capital controls, and let the ARS float freely yesterday. The peso tumbled about 30%, getting close to 14 ARS per USD, where it had been trading in the black market. The government also announced that it is on track to receive about USD 12-to-15B, to build up the battered foreign reserves, and to contain any overshooting. This money will come through many channels, for example, grain producers have announced that they will sell about USD400M a day over the coming weeks.
11 July. 2016 Lower Inflation in Brazil and Fiscal Tightening Point to Q4 Easing (Publication Centre)
The latest IPCA inflation data in Brazil show the year-over-year rate fell to 8.8% in June from 9.3% in May. This is the slowest pace since May 2015, with inflation pulled lower by declines across all major components, except food. Indeed, food prices were the main driver of the modest 0.4% unadjusted monthto-month increase, rising by 0.7%, following a 0.8% jump in May. The year-over-year rate rose to 12.8% in June from 12.4%.
18 Dec. 2015 Should We be Worried by the Rise in the Saving Rate? (Publication Centre)
We have argued consistently since oil prices first began to fall that U.S. consumers would spend most of their windfall, so real spending would accelerate even as nominal retail sales growth was dragged down by the drop in the price of gas and other imported goods. At the same time, we argued that capital spending in the oil business would collapse, and that exports would struggle in the face of the stronger dollar.
11 July. 2016 Jobs Overstate Economic Volatility, Wages Will Soon Matter More (Publication Centre)
Whatever you might think about the state of the U.S. economy, it is not as volatile as implied by the past few months' payroll numbers. Assuming steady productivity growth in line with the recent trend, the payroll data suggest the economy swung from bust to boom in one month, with not even a pause for breath.
11 January 2018 Will France Reap the Rewards of Supply-Side Reforms in 2018? (Publication Centre)
Momentum in French manufacturing eased slightly in November, but the setback was modest. Industrial production dipped 0.5% month-to-month, only partially reversing the revised 1.7% jump in October.
11 July. 2016 Net Exports Boosted German GDP Growth in Q2, as Imports Fell (Publication Centre)
The German trade data on Friday completed a poor week for economic reports in the Eurozone's largest economy. The seasonally adjusted trade surplus fell to €22.1B in May, from €24.1B in April, mainly due to a 1.8% month-to-month fall in exports. Imports, on the other hand, were little changed.
18 April 2019 China can only Disappoint in Q2, after March and Q1 Data (Publication Centre)
China's real GDP growth was unchanged at 6.4% year-over-year in Q1, above the consensus for a slowdown to 6.3%.
18 Apr. 2016 Solid Colombian Manufacturing Sector Offsetting Soft Demand (Publication Centre)
Colombia's economic activity surprised to the upside in February, despite the challenging domestic environment. Private spending rose more than expected, but leading indicators suggest that household consumption will remain weak in Q2. Retail sales jumped 4.6% year-over-year in February, up from a 2.1% increase in January, and the fastest pace since August 2015.
11 June 2019 April Data Point to Flat GDP in Q2, But Q3 Will be Much Better (Publication Centre)
April's GDP data give a grim firs t impression, though the details provide reassurance that the economy isn't on the cusp of a recession.
11 June 2018 Production and Labour Market Data will Hit Rate Hike Odds (Publication Centre)
The resolution of tensions in Italy and aboveconsensus U.K. PMIs for May last week persuaded investors that the MPC likely will press on and raise interest rates soon.
18 April 2018 Mortgage Applications Wilting Under the Weight of Higher Rates (Publication Centre)
Mortgage applications appear to have recovered from their reported February drop, which was due mostly to a very long-standing seasonal adjustment problem
16 July 2018 Mr. Duque Inherits a Colombian Economy Firing on all Cylinders (Publication Centre)
Last week's hard data in Colombia were upbeat, confirming that economic growth accelerated in the first half. Retail sales rose 5.9% year-over-year in May, overshooting consensus.
16 January 2018 Will Surging Equity Prices Boost Consumption? (Publication Centre)
The recent surge in equity prices is not a game- changer for the outlook for households' spending. Like last year, slowing growth in real disposable incomes and house prices will have a far greater impact on spending than rising paper wealth.
14 June. Higher Inflation to Highlight Broad Recovery in Cost Pressures (Publication Centre)
We expect today's consumer prices figures to show that CPI inflation picked up to 0.5% in May, from 0.3% in April, exceeding the 0.4% rate anticipated by both the consensus and the MPC, in last month's Inflation Report. We expect the increase to be driven by a jump in the core rate to 1.4%, from 1.2% in April.
13 February 2018 China's Firms Mindful of Intensified Enforcement of Financial Regulation (Publication Centre)
Chinese monetary conditions remain tight. Systemic tightening through higher interest rates last year is playing a role, but intensified and ever- more public regulatory enforcement is becoming the primary driver of tightening credit conditions for businesses.
14 March 2017 Small Firms are Happy, but When Will Their Capex Plans Pick up? (Publication Centre)
Small businesses remain extremely positive about the economy, but some of the post-election gloss appears to be wearing off. To be clear, the headline composite index of small business sentiment and activity in February, due this morning, will be much higher than immediately before the election, but a modest correction seems likely after January's 12- year high.
13 February 2018 Are the Good Times over For EZ Bond and Equity Investors? (Publication Centre)
Storm clouds gathered over Eurozone financial markets last week. The sell-off in equities accelerated, pushing the MSCI EU ex-UK to an 11-month low.
14 March 2017 The ECB can Raise its Deposit Rate Before QE Ends (Publication Centre)
Markets are becoming more sensitive to rumours about changes in ECB policy. The euro and yields jumped on Friday after a Bloomberg report that the central bank has discussed raising rates before QE ends.
14 June. 2016 Kuczynski is Good For Peru, But he Won't Find it Easy to Rule (Publication Centre)
Pedro Kuczynski, the centre-right candidate of the Peruvians for Change party, won the presidential election held in June 5th. Mr. Kuczynski, a former finance minister and World Bank economist, defeated Ms. Keiko Fujimori, the candidate of the conservative Fuerza Popular party, and the daughter of jailed former leader Alberto Fujimori. Mr. Kuczynski's margin of victory over Ms. Fujimori was fewer than 43K votes, or just 0.2%.
14 June. 2016 Eurozone Investment is Improving, But Growth will Slow in Q2 (Publication Centre)
Data today likely will show that manufacturing in the Eurozone was off to a strong start to the second quarter. Advance country data suggest that industrial production jumped 1.1% month-to-month in April, pushing the year-over-year rate up to 1.9% from 0.1% in March. The rise in output was driven mainly by Germany and France, but decent month-to-month gains in Ireland, Portugal and Greece also helped.
14 June 2017 The Squeeze on Real Wages is Intensifying Rapidly (Publication Centre)
CPI inflation increased to 2.9% in May, from 2.7% in April, exceeding the no-change expectation of both the consensus and the MPC, as well as our own 2.8% forecast.
13 February 2019 Few Near-Term Upside Risks to Core Inflation Medium-Term Threat Rising (Publication Centre)
The odds favor--just--an end to the three-month streak of solid 0.2% increases in the core CPI with the release of today's January report.
14 June 2019 Brazil's Private Spending Still Hurt by High Political Uncertainty (Publication Centre)
In a busy week in Brazil, ongoing signals of feeble economic activity have strengthened our forecast for GDP growth of just 1.0% this year, below the 1.3% consensus forecast.
14 June 2019 If the BoK Blinks--and Cuts--it Would be Ignoring Better Data (Publication Centre)
Korea watchers appear to be hanging on Governor Lee Ju-yeol's every word, searching for any sign that he'll drop his hawkish pursuit of more sustainable household debt levels and prioritise short-term growth concerns.
14 June 2019 Retail Sales and IP Both Likely Rebounded in May (Publication Centre)
The wave of May data due for release today likely will go some way to countering the market narrative of a seriously slowing economy, a story which gained further momentum last week after the release of the May employment report.
14 March 2018 Fundamentals for Brazilian Consumers Continue to Improve (Publication Centre)
The consumer in Brazil was off to a strong start to the first quarter, and we expect household spending will continue to boost GDP growth in the near term.
14 May 2018 Brazil's Domestic Consumption Will Continue to do Well, Despite Threats (Publication Centre)
Data released last week in Brazil reinforced our view of a modest, final, interest rate cut this week, despite the recent strength of the USD and volatility in global markets.
14 Sept. 2015 Italy's Structural Problems Persist, but Cyclical Upturn is Firming (Publication Centre)
Italy's long-term challenges--chiefly, structurally high government debt and deteriorating demographics--remain daunting, but the cyclical picture is improving steadily. Final GDP data last week revealed that growth in the first half of the year was 0.2% better than initially estimated, taking the annualised growth rate to 1.4%, the highest in five years. This is the first sign of a durable business cycle upturn since the sovereign debt crisis crashed the economy in 2012.
14 October. 2016 Mexican Manufacturing is Recovering, But Oil Still a Big Drag (Publication Centre)
Wednesday's Mexican industrial production report was upbeat for manufacturing, but it revealed that the oil and public construction sectors remain under severe strain.
13 December 2018 Expect a Dovish Mr. Draghi Today, but Don't Bet Money on It (Publication Centre)
We suspect that today's ECB meeting will be a sideshow to the political chaos in the U.K., but that doesn't change the fact that the central bank's to-do list is long.
14 September 2018 Core Inflation won't Keep Falling (Publication Centre)
We were right about the below-consensus inflation numbers for June, but wrong about the explanation. We thought the core would be constrained by a drop in used car prices, while apparel and medical costs would rebound after their July declines.
14 September 2018 MPC Emphasises Rising Downside Risks, Rather than Better GDP Data (Publication Centre)
The MPC surprised nobody yesterday by voting unanimously to keep Bank Rate at 0.75% and to maintain the stocks of gilt and corporate bond purchases at £435B and £10B, respectively.
13 Feb. 2015 A Tough 2015 Ahead for Brazil as Downside Risks to Growth Intensify (Publication Centre)
Over the last few months we have started to see hard evidence of Brazil's deceleration, and, as we have argued in previous Monitors, the slowdown is now set to become more visible. Over the coming weeks, markets will focus on whether Brazil is already in recession, its likely severity, and how the country will get out of this mess.
14 November 2017 Poor EZ Production Data Won't Dent Second Q3 GDP Estimate (Publication Centre)
Soft September data in Germany and Italy suggest that today's industrial production report in the Eurozone will be poor. Our first chart shows that data from the major EZ economies point to a 0.8% month-to- month fall in September.
14 May 2018 Germany's Problem is Increasingly Clear: It has too Much Money (Publication Centre)
Germany's newly-appointed finance minister, Olaf Scholz, proudly announced earlier this month that his country would be running a budget surplus of €63B over the next four years--about 1.9% of GDP between now and 2022--some €14B more than initially estimated.
13 February 2017 What Would it Take to Persuade the Fed to Hike in March? (Publication Centre)
Our argument that rates could rise as soon as March has always been contingent on two factors, namely, robust labor market data and a degree of clarity on the extent of fiscal easing likely to emerge from Congress. On the first of these issues, the latest evidence is mixed.
13 February 2017 Can French Investment Maintain Momentum in 2017? (Publication Centre)
French manufacturing cooled at the end of 2016. Industrial production slipped 0.9% month-to-month in December, partially reversing an upwardly revised 2.4% jump in November. The main hits came from declines in oil refining and manufacturing of cars and other transport equipment.
13 February 2017 Too Soon to Conclude the Economy is Finally Rebalancing (Publication Centre)
Data on industrial production and trade released last week have fanned hopes that the U.K.'s growth model is moving away from its excessive reliance on household spending, and towards production and exports. But a close look at the underlying drivers of the strong headline figures suggests that it is too soon to hope that the economy is undergoing a major rebalancing.
14 July. 2016 EZ GDP Growth all but Stalled in Q2, as Domestic Demand Slowed (Publication Centre)
Data yesterday showed that industrial production in the Eurozone stumbled in May. Production fell 1.2% month-to-month, driven by weakness in all major economies and falling output in all sub-industries. The poor headline follows an upwardly revised 1.4% jump in April, which means that production rose marginally in the first two months of the second quarter.
14 Jan. 2016 A Downbeat Outlook for Q4 GDP Data in the Eurozone (Publication Centre)
EZ survey data were solid in the fourth quarter, pointing to robust GDP growth, but numbers from the real economy have so far not lived up to the rosy expectations. Data yesterday showed that industrial production fell 0.7% month-to-month in November, pushing the year-over-year rate down to 1.1% from a revised 2.0% in October. Italian data today likely will force marginal revisions to the headline next month, but they are unlikely to change the big picture.
13 June 2018 Mexico's Manufacturing Activity in April was Weak, but it Will Improve (Publication Centre)
Mexico's industrial recovery, which began in late Q4, lost momentum at the start of the second quarter.
13 May 2019 Inflation in Rents and Other Services is Rising, Further Gains Ahead (Publication Centre)
The core CPI inflation rate rose in April to 2.1% from 2.0%, thanks to unfavorable rounding, despite the below consensus 0.14% month-to-month print.
14 Apr. 2015 The Eurozone is on track for strongest growth since Q1 2011 (Publication Centre)
Eurozone industrial production data today will confirm that economic growth likely accelerated in the first quarter. We think output rose 0.7% month-to-month in February, equivalent to a 0.8% increase year-over-year.
14 Apr. 2016 The Eurozone's Manufacturing Outperformance Likely Won't Last (Publication Centre)
Industrial production in the euro area dipped in February. Output fell 0.8% month-to-month pushing the year-over-year rate down to 0.8% from a revised 2.9% in January. This indicates that Eurozone manufacturing continues to lag the pace seen in previous business cycle upturns.
14 Dec. 2015 Peru's Central Bank Tightens Again to Contain Inflation Pressures (Publication Centre)
Peru's central bank, the BCRP, admitted defeat again in the face of the inflationary effects of the PEN's depreciation and El Niño, increasing interest rates by 25bp to 3.75% last Thursday, following its 25bp increase in September. Peru is the third LatAm economy in the last few months to raise rates in response to currency weakness, despite sluggish economic growth. The key problem for Peru is that inflation has been trending higher since early 2013 and has remained stubbornly high, above 2.8% all this year. "Temporary" factors just keep on coming.
13 October 2017 Eurozone GDP Growth Likely Slowed in Q3, but Only Sligh tly (Publication Centre)
The manufacturing sector likely was the primary driver of Q3 GDP growth in the Eurozone. Data yesterday showed that industrial production rose 1.4% month-to-month in August, pushing the year-over-year rate up to 3.8%, from a revised 3.6% in July.
13 May 2019 Poor Data in Mexico are Gradually Setting the Stage for Rate Cuts (Publication Centre)
External and domestic shocks in Mexico over the last two years, including the "gasolinazo", NAFTA renegotiation and the presidential election, have put the country's financial metrics under severe stress and pushed inflation to cyclical highs.
13 May. 2016 EZ Manufacturing Jumped in Q1, but Likely Will Nosedive in Q2 (Publication Centre)
Activity in the Eurozone industrial sector cooled at the end of the first quarter. Manufacturing production declined 0.8% month-to-month in March, pushing the year-over-year rate down to 0.2% from a revised 1.0% in February. Over Q1 as a whole, though, the story was positive.
13 Nov. 2015 Soft Q3 GDP Data to Pave the Way for More Monetary Easing (Publication Centre)
Industrial production data yesterday confirmed downside risks to today's GDP data in the Eurozone. Output fell 0.3% month-to-month in September, pushing the year-over-year rate down to 1.7% from a revised 2.2% in August. Weakness in Germany was the main culprit, amid stronger data in the other major economies. A GDP estimate based on available data for industrial production and retail sales point to a quarterly growth rate of 0.4% quarter-on-quarter, but we think growth was rather lower, just 0.2%, due to a drag from net trade.
13 May. 2015 Fed Lift Off Slightly Delayed - Breathing Space for LatAm? (Publication Centre)
The US employment data last week reduced further the likelihood of a June Fed rate increase. In turn, this changes the likely timing of the normalization process in some LatAm economies. Our Chief Economist, Ian Shepherdson, expects the Fed to start its normalization process in July or September; the strength of the employment data will prevent any postponement beyond the third quarter.
13 November 2018 Argentina's Cyclical Stabilization Continues 2019 Likely Will be Better (Publication Centre)
The sharp currency sell-off in Q2 and Q3, the financial crisis and tighter monetary and fiscal policies have pushed the Argentinian economy under stress since Q2.
14 December 2016 Brazil Consumption Under Strain in Early Q4, but it Will Improve, Soon (Publication Centre)
Brazil's consumer recession seems never-ending. Retail sales fell 0.8% month-to-month in October, pushing the headline year-over-year rate down to -8.2% in October, from -5.7% in September. Recent financial market volatility, credit restrictions and the ongoing deterioration of the labour market continue to hurt consumers.
14 December 2016 German and Eurozone Inflation is About to Shoot Higher (Publication Centre)
German inflation pressures were unchanged last month. The CPI index rose 0.8% year-over-year, matching the increase in October, and in line with the consensus and initial estimate. Energy deflation intensified marginally, as a result of lower prices for household utilities.
13 July. 2016 German Inflation is Rising, but Will Bund Yields Pay Attention? (Publication Centre)
The final June inflation report from Germany yesterday confirmed that pressures are rising. Inflation rose to 0.3% year-over-year in June, up from 0.1% in May, mainly due to higher energy prices. Household energy prices--utilities--fell 4.9% year-over-year, up from a 5.7% decline in May, while deflation in petrol prices eased to -9.4%, up from -12.1% in May.
14 February 2018 Look for a Disappointing Q4 German GDP Report Today (Publication Centre)
Today's Eurozone data will provide further details on what happened in Q4. Advance data suggest that industrial production rose a modest 0.1% month- to-month, lifting the year-over-year rate to 4.3% in December, from 3.9% in November.
13 July 2017 The Eurozone Economy Maintained Momentum in Q2 (Publication Centre)
Yesterday's data showed that industrial production in the Eurozone accelerated at the end of spring. Output, ex-construction, jumped 1.3% month-to-month in May, much better than the downwardly-revised 0.3% rise in April; the rise pushed the year-over-year rate up to a six-year high of 4.0%.
14 Jan. 2015 A Question of Seniority as the European Court Decides on OMT (Publication Centre)
The European Court of Justice, ECJ, will not likely pour fuel on the slumbering fire later today by ruling that OMT is in violation of EU law.
13 July 2017 Don't Extrapolate from May's Uptick in Basic Wage Growth (Publication Centre)
Yesterday's labour market data gave sterling a shot in the arm on t wo counts. First, the headline, three-month average, unemployment rate fell to just 4.5% in May, from 4.6% in April.
14 February 2018 Gas Prices Will Lift the January CPI: Core has Risks in Both Directions (Publication Centre)
We have no real argument with the consensus forecasts for the January CPI, with the headline likely to rise by 0.3%, with the core up 0.2%.
14 February 2017 Global Manufacturing Picks Up Pace, Are Good News for LatAm? (Publication Centre)
More evidence indicating that the recovery in global industrial activity is underway and gaining momentum- has poured in. In particular, trade data from China, one of LatAm's biggest trading partners, was stronger than the market expected last month. Both commodity import and export volumes increased sharply in January, and this suggests better economic conditions for China's key trading partners.
14 December 2016 Labour Data Set to Show a Clearer Deteriorating Trend (Publication Centre)
Today's labour market figures likely will bring further signs that firms are recruiting more cautiously and limiting pay awards, due to still-elevated economic uncertainty.
13 June 2017 Solid Mexican Manufacturing Eclipsed By Other Key Sectors (Publication Centre)
Activity in the Mexican industrial sector cooled marginally at the start of the second quarter, but the drop was not as dramatic as the headlines suggested. Output fell 4.4% year-over-year in April, after a 3.4% increase in March.
13 July. 2016 Will Higher Prices for Imports Change Inflation Perceptions? (Publication Centre)
In recent years we have argued consistently that investors and the commentariat overstate the importance of the dollar as a driver of U.S. inflation. Only about 15% of the core CPI is meaningfully affected by shifts in the value of the dollar, because the index is dominated by domestic non-tradable services.
14 December 2018 Japan's Trade Deficit will soon Diminish, but not in November (Publication Centre)
Data released earlier this week show that Japan's current account surplus continued its downtrend in October, falling to ¥1,404B, on our seasonal adjustment, from ¥1,494B in September.
13 December 2018 China's November Activity Data are Set to Disappoint (Publication Centre)
China's October activity data showed signs of the infrastructure stimulus machine sputtering into life. Consensus expectations appear to hold out for a continuation into November, but we think the numbers will be disappointing.
13 December 2017 Mexico's Manufacturing Starts Q4 Badly, but it Will Gradually Improve (Publication Centre)
Mexican industrial activity started the fourth quarter badly. Industrial production fell 0.1% month- to-month in October, pushing the year-over-year rate slightly up to -1.1% from -1.2% in September and -0.7% in Q3.
15 Sept. 2015 Subdued EZ Manufacturing is in Line with the Rest of the OECD (Publication Centre)
Industrial production data yesterday indicate manufacturers in the Eurozone enjoyed a decent start to Q3, thanks to strength in Germany, Italy and Spain, which offset weakness in France. Production ex-construction rose 0.6% month-to-month in July, boosted in part by a 3% jump in energy output. If production is unchanged in August and September, output will rise 0.3% quarter-on-quarter in Q3, but this estimate is uncertain, and we look for an increase of about 0.4%-to-0.5%.
15 October 2018 The Stock Market Wobble isn't Enough to Deter the Fed (Publication Centre)
A 45bp rise in long-term interest rates--the increase between mid-August and last week's peak--ought to depress stock prices, other things equal.
15 September 2016 A Critical 12 Months Ahead for the EU (Publication Centre)
Yesterday's State of the Union address by EC president Jean-Claude Juncker commanded more attention than usual, but contained little news on the key talking points for investors.
12 Mar. 2015 Weak Euro to help manufacturers, but EM weakness is still a worry (Publication Centre)
Industrial production in the Eurozone was probably unchanged in January equivalent to a 0.2% fall year-over-year. This is slightly below the consensus for a 0.2% rise month-to-month, mainly due to the downside surprises in m/m data in Italy and Germany released previously.
15 September 2017 Chinese Consumption and Investment is Weakening in Q3 (Publication Centre)
The Chinese activity data published yesterday were much weaker than expected; growth rates fell resoundingly. Did analysts really get it wrong, or is this just another example of erratic Chinese data?
12 March 2018 Weak Production Data Signal Soft January in Germany and France (Publication Centre)
Friday's industrial production headlines in the Eurozone were weak, but the details tell a more nuanced story.
15 October 2018 Chinese Trade: Import from Anywhere but the U.S. (Publication Centre)
China's September trade numbers show that, far from reducing the surplus with the U.S., the trade wars so far have pushed it up to a new record.
15 November. 2016 EZ GDP Growth Likely was Stable in Q3, in Line With First Estimate (Publication Centre)
Investors face a busy EZ calendar today, but the second estimate of Q3 GDP, and the advance GDP data in Germany, likely will receive most attention. Yesterday's industrial production report in the Eurozone was soft, but it won't force a downward GDP revision, as we had feared.
12 March 2019 We Need to Talk a Bit about Revisions to German Construction (Publication Centre)
Yesterday's industrial production numbers in Germany were similar to Friday's confusing new orders data.
15 Oct. 2015 Headline Inflation to Slip Below Zero, but Not For Long (Publication Centre)
The headline CPI inflation rate almost certainly dipped below zero in September, barring a startling and deeply improbable surge in the core. We look for a 0.4% month-to-month headline drop, driven by an 11% plunge in gasoline prices, pushing the year-over-year rate to -0.3%. This is of no real economic significance, not least because hugely unfavorable base effects mean the year-over-year rate almost certainly will rise sharply over the next few months, reaching about 1¾% as soon as January.
15 Oct. 2015 Investment Likely Rebounded in Q3, but No Change in Weak Trend (Publication Centre)
Yesterday's industrial production report was poor, but the headline was better than we, and the market, feared. Output fell 0.5% month-to-month in August, but the July data were revised up 0.2%, pushing the year over-year rate--using the seasonally- and working day-adjusted index--higher to 1.9% from 1.4% in July. Bloomberg reported the year-over-year rate fell to 0.9% from 1.7% in July, but they used an index which is only working day-adjusted.
16 Apr. 2015 Manufacturing constrained by the Oil capex collapse (Publication Centre)
More evidence emerged yesterday of the fading impact of the severe winter on the data, in the form of the strength of the NAHB survey and the weakness of the headline industrial production number.
16 April 2018 Chinese New Year Holiday Effects Spill over into the March Trade Data (Publication Centre)
The holiday effects are at it again. C hina's trade balance dropped to a deficit of $5.0B in March, from a surplus of $33.5B in February, confounding expectations for a surplus of $27.5B.
12 July 2017 BoJ's Curve Targeting is More Stimulatory than Base Targeting (Publication Centre)
Japanese M2 growth increased trivially in June to 3.9% year-on-year from 3.8% in May, significantly higher than the 3.2% rate in August, before the BoJ began targeting the yield curve.
12 July 2017 Financial Conditions in the Eurozone are Tightening, Slowly (Publication Centre)
The debate about the ECB's policy trajectory is bifurcated at the moment. Markets are increasingly convinced that a rapidly strengthening economy will force the central bank to make a hawkish adjustment in its stance.
16 February 2017 Slowdown in Wage Growth Further Reduces 2017 Rate Hike Chances (Publication Centre)
Yesterday's labour market data delivered a further blow to hopes that consumers' spending will retain enough momentum for the MPC to press ahead and raise interest rates this year. The most striking development is the decline in year-over-year growth in average weekly wages to just 1.9% in December, from 2.9% in November.
16 January 2018 Brazil's Macro Conditions are Improving, But Fiscal Progress is Key (Publication Centre)
The IBC-Br index, a monthly proxy for Brazil's GDP--rose 0.5% month-to-month in November, pushing the year-over-year rate down to 2.8%, from an upwardly-revised 3.1% in October.
12 January 2017 How Can Trump Deliver Quickly on his Tax Cut Pledges? (Publication Centre)
As far as we can tell, most forecasters expect the impact of fiscal stimulus this year to be gradual, with perhaps most of the boost to growth coming next year. At this point, with no concrete proposals either from the new administration or Congress, anything can happen, and we can't rule out the idea of a slow roll-out of tax cuts and spending increases.
16 Feb. 2016 The ECB Remains on Track to Deliver More Easing in March (Publication Centre)
Mr. Draghi's introductory statement before yesterday's hearing at the European Parliament repeated that the ECB will "review and possibly reconsider its monetary policy stance in March." But it didn't provide any conclusive smoking gun that further easing is a done deal.
16 December 2016 The Eurozone Manufacturing Sector is Picking up Momentum (Publication Centre)
Yesterday's euro area PMI data continue to tell a story of a firm business cycle upturn. The composite PMI was unchanged at 53.9 in December; an increase in the manufacturing index offset a decline in the services PMI.
12 June 2017 Brazil's Inflation is in Check, but Politics are Paramount (Publication Centre)
Brazilian political risk remains high but, as we have argued in previous Monitors, it is unlikely to deter policymakers from further near-term monetary easing. The political crisis, however, does suggest that the COPOM will act cautiously, waiting until the latest storm passes before acting more aggressively, despite ongoing good news on the inflation front.
16 Dec. 2015 The Cyclical Rise in Labour Participation Has Run Its Course (Publication Centre)
Rapid growth in labour supply has enabled the U.K. economy to grow quickly over the last three years without generating excessive wage or inflation pressure. The rise in the participation rate--the proportion of those aged over 16 in or looking for work--has been critical to this revival. But the rise in the participation rate largely has reflected cyclical factors rather than a sustainable upward trend, and the downward pressure on participation from demographic factors will build over the coming years.
12 July. 2016 Do Pricing Distortions Mean We Should Ignore Weak Help Wanted? (Publication Centre)
Judging from our inbox, economy bulls are pinning a great deal of hope on the idea that the collapse in the Help Wanted Online index is misleading, because the index is subject to distortions caused by shifts in pricing behavior in the online job advertising business. These distortions were analyzed in a recent Fed paper--click here to read on the Fed's website-- which makes a convincing case that at least some of the decline in the HWOL over the past half-year represents a change in recruiters' behavior rather than slowing in labor demand.
12 July 2019 June's Core CPI Makes it Clear that a 50bp Ease is an Unnecessary Risk (Publication Centre)
Monthly core CPI prints of 0.3% are unusual; June's was the first since January 2018, so it requires investigation.
12 May 2017 Falling Inflation in Brazil Signals Rapid Rate Cuts Ahead (Publication Centre)
Brazil's April CPI data this week showed that inflation pressures remain weak, supporting the BCB's focus on the downside risks to economic activity. Wednesday's report revealed that the benchmark IPCA inflation index rose 0.1% unadjusted month-to-month in April, marginally below market expectations.
15 May 2019 The Escalation of Trade Tensions Fans Concerns for LatAm's Upturn (Publication Centre)
LatAm assets did well in Q1, on the back of upbeat investor risk sentiment, low volatility in developed markets and a relatively benign USD.
12 September 2017 Stronger Mexican Manufacturing Overshadowed by Weak Mining (Publication Centre)
Industrial activity in Mexico had a very poor start to the third quarter. Output plunged 1.0% month-to- month in July, the biggest drop since May 2015, pushing the year-over-year rate down to -1.5%, from -0.2% in June.
15 February 2017 Poor Brazilian Retail Sales don't Change the Improving Trend (Publication Centre)
Brazil's consumer spending data yesterday appeared downbeat. Retail sales fell 2.1% month-to-month in December, pushing the year-over-year rate down to 4.9%, from -3.8% in November. This is a poor looking headline, but volatility is normal in these data at this time of the year, and the underlying trend is improving.
15 February 2017 Yellen Says no "Active" Balance Sheet Management from the Fed (Publication Centre)
Fed Chair Yellen delivered no great surprises in her semi-annual Monetary Policy Testimony, though she certainly was clear on her attitude to the balance sheet. The Fed does not want to "...use the balance sheet as an active tool of monetary policy."
15 February 2019 Will the BCB Help to Drive a GDP Rebound After a Noisy 2018 (Publication Centre)
February's COPOM meeting minutes again signalled that Brazil's central bank will stick with its cautious approach to monetary policy.
15 Jan. 2015 Inflation Data Confirm Investment Malaise in the French Economy (Publication Centre)
France just about avoided slipping into deflation in December, with the CPI rising 0.1% year-over-year, down from 0.3% in November. The 4.4% drop in the energy component should have pushed inflation below zero, but a seasonal increase in tourism services was enough to offset the drag from oil prices.
12 September 2018 Wage Growth Won't Remain Above 3% this Year, Despite July's Leap (Publication Centre)
It's tempting to conclude that the pick-up in year over-year growth in average weekly wages, excluding bonuses, to a three-year high of 3.1% in July, from 2.8% in June, signals that employees' bargaining power has strengthened and that a sustained wage recovery now is under way.
12 September. 2016 More Poor Data Signal Slow Start to Q3 (Publication Centre)
Friday's economic data added to the evidence that the German economy stumbled in July. The seasonally adjusted trade surplus slipped to €19.4B, from a revised €21.4B in June.
15 Apr. Nothing in MPC Minutes to Support Rate Cut Speculation (Publication Centre)
The minutes of yesterday's MPC meeting indicate that it is not going to be panicked into cutting interest rates in the run-up to the E.U. referendum in June. The Committee voted unanimously again to keep Bank Rate at 0.5%, and dovish comments were conspicuously absent.
13 December 2016 CPI Inflation Likely Picked up in November, Bigger Advances Ahead (Publication Centre)
November's consumer price report likely will show that October's dip in CPI inflation was just a blip against a strong upward trend. We think that CPI inflation picked up to 1.1% in November, from 0.9% in October, in line with the consensus.
13 April 2017 Slowing Labour Income Growth Highlights Consumers' Woes (Publication Centre)
Yesterday's labour market data showed that growth in households' income has slowed significantly in recent months. Firms are both hiring cautiously and restraining wage increases, due to heightened uncertainty about the economic outlook and rising raw material and non-wage labour costs. Consumers' spending, therefore, will support GDP growth to a far smaller extent this year than last.
15 December 2016 EZ Manufacturing will Recover Quickly from its Poor Start to Q4 (Publication Centre)
Eurozone manufacturers had an underwhelming start to Q4. Data yesterday showed that production fell 0.1% month-to-month in October, pushing the year-over-year rate down to 0.6%, from a revised 1.3% in September. Output was constrained mostly by weakness in France and a big month-to-month fall in Ireland, which offset marginal gains in Germany and Spain.
15 Jan. 2016 Don't Believe Everything You See in Germany's GDP Data (Publication Centre)
Yesterday's preliminary full-year GDP data in Germany tell a cautionary tale of the dangers in taking national accounts at face value. The headline data suggest real GDP growth rose to 1.7% in 2015, up slightly from 1.6% in 2014, but these data are not adjusted for calendar effects. The working-day adjusted measure buried in the press release instead indicates that growth slowed marginally to 1.5% from 1.6% in 2014.
15 January 2018 Chinese Import Growth Slowdown Paints an Overly Gloomy Picture (Publication Centre)
China's import growth in dollar terms slowed sharply to 4.5% year-over-year in December from 17.7% in November, significantly below the consensus forecast.
15 March 2017 Mexican Manufacturing will do Fine in Q1, Despite Threats (Publication Centre)
The collapse in capital spending in the oil sector and poor construction spending have constrained aggregate Mexican industrial output in recent months, despite the strength of the manufacturing sector. Total production fell 0.1% year-over-year in January, though note this was a clear improvement after the 0.6% drop in December, and better than the average 0.4% contraction over the second half of 2016.
12 October 2017 Core PPI at Risk from Hurricanes. Trend is Rising too, Slowly (Publication Centre)
Our forecast for a 0.3% increase in the September core PPI, slightly above the underlying trend, is even more tentative than usual.
15 March 2019 Will Brazil's Supply and Demand Divergence Continue this Year (Publication Centre)
Brazil's industrial sector keeps losing momentum, despite interest rates at record lows and improving confidence.
15 May 2017 Mexican Manufacturing set to Remain Resilient in Q2 and Q3 (Publication Centre)
Recent industrial data for Mexico point to renewed upside risks for GDP growth, despite the likely headwind to consumption from high inflation and depressed confidence.
15 May 2018 Mexico's Manufacturing Ended Q1 Strongly, Will the Trend Continue? (Publication Centre)
Mexican industrial production is slowly improving, and further good numbers are likely in coming months.
12 October 2018 What Happens Under Maximum China Tariffs Clue It's not Good (Publication Centre)
The imposition of 10% tariffs on $200B-worth of Chinese imports is not a serious threat either to U.S. economic growth--the tariffs amount to 0.1% of GDP--or inflation.
15 June 2017 China's Q2 Growth to Remain Sturdy but Expect a Slower H2 (Publication Centre)
China's industrial production grew at an annualised 7.2% rate by volume in Q1, according to our estimates, up from an average 5.9% rate in the six quar ters through mid-2016.
15 January 2019 What can we Learn from the Weak EZ Manufacturing Data (Publication Centre)
Last week's horrible manufacturing data in the major EZ economies had already warned investors that yesterday's industrial production report for the zone as a whole would be one to forget.
15 July 2019 Early Resolution to the Debt Ceiling would Raise Growth Forecasts (Publication Centre)
Treasury Secretary Mnuchin's five-line letter to House Speaker Pelosi on last Friday--copied to other Congressional leaders--which said that "there is a scenario in which we run out of cash in early September, before Congress reconvenes", introduces a new element of uncertainty to the debt ceiling story.
12 October. 2016 After High Volatility in Q4, LatAm Currencies Will Strengthen in 2017 (Publication Centre)
Investors will increase their focus on exchange rates as the US presidential election and the Fed's next rate hike approach. Markets are becoming concerned that a surge in the USD could trigger another spike in LatAm currency volatility, depressing the good year- to-date performance of most local market assets.
15 July. 2016 Autos Will Depress Headline June Spending, Core Picture is Fine (Publication Centre)
When the dust settles after today's wave of data, we expect to have learned that core retail sales continued to rise in June, core inflation nudged back up to its cycle high, and manufacturing output rebounded after an auto-led drop in May. None of these reports will be enough to push the Fed into early action, but they will add to the picture of a reasonably solid domestic economy ahead of the U.K. Brexit referendum.
10 September 2018 EZ Investment will Slow in Q3, but Consumption Should Pick Up (Publication Centre)
Friday was a busy day in the Eurozone economy. The third detailed GDP estimate confirmed that growth was unchanged at 0.4% quarter-on-quarter in Q2, pushing the year-over-year rate down by 0.4 percentage points to 2.1%, marginally below the first estimate,2.2%.
11 October. 2016 Conditions Are Set for the BCB to Start Easing Next Week (Publication Centre)
The latest CPI data in Brazil confirm that inflationary pressures eased considerably last month. Inflation fell to 8.5% year-over-year in September, from 9.0% in August, as a result of both lower market- set and regulated inflation.
2 Apr. 2015 Soft signals from Brazil's leading indicators - Further woes ahead (Publication Centre)
It is very difficult to be positive about the Brazilian economy in the short term, with every indicator of confidence at historic lows. The industrial business confidence index fell 9.2% month-to-month in March alone. Capacity use dropped to 79.7% from 81.5% in February, the lowest level in six years, and inventories rose, presumably because businesses over-estimated the strength of sales.
10 October 2017 Inflation is Finally Abating in Mexico But no Banxico Easing Until Q2 (Publication Centre)
Inflation in Mexico fell significantly in September. Data yesterday showed that the CPI rose just 0.3% month-to-month, pushing the year-over-year rate down to 6.4% from 6.7% in August, its highest level in 16 years.
19 March 2019 The Real Story About Recent Volatility in EZ Net Exports (Publication Centre)
Yesterday's sole economic report showed that the EZ trade surplus rebounded slightly at the start of the year, rising to €17.0B in January, from a revised €16.0B in February, lifted by a 0.8% increase in exports, which offset a 0.3% rise in imports.
2 Nov. 2015 Media and Market Biases Leading Investors up the Wrong Path (Publication Centre)
We can't recall a time when we have disagreed so strongly with the consensus narrative, in both the media and the markets, about the state of the U.S. economy. We think both investors and the commentariat are too bearish on growth and too complacent about inflation risks, and as a result, insufficiently worried about the speed with which interest rates will rise over the next couple of years.
2 Mar. 2015 Falling Confidence, High Inflation, Rising Rates: Brazil in a Mess (Publication Centre)
Brazil's economic data last week were appalling. The IPCA-15 price index rose 1.3% month-to-month, the fastest pace in 12 years, pushing the annual rate to 7.4% in mid-February from 6.7% in mid-January,well above the 6.5% upper bound of the BCB's target range.
10 July 2019 Will the MPC Draw a Line in the Sand Under Sterling? (Publication Centre)
The pound can't get a break. Sterling fell to just $1.24 yesterday, its lowest level against the dollar since March 2017, bar the momentary "flash crash" in January.
10 May 2018 Does Shunto Deliver Better Contracts for Japanese Workers? (Publication Centre)
We have been rigorous in using the word nascent whenever referring to Japan's wage-price spiral.
10 July 2019 Powell to Stick to the Party Line. Will he Mention the Trimmed Mean PCE? (Publication Centre)
We'd be surprised to see any serious shift in the tone of Fed Chair Powell's semi-annual Monetary Policy Testimony today compared to the FOMC statement and press conference just three weeks ago.
10 October 2017 German Manufacturing Continued to Boost the Economy in Q3 (Publication Centre)
German manufacturing snapped back at the end of summer. Industrial production jumped 2.6% month-to-month in August, pushing the year-over- year rate up to 4.7% from a revised 4.2% in July.
10 February 2017 Dip in German Exports Won't Ruin the Rebound in Q4 as a Whole (Publication Centre)
German exporters stumbled at the end of last year. The seasonally adjusted trade surplus in Germany dipped to €18.4B in December, from €21.8B in November, hit by a 3.3% month-to-month plunge in exports. Imports were flat on the month. The fall in exports looks dramatic, but it followed a 3.9% jump in the previous month, and nominal exports were up 2.5% over Q4 as a whole. Advance GDP data next week likely will show that net trade lifted quarter-on-quarter growth by 0.2 percentage points, partly reversing the 0.3pp drag in Q3. Real imports were held back by a jump in the import price deflator, due to rebounding oil prices.
2 Oct. 2015 Economic Activity Remains Weak in Chile - But the BCCh Will Act (Publication Centre)
Chile's economic indicators for July were unreservedly weak, confirming that the economic recovery remains sluggish. The industrial production index--comprising mining, manufacturing, and utility output--fell by 5.2% year-over-year in August, after a 1.7% contraction in July. Mining production suffered a sharp 9.3% year-over-year contraction, due mainly to an 8.3% fall in copper production, as strikes and maintenance works badly hit the industry.
19 July. 2016 Why is Homebuilding not Keeping Pace with Demand? (Publication Centre)
The sustained upturn in mortgage applications since last fall ought to have driven up the pace of new home construction quite sharply. But our first chart shows that single-family building permit issuance--we use permits rather than starts, as they are much less volatile--rose only 8.3% year-over-year in the three months to May, while applications for new mortgages to finance house purchase jumped by 18.8% over the same period.
10 October 2018 Did German GDP Growth Crash in Q3 (Publication Centre)
The hard data now point to a horrendous Q3 GDP print in Germany, which almost surely will constrain the advance EZ GDP print released on October 30.
10 Dec. 2014 German Exports are Holding Up, But Greek Election Risks Loom (Publication Centre)
The German manufacturing sector is showing signs of stabilisation with industrial production rising 0.2% month-on-month in October, equivalent to 0.8% year-over- year. This is consistent with a decent retracement in production this quarter, but growth is still only barely above zero.
10 Feb. 2016 Downside Production Surprise to Take its Toll on Sterling (Publication Centre)
December's industrial production figures, released today, look set to surprise the consensus to the downside, pushing down the pound and increasing the chances that the preliminary estimate of a 0.5% quarter-on-quarter increase in fourth quarter GDP will be revised down.
2 February 2018 Is it Time to Tell a More Balanced Story on EZ Manufacturing? (Publication Centre)
We struggle to find much wrong with the near-term outlook for Eurozone manufacturing. The headline PMI fell marginally to 59.6 in January, from 60.6 in December, but it continues to signal robust growth at the start of the year.
10 Feb. 2016 No Relief for German Q4 GDP Forecasts in Yesterday's Data (Publication Centre)
Yesterday's German manufacturing and trade data did little to allay our fears over downside risks to this week's Q4 GDP data. At -1.2% month-to-month in December, industrial production was much weaker than the consensus forecast of a 0.5% increase. Exports also surprised to the downside, falling 1.6% month-to-month. Our GDP model, updated with these data, shows GDP growth fell 0.2%-to-0.3% quarter-on-quarter in Q4, reversing the 0.3% increase in Q3.
10 Dec. 2014 - Mortgage Demand Has Recovered its October Plunge, but Still Low (Publication Centre)
Demand for new mortgages to finance house purchase has rebounded somewhat in recent weeks, following an alarming dip in the wak e of October's stock market correction. At the low, in the third week in October, the MBA's index of applications volume was at its lowest since mid-February, when the reported numbers are substantially depressed by a long-standing seasonal adjustment problem.
19 October 2017 Q3's Slowdown in EZ Construction is no Threat, the Trend is Firm (Publication Centre)
The upturn in the Eurozone construction sector likely paused in Q3. Yesterday's August report showed that output fell 0.2% month-to-month, pushing the year-over-year rate down to +1.6%, from a revised +2.8% in July.
2 February 2018 A Solid Finish to 2017 for Brazil, Pointing to Upside Risks (Publication Centre)
Brazil's December industrial production and labour reports, released this week, confirmed that the recovery remained solidly on track at the end of last year.
19 December 2017 New Home Sales and Construction Appear Set to Rocket Next Year (Publication Centre)
In the short-term, all the housing data are volatile. But you can be sure that if the recent pace of new home sales is sustained, housing construction will rise.
2 May 2017 Economic Activity in Mexico Remains Strong, but Will Slow (Publication Centre)
19 October 2017 Leading Indicators Will be Hit by Storms, but not on the Katrina Scale (Publication Centre)
We don't use the index of leading economic indicators as a forecasting tool. If it leads the pace of growth at all, it's not by much, and in recent years it has proved deeply unreliable.
2 March 2018 Brazil GDP Ended 2017 Softly, but the Recovery Will Accelerate in Q1 (Publication Centre)
Brazil's GDP growth slowed to just 0.1% quarter- on-quarter in Q4, from an upwardly-revised 0.2% in Q3. This pushed the year-over-year rate up to 2.1%, from 1.4%, but this was weaker than market expectations.
2 May 2017 Can Sterling's Recovery Gather More Momentum? (Publication Centre)
Sterling continued to recover last week, hitting its highest level against the dollar since October, despite a series of data releases indicating that the economy is losing momentum. Indeed, sterling was unscathed by the news on Friday that quarter-on-quarter GDP growth slowed to just 0.3% in Q1, from 0.7% in Q4.
19 Jan. 2015 Peru's Central Bank Committed to Boost Economic Growth (Publication Centre)
In a surprise move, Peru's central bank, BCRP, succumbed to the current weakness of the economy and cut interest rates by 25bp to 3.25% last Thursday, for the first time since August last year. The board also lowered the interest rates on lending and deposit operations between the central bank and financial institutions.
2 March 2017 Is it all over for Mr. Fillon? (Publication Centre)
The French presidential election campaign remains chaotic. Republican candidate François Fillon had to defend himself again yesterday as investigations into his potential misuse of public funds deepened. Mr. Fillon and his wife have now been summoned to court to explain themselves. Markets expected Mr. Fillon to resign as the Republican front-runner. Instead, he used his unscheduled media address to defiantly declare that he is staying in the race.
10 November 2017 Data to Confirm Production Picked Up but Net Trade Hit Growth in Q3 (Publication Centre)
September's industrial production figures likely will not surprise markets today. We look for a 0.3% month-to-month rise in production, matching the consensus and the ONS assumption in the preliminary estimate of Q3 GDP.
10 January 2017 The German Economy Fired on All Cylinders in the Fourth Quarter (Publication Centre)
Survey data have been signalling a stronger German economy in the last few months, and hard data are beginning to confirm this story. Data yesterday showed that industrial production rose 0.4% month-to-month in November, pushing the year-over-year rate up to 2.2%, from an upwardly-revised 1.6% in October. The headline was boosted mainly by a 1.5% month-to-month jump in construction and a 0.9% rise in intermediate goods production.
10 Nov. 2015 Trade Data Confirm Our Worst Fears for German Q3 GDP (Publication Centre)
German trade data yesterday added further evidence that net exports likely will wreak havoc with the Q3 GDP report this week. Exports rose 2.6% month-to-month in September, partially rebounding from a 5.2% plunge in August. But imports jumped 3.6%, further adding to the net trade drag on a quarterly basis. Our first chart shows our estimate of real net trade in Q3 as the worst since the collapse in 2008-to-09.
10 November 2017 Argentina Fights High Inflation, But Colombia's Outlook Is Improving (Publication Centre)
The Central Bank of Argentina surprised markets on Tuesday, raising its main interest rate by 100bp to 28.75% to cap inflation expectations and push core inflation down at a faster pace.
19 September 2016 Construction Investment Will Boost EZ GDP Growth in Q3 (Publication Centre)
Construction data in the Eurozone usually don't attract much attention, but today's July report will provide encouraging news, compared with recent poor manufacturing data. We think construction output leapt 2.1% month-to-month, pushing the year-over-year rate up to 2.3%, from 0.7% in June. This strong start to the third quarter was due mainly to a jump in non-residential building activity in France and Germany.
19 Feb. 2015 Never Mind the Dovish Minutes, What Does Yellen Think? (Publication Centre)
It's easy to read the January minutes as the dovish counterpart to a clear hawkish shift in the meeting. The statement, remember, upgraded the growth view to "solid" from "moderate"; it reiterated that the downward inflation shock from energy prices will be "transitory" and it said that the the pace of job growth is now "strong", having previously been "solid".
19 Jan. 2016 RPI Inflation Will Strengthen More Rapidly Than Markets Expect (Publication Centre)
RPI inflation has declined in importance as a measure of U.K. inflation and was stripped of its status as a National Statistic in 2013. Yet it is still used to negotiate most wage settlements, calculate interest payments on index-linked gilts, and revalue excise duties. We have set out our above-consensus view on CPI inflation several times, including in yesterday's Monitor. But the potential for the gap between RPI and CPI inflation to widen over the coming years also threatens the markets' view that the former will remain subdued indefinitely.
2 November 2018 Ignore the October Surge in Korean Exports, but Take Heed of Imports (Publication Centre)
Korea's trade data have been extremely volatile over the past two months, thanks to distortions caused by last year's odd holiday calendar.
10 May 2019 Underlying Core Inflation is Stable, Despite the Weak Q1 Core PCE (Publication Centre)
On the face of it, our forecast of higher core inflation by the end of this year is seriously challenged by the recent data.
19 December 2018 Another Strong Economic Activity Index in Brazil Outlook is Upbeat (Publication Centre)
Brazil is back on global investors' radar screens. Financial market metrics capture a relatively robust bullish tone, especially since the presidential election.
10 May. 2016 Jump in German Factor Orders do Not Signal the Start of an Upturn (Publication Centre)
New business in German manufacturing ended the first quarter on a strong note. Factory orders rose 1.9% month-to-month in March, above the consensus 0.6%, and net revisions to the February data were +0.4 percentage points. The rise in new orders was exclusively due to a 4.3% increase in export orders, which offset a 1.2% fall in domestic orders. These are strong numbers, but the details suggest that mean reversion will push the headline down next month.
19 Nov. 2015 Is Another Unsecured Credit Bubble Developing? (Publication Centre)
A sharp increase in unsecured borrowing has played a big role in supporting consumers' spending over the past year. The stock of unsecured credit, excluding student loans, increased by 8.2% year-over-year in September--the fastest growth since February 2006--boosting the funds available for households to spend by around 1%.
10 January 2017 Production Likely Surged in November, but Trend Remains Weak (Publication Centre)
The consensus expectation that industrial production rose by 1.0% month-to-month in November is far too low; we expect Wednesday's data to show a jump of 2.0% or so. The rebound, however, should not be interpreted as another sign that the economy has been revitalised by the Brexit vote. Instead, we expect the rise chiefly to reflect volatility in oil production and heating energy supply.
19 September 2017 China's Property Market Cools, Downtrend now Established (Publication Centre)
China's property market continued to slow in August, with prices rising by just 0.2% month-on- month seasonally adjusted, half the July pace.
2 January 2019 A Further Slowdown in GDP Growth Is Imminent (Publication Centre)
The economy's fragility was underlined by the Q3 national accounts, released just before the Christmas break.
10 May 2017 German GDP Growth Likely Accelerated in the First Quarter (Publication Centre)
Yesterday's economic data in Germany cemented the story of a strong start to the year, despite the disappointing headlines. Industrial production slipped 0.4% month-to-month in March, pushing the year-over-year rate down to +1.9% from a revised +2.0% in February.
10 October 2018 Underlying Inflation Pressures in Most of LatAm are Under Control (Publication Centre)
Yesterday's CPI report in Mexico confirmed that headline inflation edged higher, to 5.0% in September from 4.9% in August, as the mid-month inflation index suggested.
19 June 2017 Colombia's Economy Started Q2 Poorly, Expect a Sluggish Recovery (Publication Centre)
Evidence of slowing economic activity in Colombia continues to mount. Retail sales fell 2.0% year- over-rate in April, down from a revised plus 3.0% in March; and the underlying trend is falling. This year's consumption tax increase, low confidence, tight credit conditions, and rising unemployment continue to put private consumption under pressure.
10 Dec. 2015 Oil Prices to Play Tricks with German Net Exports Again in Q4? (Publication Centre)
German exports had a sluggish start to the fourth quarter, falling 1.2% month-to-month in October. The monthly drop pushed the year-over-year rate down to 3.0% from 4.2% in September, well down from the 5.6% third quarter average and extending the loss of momentum in recent months. Imports fell 3.6%, so net exports rose, but it's too early to make any useful estimates of net trade in the fourth quarter as a whole.
10 Mar. 2015 Don't Panic Over Fall in German Exports, Trend is Still Firm (Publication Centre)
The 12-month average German trade surplus continues to set records, rising to €18.2B in January, but exports started the quarter on a weak note, falling 2.1% month-to-month in January, equivalent to a mere 1.9% rise year-over-year.
19 June 2019 Market-based Recession Indicators Are Not Flashing Red (Publication Centre)
We doubt there will ever be a fail-safe leading indicator of when a recession is about to hit, but asset prices can help us to assess the risks, at least.
18 September 2018 Chainstore Sales Growth has Jumped Thank the Tax Cuts (Publication Centre)
The first estimate of retail sales growth in August was weaker than implied by the Redbook chainstore sales survey, but our first chart shows that the difference between the numbers was well within the usual margin of error.
10 December 2018 EZ Consumption Slowed Sharply in Q3, is a Q4 Rebound Coming? (Publication Centre)
Friday was a busy day in the Eurozone. The final and detailed GDP report confirmed that growth in the euro area slowed to 0.2% quarter-on-quarter in Q3, from 0.4% in Q2, with the year-over-year rate slipping by 0.6 percentage points to 1.6%, just 0.1pp below the first estimate.
2 June 2017 PMIs Signal a Strong Q2 for the EZ Manufacturing Sector (Publication Centre)
Yesterday's final May manufacturing PMIs confirmed that the EZ industrial sector is in fine form. The PMI for the euro area was unchanged at a cyclical high of 57.0 in May, in line with the initial estimate.
10 April 2019 Retail Sales Likely Dipped in March, but Remain Firmly on a Rising Path (Publication Centre)
Our view that households will continue to spend more in the first half of this year, preventing the economy from slipping into a capex-led recession, was not seriously challenged yesterday by the BRC's Retail Sales Monitor.
10 April 2018 Don't Mistake the Jump in Halifax's HPI for an Improving Trend (Publication Centre)
Halifax's house price index rose by an eye catching 1.5% month-to-month in March, superficially suggesting that the housing market is reviving.
2 July. 2015 Strong Jobs Numbers a Decent Bet, but Reasons for Caution too (Publication Centre)
Most of the indicators we follow point to another very strong payroll report today; we look for a 260K gain, matching May's performance. The best single leading indicator, the NFIB small business hiring intentions number, points to a massive 320K leap in private payrolls, as our first chart shows.
10 April 2017 Falling Unemployment Matters More than the Weather-hit Jobs Number (Publication Centre)
The BLS offered no estimate of the impact on payrolls of the snowstorm which hit the Northeast during the March survey week, but it appears to have been substantial. All the leading indicators pointed to a solid 200K-plus reading, more than double the official initial estimate, 98K.
19 June 2018 Rental Inflation is Set to Rise as Vacancies fall and Demand Increases (Publication Centre)
Housing rents account for some 41% of the core CPI and 18% of the core PCE, making them hugely important determinants of the core inflation rate.
Business Insider UK - Theresa May only has two Brexit options left: Capitulation to the EU or a second referendum (Media Centre)
Chief Eurozone Economist Claus Vistesen on Latvia
26 May. 2015 Is Core Inflation Really Rising, or are the Recent Gains Just Noise? (Publication Centre)
After four straight above-trend increases in the core CPI, you could be forgiven for thinking that something is afoot. It's still too soon, though to rush to judgment. The data show three previous streaks of 0.2%-or-bigger over four-month periods since the crash of 2008, and none of them were sustained.
17 August. 2015 Should We Worry About Two Straight Outsized Core PPI Gains? (Publication Centre)
The back-to-back 0.3% increases in the core PPI in June and July represent the biggest two-month gain since mid-2013, so we now have to be on the alert for the August report, which will be released September 11, a week before the FOMC meeting. A third straight outsized gain--the trend before June's jump was only about 0.05% per month, and the year-over-year rate is still only 0.6%--would suggest something real is stirring in the numbers, rather than just noise.
12 Jan. 2015 More Misery for Industrial Production in the Eurozone (Publication Centre)
Manufacturing data for the euro area's major economies point to renewed downside risks for GDP growth, despite the likely tailwind to consumption from low oil prices. November industrial production fell 0.1% and 0.3% month-to-month in Germany and France respectively, indicating that the manufacturing sector remains under pressure.
13 February 2018 Brazilian Households are in Good Shape, Despite Ending Q4 Poorly (Publication Centre)
Consumers' spending in Brazil weakened at the end of Q4, but we think households will support GDP growth in the first quarter.
10 August. 2015 End of the Tightening Cycle in Brazil, as The Recession Bites? (Publication Centre)
While we were out, Brazil's Monetary Policy Committee--Copom-- increased the Selic rate by 50bp to 14.25% on July 29th. The short statement indicated that the decision was unanimous and without bias. But it also signaled that the Copom is ready to end the tightening cycle if the data and, especially, the BRL, permit.
30 Oct. 2015 Can the Recovery in Business Investment Maintain Its Pace? (Publication Centre)
Business investment has punched above its weight in the economic recovery from the crash of 2008; annual real growth in capex has averaged 5% over the last five years, greatly exceeding GDP growth of 2%. This recovery is unlikely to grind to a halt soon, since profit margins are still high and borrowing costs will remain low. But corporate balance sheets are not quite as robust as they seem, while capex in the investment-intensive oil sector still has a lot further to fall.
5 March 2019 Simultaneous ISM Declines are Disconcerting, but won't Persist (Publication Centre)
The simultaneous weakening of the ISM manufacturing and non-manufacturing surveys in recent months is one of the more disconcerting shifts in the recent macro data.
8 August 2017 Watch the NFIB Survey for Clues to Job Growth, Capex and Inflation (Publication Centre)
The NFIB survey of small businesses today will show that July hiring intentions jumped by four points to +19, the highest level since November 2006. The NFIB survey has been running since 1973, and the hiring intentions index has never been sustained above 20.
14 Mar. 2016 Peru Hold Rates, But Tightening Cycle Hasn't Ended Just Yet (Publication Centre)
Peru's central bank, the BCRP, kept borrowing costs at 3.25% last week, surprising the consensus forecast for a 25bp increase. This was an unexpected move because inflation risks have not abated much since the previous meeting, when policymakers lifted rates for the third straight month.
17 August. 2016 Oil Sector Capex is Rebounding, and Will Add to Q3 GDP Growth (Publication Centre)
The most important number released yesterday was hidden well behind the headline inflation, production and housing construction data. We have been waiting to see how quickly the upturn in the number of rigs in operation would translate into rising oil and gas well-drilling, and now we know: In July, well-drilling jumped by 4.7%
7 July 2017 Upside Risk for Payroll. Despite Soft ADP. Robust AHE a Decent Bet too (Publication Centre)
ADP's reported 158K increase in private payrolls was very close to our model-based estimate, so it doesn't change our 220K forecast for todays official payroll number, well above the 177K consensus.
17 Feb. 2015 The Eurozone's trade surplus is surging, and more upside ahead (Publication Centre)
Yesterday's trade data showed that the Eurozone's external balance continues to improve markedly. The seasonally adjusted trade surplus in the euro area rose to €23.3B in December, a new all-time high, from a revised €21.6B in November.
16 July 2019 No End in Sight Yet to the Industrial Consumer Bifurcation (Publication Centre)
Today's brings the June retail sales and industrial production reports, after which we'll update our second quarter GDP forecast.
21 October. 2016 The BCB is Cautious, But its Inflation Fears Will Ease Soon (Publication Centre)
Brazil's monetary policy committee, the Copom, cut the Selic rate by 25bp to 14.0% in a unanimous decision, without bias, on Wednesday. This marks the start of the first easing cycle since 2012, and it arrives after 15 months with rates held at 14.25%.
GUARDIAN - UK house price growth up in final set of figures before vote to leave EU (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. House Prices
16 July 2018 Upside Risks to the Consensus for June CPI Inflation (Publication Centre)
We expect June's consumer prices report, released on Wednesday, to show that CPI inflation increased to 2.7%, from 2.4% in May, above the consensus, 2.6%, and the Bank of England's forecast, 2.5%.
20 February 2019 Robust Labour Market Implies MPC Won't Dally After Brexit Risks Fade (Publication Centre)
Signs of a slowdown in the labour market data are conspicuously absent.
8 August. 2016 Wage Gains Set to Slide in August, Delaying the Fed Until December (Publication Centre)
We were happy to see the 255K gain in July payrolls, but we remain nervous about the sustainability of such strong numbers. The jump in employment was very large relative to some of the key survey-based indicators of the pace of hiring, even after allowing for the 29K favorable swing in the birth/ death model, compared to a year ago, and the 27K jump in state and local government education jobs, likely due to seasonal adjustment problems
Business Insider - London's house prices are growing at their slowest rate since 2012 (Media Centre)
Chief U.K. Economist Samuel Tombs on Nationwide's June House Price Index
20 Jan. 2015 Current Account Surplus Stays Robust, but Watch Deficit in Spain (Publication Centre)
Eurozone current account data yesterday provided further evidence of stabilisation in the economy despite a headline deterioration. The adjusted current account surplus fell to €18.1B in November from a revised €19.5B in October, but the decline was mainly driven by an increase in current transfers; the core components remain solid.
11 September 2018 Business Owners Bullish, but Where's the Capex (Publication Centre)
If you had only the NFIB survey of small businesses as your guide to the state of the business sector, you'd be blissfully unaware that the economic commentariat right now is obsessed with the potential hit from the trade tariffs, actual and threatened.
8 August 2017 Will Mexico's Economy Resilience Continue in the Second Half? (Publication Centre)
The Mexican economy maintained its relatively strong momentum in Q2. The first estimate of Q2 GDP, released last week, confirmed that growth was resilient during the first half of this year, despite the confidence hit caused by domestic and external headwinds.
8 August 2018 Chainstore Sales Growth is Strong, but the Tax Cuts aren't Responsible (Publication Centre)
The release yesterday of the weekly Redbook chainstore sales report for the week ended Saturday August 4 means that we now have a complete picture of July sales.
17 August 2018 China Talks Could Help Support The RMB But it Won't Last (Publication Centre)
China and the U.S. are officially to restart trade talks, according to China's Ministry of Commerce, after previous negotiations stalled in June.
10 January 2019 Japanese Households Face Cross-currents Time to Tighten the Belt (Publication Centre)
Japan's wage growth surprised us with a jump to 2.0% year-over-year in December, up from 1.5% in November.
8 August 2018 July Brought Neither Feast Nor Famine for Retailers (Publication Centre)
The run-up to the release of the official retail sales figures has become so congested with other indicators, following alterations by the ONS to its publication schedule, that we now have to preview the data earlier than usual.
BUSINESS INSIDER - Housing Starts Surge In December (Media Centre)
Housing Starts Surge In December
10 August. 2015 While We Were Out... (Publication Centre)
...The Fed told investors that it now requires only "some further improvement" in labor market conditions before starting to raise rates-- the "some" is new--but did not set out any specific conditions. With the unemployment rate now just a tenth above the top of the Fed's Nairu range, 5.0-to-5.2%, and very likely to dip into it by the time of the decision on September 17, while payroll growth is trending solidly above 200K per month, rates already would have been raised some time ago in previous cycles.
BUSINESS INSIDER - Germany's ballooning trade surplus just hit a new record size (Media Centre)
Germany's exporters just broke another record: The trade surplus for Europe's biggest economy is now at its highest on record.........Here's how Germany's recent export history looks, according to Pantheon Macroeconomics
31 August. 2016 Cheaper Borrowing Costs Won't Reignite Firms' Investment Appetite (Publication Centre)
July's money and credit figures provided more evidence that firms have become reluctant to invest following the Brexit vote. Lending by U.K. banks to private non-financial companies--PNFCs--rose by just 0.2% month-to-month in July, below the average 0.5% increase of the previous six months.
16 Sept. 2015 Industry in Less-Bad Shape Than August Data Suggest - Q4 Better? (Publication Centre)
We aren't going to pretend for a minute that the manufacturing sector is anything other than weak, but the 0.5% drop in output in August--the worst month since January 2014--hugely overstates the extent of industry's struggles. All the decline was due to a 6.4% plunge in auto output, but a glance at the recent path of production in this sector makes it very clear that its short-term swings aren't to be taken seriously. Auto production fell by 4.5% in June, rocketed by 10.6% in July, and then dropped sharply in August.
16 Sept. 2015 Will Downbeat Sentiment Push the ECB into More QE this Year? (Publication Centre)
Economic data are telling a story of a strengthening recovery, but downbeat investor sentiment points to a more difficult environment. The headline ZEW expectations index fell to a ten-month low of 12.1 in September, from 25.0 in August. This takes sentiment back to levels not seen before QE was announced, highlighting the increasing worry that deflation risks and low growth in China will derail the recovery. We don't agree, but we can't be sure the ECB thinks the same, and risks of additional stimulus this year have increased.
27 Jan. 2016 The Curious Case of Missing Equity Earnings in the Eurozone (Publication Centre)
Eurozone investors continue to look to the ECB as the main reason to justify a constructive stance on the equity market. Last week, the central bank all but promised additional easing in March, but the soothing words by Mr. Draghi have, so far, given only a limited lift to equities. Easy monetary policy has partly been offset by external risks, in the form of fears over slow growth in China, and the risk of low oil prices sparking a wave of corporate defaults. But uncertainty over earnings is another story we frequently hear from disappointed equity investors. We continue to think that QE and ZIRP offer powerful support for equity valuations in the Eurozone, but weak earnings are a key missing link in the story.
BUSINESS INSIDER - Homebuilder confidence tumbles in March (Media Centre)
Chief US Economist Ian Shepherdson comments on disappointing Homebuilder Confidence data
16 Oct. 2015 Bund Yields are Too Low, but no Serious Increase Until Next Year (Publication Centre)
Bond markets in the euro area have been a calm sea recently relative to the turmoil in equities, credit and commodities. Following the initial surge in yields at the end of second quarter, 10-year benchmark rates have meandered in a tight range, recently settling towards the lower end, at 0.5%. Our outlook for the economy and inflation tells us this is to o low, even allowing for the impact of QE.
7 Oct. 2015 Banxico Confirms No Rush to Hike Interest Rates, With the Fed on Hold (Publication Centre)
The September Banxico minutes restated that the U.S. Fed's first interest rate hike is the key event awaited by Mexican policymakers. Banxico's board of governors voted unanimously on September 21st to keep the main interest rate at a record-low 3%.
27 February 2018 Brazil's Low Inflation in Mid-February Ushers in Bets for a Final Rate Cut (Publication Centre)
Brazil's inflation rate remained well under control over the first half of February. We see no threats in the near term, indicating that more stimulus will be forthcoming from the BCB.
31 January 2017 Focus on Strong EZ Q4 GDP Data On a Busy Day in the Eurozone (Publication Centre)
Today will be an incredibly busy day for EZ investors with no fewer than eight major economic reports. Overall, we think the data will tell a story of a stable business cycle upturn and rising inflation. Markets will focus on advance Q4 GDP data in France and in the euro area as a whole. Our mo dels, and survey data, indicate that the EZ economy strengthened at the end of 2016, and we expect the headline data to beat the consensus.
27 August. 2015 Mr. Praet's Dovish Comments Don't Signal Easing Next Week (Publication Centre)
ECB board member Peter Praet fired the first shot across the markets' bow yesterday following this week's turmoil. Speaking to journalists in Germany, Mr. Praet noted "increased downside risk of achieving a sustainable inflation path towards 2%," and assured investors the current QE program is fully flexible, and can be readily adjusted in response to an adverse development in inflation expectations. We don't think, though, this is a pre -cursor for additional easing at next week's ECB meeting.
16 October 2018 No Further Step Up in Wage Growth Likely in August (Publication Centre)
Consensus expectations for August's labour market data, released today, look well grounded.
04 August. 2015 Stable Manufacturing in the EZ, but Slowing China is a Risk (Publication Centre)
Eurozone manufacturing is showing signs of stabilisation. Final PMI data showed the headline gauge falling trivially to 52.4 in July from 52.5 in June, slightly above the initial estimate of 52.2. New orders slowed, though, with companies reporting weakness in export business amid firm domestic demand.
7 Oct. 2015 Are Payrolls Slowing Because There's No-one Left to Hire? (Publication Centre)
In the absence of market-moving data today, we want to take a closer look at the labor market, and, specifically, the idea that payroll growth is slowing because firms cannot find staff they consider suitably qualified for the jobs available. Every indicator of labor demand, with the sole exception of manufacturing-specific surveys, is consistent with very rapid payroll growth, well in excess of 200K per month.
31 August. 2016 German Core Inflation Slipped in August, but Should Rebound Soon (Publication Centre)
The upward trend in German inflation stalled temporarily in August, with an unchanged 0.4% year-over-year reading in August. A dip in core inflation likely offset a continued increase in energy price inflation. The detailed final report next month will give the full story, but state data suggest that the core rate was depressed by a dip in price increases of household appliances, restaurant services, as well as "other goods and services."
31 August. 2015 Brazil's Recession, Worse Than Feared And No Respite In Sight (Publication Centre)
Brazil's recession has deepened. Overall, the economy has sunk into its worst slump in six years, and the recovery will be painful and slow. This is not surprising, but the sharper than expected 3% contraction over the first half of the year may have thrown a further bucket of cold water on President Rousseff, whose popularity ratings have fallen to a level not seen since 1992, when President Collor de Mello was forced out of office after being impeached for corruption. Real GDP in Brazil fell 1.9% quarter-on-quarter in Q2, much worse than the downwardly revised 0.7% contraction in Q1.
31 August 2018 Did Eurozone Core Inflation Decline Slightly in August (Publication Centre)
Yesterday's advance CPI data in Germany suggest that inflation fell slightly in August.
27 May. Q1 GDP Just the Beginning of a Prolonged Slowdown (Publication Centre)
The second estimate of Q1 GDP confirmed that the recovery has lost momentum and revealed that growth would have ground to a halt without consumers. GDP growth likely will slow further in Q2, as Brexit risk undermines business investment.
21 March 2017 Will Investors Shorting Sterling Remain Frustrated? (Publication Centre)
Speculators who have sold sterling over the last six months have been frustrated. Investors have been overwhelmingly net short sterling, but the pound has hovered between $1.20 and $1.25, as our first chart shows. Undeterred, investors increased their net short positions last week to 107K contracts-- the most since records began in 1992--from 81K a week earlier.
27 March 2019 Can the Fed Engineer Sustained Non-in ationary Wage Growth (Publication Centre)
The Fed wants price stability--currently defined as 2% inflation--and maximum sustainable employment.
GUARDIAN - UK house prices edge up 0.2% in April (Media Centre)
20 Jan. 2016 Wage Growth Will Push the "Data Driven" Governor to Hike this Year (Publication Centre)
Bank Governor Mark Carney reiterated in a speech yesterday that he wants to see sustained momentum in GDP growth, domestic cost pressures firm and core inflation rise further towards 2%, before raising interest rates. We doubt he will have long to wait on the last two points, given the tightness of the labour market.
17 August 2017 China's Reform Scorecard Part Five: Monetary Policy Operation (Publication Centre)
Chinese monetary policymakers can rely on several different instruments to affect market and broad liquidity, ranging from various forms of open market operations to interest rates to FX intervention. The tool kit is constantly changing as the PBoC refines its operations.
Independent - UK house price growth drops to five-year low as London remains worst-performing region (Media Centre)
Guardian - UK house prices fell in January for the first time in five months (Media Centre)
16 September. 2016 Something Bad Happened to Industry in August, Will it Last? (Publication Centre)
We have not been expecting the Fed to raise rates next week, and yesterday's data made a hike even less likely. The September Philly Fed and Empire State surveys were alarmingly weak everywhere except the headline level, and the official August production data were grim.
26 September 2018 The Fed Must Keep Hiking as the Labor Market Keeps Tightening (Publication Centre)
It would be astonishing if the Fed doesn't raise rates today, and Chair Powell is not in the astonishment business; they will hike by 25bp.
7 May 2019 The Economy's Pulse is Stronger than Business Surveys Suggest (Publication Centre)
All the main business surveys released last week continued to paint a picture of a listless economy.
27 July. 2016 Can Fiscal Stimulus be a Silver Bullet for the Eurozone Economy? (Publication Centre)
Global economic growth continues to fall short of expectations, and the call for aggressive fiscal stimulus is growing in many countries. This is partly a function of the realisation that monetary policy has been stretched to a breaking point. But it is also because of record low interest rates, which offer governments a golden and cheap opportunity to kickstart the economy. One of the main arguments for stronger fiscal stimulus is based on classic Keynesian macroeconomic theory.
31 March 2017 Eurozone Inflation Data will Undershoot the Consensus Today (Publication Centre)
Yesterday's advance data from Germany and Spain suggest that today's Eurozone inflation report will undershoot the consensus. In Germany, headline inflation slipped to 1.6% in March from 2.2% in February, and in Spain the headline rate plunged to 2.3% from 3.0%.
7 May 2019 Plunging Industrial Activity in Brazil Highlight the Political Mess (Publication Centre)
In our recent Monitors, we stressed that some leading indicators in Brazil, particularly business and consumer confidence, are still pointing to a gradual economic recovery.
19 Mar. 2015 A Weak Euro and Low Oil Prices are Boosting the EZ Trade Surplus (Publication Centre)
Due to a technical quirk, Eurostat was not able to publish seasonally adjusted January trade numbers yesterday, so the report is of limited use. The unadjusted trade surplus in the Eurozone plunged to €7.9B in January, from €24.3B in December, driven in part by a collapse in Italy's surplus.
27 Oct. 2015 Upbeat IFO Survey, Despite Dip in Headline Business Climate Index (Publication Centre)
Economic sentiment in the Eurozone's largest economy stayed solid at the start of the fourth quarter, despite subdued manufacturing and poor investor sentiment. The headline IFO business climate index fell slightly to 108.2 in October from 108.5 in September, due to a fall in the current assessment index. The expectations index rose, though, to 103.8 from 103.5 last month pointing to a resilient outlook for businesses and solid GDP growth in coming quarters.
Business Insider U.K. - The best of 2018 may already be over for the pound (Media Centre)
Chief U.K. Economist Samuel Tombs discussing sterling in 2018
15 Jan. 2016 Downside Risk for December Retail Sales and Industrial Output (Publication Centre)
After a very light week for economic data so far, everything changes today, with an array of reports on both activity and inflation. We expect headline weakness across the board, with downside risks to consensus for the December retail sales and industrial production numbers, and the January Empire State survey and Michigan consumer sentiment. The damage will b e done by a combination of falling oil prices, very warm weather, relative to seasonal norms, and the stock market.
BUSINESS INSIDER - Retail sales rise less than expected (Media Centre)
Chief US Economist Ian Shepherdson on Retail Sales figures, March
3 August 2018 Brazil Likely will Keep Rates on Hold as Long as the BRL Behaves (Publication Centre)
The Brazilian Central Bank's policy board--the Copom--met expectations on Wednesday, voting unanimously to keep the Selic rate on hold at 6.50%.
3 August 2017 Will the MPC Call Time on the Term Funding Scheme? (Publication Centre)
We see only a small risk today of the MPC raising interest rates or sending a strong signal that a hike is imminent, for the reasons we set out in our preview of the meeting. The MPC, however, also must decide today whether to wind up the Term Funding Scheme-- TFS--launched a year ago as part of its post-Brexit stimulus measures.
14 September 2017 August Core CPI Set to Mean-Revert to 0.2% as Temporary Factors Fade? (Publication Centre)
After five straight undershoots to consensus, with the core CPI averaging monthly gains of just 0.05%, investors are asking hard questions about the Fed's belief -- and ours -- that core inflation is headed towards 2% in the not-too-distant future.
12 September 2017 NFIB Labor Indicators Still Very Strong, Despite August Dips (Publication Centre)
The key labor market numbers from the monthly NFIB survey of small businesses are released ahead of the main report, due today.
14 September 2017 Robust Manufacturing and Rising Employment in the Eurozone (Publication Centre)
Manufacturing in the Eurozone had a slow start to the third quarter. Industrial production rose only 0.1% month-to-month in July, though the year-over-year rate was pushed up to 3.2% from a revised 2.8% in June.
14 September 2017 PBoC Pushes Back on RMB Rise. Stability is Still King, for now (Publication Centre)
The RMB has risen strongly in recent months, initially with the euro and the yen, but China's currency rose on a trade-weighted basis in August.
TELEGRAPH - UK house prices slip as market feels a chill (Media Centre)
TELEGRAPH - House prices soar, fuelled by sky-high rises in London flats - but uncertainty lies ahead (Media Centre)
14 September 2016 German Inflation is Heading Higher, Despite Pause in August (Publication Centre)
Yesterday's final CPI report in Germany confirmed the initial estimate that inflation was unchanged at 0.4% year-over-year in August. Deflation in energy prices eased further, but the headline was pegged back by a small fall in the core rate to 1.2% year-over- year, from 1.3% in July.
2 January 2018 BoJ: Chinese Profit Story Deteriorates Amid Surprisingly Robust PMIs (Publication Centre)
China's official PMIs paint a picture of robust momentum going into 2018 but we find this difficult to reconcile with the other data.
6 May. 2016 Chile's Economy Picks Up in Q1, but no Sustained Acceleration (Publication Centre)
Economic growth in Chile picked up in Q1, but the recovery remains disappointingly weak, due to both global and domestic headwinds. The latest Imacec index, a proxy for GDP, rose just 2.1% year-over-year in March, slowing from a 2.8% gain in February. Assuming no revisions next month, economic activity rose 1.2% quarter-on-quarter in Q1, better than the 0.9% increase in Q4. These data points to a modest pick-up in GDP growth in Q1, to 1.8% year-over-year, from 1.3% in Q4.
29 November 2018 Powell Says the Funds Rate is Just Below... Well, What, Exactly (Publication Centre)
The stock market loved Fed Chair Powell's remarks on the economy yesterday, specifically, his comment that rates are now "just below" neutral.
12 October. 2016 Monetary Policy Divergence Will Push EURUSD to 1.05 Soon (Publication Centre)
The euro's spectacular rise against the pound has been the key story in European FX markets recently. But the trade-weighted euro, however, is up "only" 6% year-to-date, as a result of the relatively stable EURUSD.
29 Sept. 2015 Deflation Focus is Overwhelming, But Inflation will Pick Up in Q4 (Publication Centre)
Eurozone September CPI data this week will show that inflation pressures remain weak, appearing to support the ECB's focus on downside risks. We think Eurozone inflation--data released Wednesday-- rose slightly to 0.2% year-over-year in September from 0.1% in August, as core inflation edged higher, offsetting weak energy prices. Looking ahead, structural inflation pressures will keep inflation well below the central bank's 2% target for a considerable period.
BUSINESS INSIDER - Retail sales tank....then again, the weather was terrible (Media Centre)
Chief US Economist Ian Shepherdson attributes bad weather to February US Retail Sales
15 January 2018 Mexico's Industrial Sector Remains Unresponsive, but Q1 Will be Better (Publication Centre)
Upbeat survey data, a competitive MXN, and the strong U.S. manufacturing sector indicate that Mexican industry should be rebounding.
29 September. 2016 Rocketing Soybean Exports Set to Hold Down August Trade Deficit (Publication Centre)
Today is all about beans. Specifically, soybeans, and more specifically, just how many of them were exported in August. This really matters, because if soybean exports in August and September remained close to their hugely elevated July level, the surge in exports relative to the second quarter will contribute about one percentage point to headline GDP growth.
12 September 2017 CPI Inflation Likely Leapt in August and is Still Set to Peak at 3% Soon (Publication Centre)
The upward trend in CPI inflation likely reasserted itself in August, following a hiatus in the last two months due to the decline in oil prices.
3 January 2019 Is QT Driving the Stock Market Down, or is it Just a Bit-part Player (Publication Centre)
We have focussed on the role of the trade war in depressing U.S. stock prices in recent months, arguing that the concomitant uncertainty, disruptions to supply chains, increases in input costs and, more recently, the drop in Chinese demand for U.S. imports, are the key factor driving investors to the exits.
*August 2017 - EZ Economic Chartbook* (Publication Centre)
The EZ economy finally stretches its legs...but it won't sustain Q1 and Q2 momentum for long
13 August. 2015 More Soft-Looking Sales as Falling Prices Depress Nominal Activity? (Publication Centre)
Retail sales have consistently disappointed markets this year, but investors' concerns are misplaced. The rate of growth of core sales has slowed because the strength of the dollar has pushed down the prices of an array of imported consumer goods, and people appear to have spent a substantial proportion of the saving on services.
3 Nov. 2015 Truck Sales Soaring, Lifted by Cheap Gas, Robust Confidence (Publication Centre)
Most of the time, markets view auto sales as a bellwether indicator of the state of the consumer. Vehicles are the biggest-ticket item for most households, after housing, and most people buy cars and trucks with credit. Auto purchase decisions, therefore, tend not to be taken lightly, and so are a good guide to peoples' underlying confidence and cashflow. We appreciate that things were different at the peak of the boom, when anyone could get a loan and homeowners could tap the rising values of their properties, but that's not the situation today.
15 August 2018 China's Authorities have Enough to Worry About...Tariff hit yet to Come (Publication Centre)
Our view on the trade data last week was that U.S. tariff hikes have caused minimal damage, so far. China's tariff increases on imports to date have resulted in stockpiling, with little evidence in the CPI of any inflationary pressure.
Wall Street Journal - Britain's New Housing Dilemma (Media Centre)
Samuel Tombs discussing the U.K. Monetary Policy
15 August 2017 Time for a Rebound in Core Retail Sales A er Unexpected So ness (Publication Centre)
No matter how you choose to slice-and-dice the recent retail sales numbers, the core data for the past couple of months have been disappointing. Our favorite measure--total sales less autos, gasoline, food and building materials--rose by just 0.1% month-to- month in May but then reversed this minimal gain in June.
BUSINESS INSIDER - This key labor market indicator hasn't been this strong in years (Media Centre)
On Thursday morning, we'll get the best-performing indicator of the US labor market: initial jobless claims. For a while now, Pantheon Macroeconomics' Ian Shepherdson has been stressing that the weekly print is noisy, particularly with the volatility the end-of-year season brings
6 February 2017 EZ Households are in Good Shape, But Spending Will Slow in 2017 (Publication Centre)
Consumers' spending in the euro area weakened at the end of Q4, but we think households will continue to boost GDP growth in the first quarter. Data on Friday showed that retail sales fell 0.3% month-to-month in December, pushing the year-over-year rate down to 1.1%, from a revised 2.8% in November.
6 Feb. 2015 Payroll Growth Trending at 250K-plus - Expect Strength Today (Publication Centre)
The odds favor a robust January payroll report today. The key leading indicator--the NIFB hiring intentions index from five months ago--points to a 275K increase, while the coincident NFIB actual employment change index suggests 260K.
WALL STREET JOURNAL - Economists react to the May jobs report: "Unambiguously Positive" (Media Centre)
Chief US economist Ian Shepherdson on the latest Jobs report
14 September 2018 Japan's PPI Inflation will Soon Slow How Sustainable is Capex Growth (Publication Centre)
Japan's PPI inflation was unchanged, at 3.0%, in August.
THE TELEGRAPH - Weak US retail sales put hopes of interest rate hike on ice (Media Centre)
Chief U.S. Economist Ian Shepherdson on US Retail Sales
30 August 2018 The Base is Low for a Q3 Rebound in French Consumers' Spending (Publication Centre)
Yesterday's data in the French economy provided the final confirmation that growth remained sluggish in Q2, and showed that households had a slow start to the third quarter.
30 August. 2016 Banxico is Waiting for Fiscal Policy Action, and the Fed (Publication Centre)
The minutes from Banxico's August 11 monetary policy meeting--in which Board members unanimously voted to keep rates on hold at 4.25%--confirmed that the bank's policy guidance remains broadly neutral. Subdued economic activity, favourable inflation and gradual fiscal consolidation explain policymakers' position.
30 August. 2016 Reports of the Economy's Resilience are Greatly Exaggerated (Publication Centre)
Over the sleepy August holidays, a view has gained traction in the media that the U.K. economy is showing little damage from the Brexit vote. Optimists argue that the size and composition of the 0.6% quarter-on-quarter rise in Q2 GDP, the 1.4% month-to-month jump in retail sales volumes in July, and the slight dip in the unemployment claimant count demonstrate that the recovery is in good shape.
13 Apr. 2016 Key Data Improving in the Biggest LatAm Economies, Just (Publication Centre)
Industrial production in Mexico surged 2.6% year-over-year in February, up from a 0.8% increase in January. A favourable calendar effect, however, is a key part of this story. Once adjusted for the leap year, which added an extra working day, industrial production rose only 0.8%, down from a 1.6% expansion in January.
30 August 2017 The Eurozone's Cyclical Recovery is Stable, Not Accelerating (Publication Centre)
While we were enjoying a rare sunny bank holiday in the U.K., data showed that Eurozone money supply growth slowed at the start of Q3. Broad money growth--M3--fell to a 10-month low of 4.5% year-over- year in July, from 5.0% in August.
30 August 2017 ADP Looks set to Report Another Solid Gain in Payrolls (Publication Centre)
We're expecting a hefty increase in private payrolls in today's August ADP employment report. ADP's number is generated by a model which incorporates macroeconomic statistics and lagged official payroll data, as well as information collected from firms which use ADP's payroll processing services.
15 August 2018 Supply Constraints Still aren't Biting, Despite Low Unemployment (Publication Centre)
The stand-out development in yesterday's labour market report was the drop in the he adline, three-month average, unemployment rate to just 4.0% in June--its lowest rate since February 1975--from 4.2% in May.
15 August. 2016 July Inflation Figures to Show Adverse Brexit Impact (Publication Centre)
July's consumer price figures, due tomorrow, likely will bring early evidence that sterling's Brexit-driven depreciation already is pushing up inflation. We think that CPI inflation picked up to 0.6% in July from 0.5% in June, exceeding the consensus forecast for an unchanged reading. Experience of past depreciations suggests that July's figures likely won't be the last time the consensus is surprised by the speed of the rise in inflation.
WALL STREET JOURNAL - U.S. Home-Builder Confidence Climbs in September, Industry Group Says (Media Centre)
Ian Shepherdson comments on US Home-builders data
Telegraph - House price growth jumps to highest since March despite weaker market post-Brexit vote (Media Centre)
Chief U.K. Economist Samuel Tombs on the U.K. Halifax House Price Index in December
30 July. 2015 Ignore Volatile Commodity Prices, and Focus on Core Inflation (Publication Centre)
Volatile commodity prices make this week's inflation data in Germany and the Eurozone a wild card. Crude oil in euro terms is down about 20% month-to-month in July, which will weigh on energy prices. In Germany, though, we think higher core inflation offset the hit from oil, pushing inflation slightly higher to 0.4% year-over-year in July from 0.3% in June.
28 Oct. 2015 Q3 Slowdown Marks the Start of a Sustained Softening (Publication Centre)
Markets responded to yesterday's disappointing GDP figures by pushing back expectations for the first rise in official interest rates even further into 2017. The first rate hike is now expected--by the overnight index swap market--in April 2017, two months later than anticipated before the GDP release. The figures certainly look weak--particularly when you scratch below the surface--and we expect growth to slow further over the coming quarters. But we don't agree they imply an even longer period of inaction on the Monetary Policy Committee.
28 Oct. 2015 Domestic Data Point to Robust Third Quarter Growth in Mexico (Publication Centre)
The Mexican economy is recovering gradually, despite many external headwinds. This week, the IGAE economic activity index--a monthly proxy for GDP--rose a solid 2.6% year-over-year in August, up from 2.0% in July. In the first half the economy grew on average 2.4%. The report showed increases in all three sectors, most notably agriculture, up 8.2% year-over-year, followed by services, 3.3%, and industrial activities, with a 1.0% gain.
28 November. 2016 GDP Won't Sustain its Recent Momentum Next Year (Publication Centre)
The second estimate of Q3 GDP last week confirmed that the Brexit vote didn't immediately drain momentum from the economic recovery. But it is extremely difficult to see how growth will remain robust next year, when high inflation will cripple consumers and the impact of the decline in investment intentions will be felt.
12 June 2017 Germany's Trade Surplus is Vulnerable to U.K. Uncertainty (Publication Centre)
Germany continues to draw fire for its ballooning trade surplus, but momentum in net exports is easing. The seasonally adjusted trade surplus dipped marginally to a three-month low of €19.7B in April, from €19.8B in March, as stronger imports offset a modest rise in exports. The German trade surplus averaged €19.9B in the first four months of 2017, about 10% lower than the cyclical peak, in the middle of 2016.
16 August 2017 Strong July Sales and Revisions Signal Robust Consumption (Publication Centre)
July's retail sales report signalled a good start to the third quarter but also implied that second quarter spending was stronger than previously thought. The upward revisions--totalling 0.5% for total sales and 0.4% for non-auto sales--were the biggest for some time, but we were not unduly surprised.
16 April 2019 The Big Difference in this Round of China Stimulus is in the Shadows (Publication Centre)
The big difference in this round of stimulus is in the complete lack of easing on the shadow banking side.
15 September 2017 Growth in EZ Car Sales Rose in August, but the Trend Has Slowed (Publication Centre)
Momentum in new EZ car sales improved slightly in the middle of Q3. New registrations in the euro area rose 6.8% year-over-year in August, accelerating marginally from a 5.3% increase in July.
28 September 2017 Is Business Capex Finally Breaking to the Upside, led by Small Firms? (Publication Centre)
We have been waiting a long time to see signs that business investment spending is becoming less reliant on movements in oil prices.
16 April 2018 Banxico and BCRP to Keep Rates Cautiously on Hold this Year (Publication Centre)
Last week, the Bank of Mexico unanimously voted to leave the main rate on hold, at 7.50%, its highest level since early 2009.
7 Apr. The Fiscal Squeeze on Household Incomes Just Got Tougher (Publication Centre)
The new fiscal year began on April 6, marking the post-election intensification of the fiscal squeeze for many households. The Office for Budget Responsibility estimates net tax and benefit changes will subtract 1.2 percentage points from year-over-year growth in households' disposable incomes in 2016.
EZ Datanote: Business Sentiment, France, June (Publication Centre)
In one line: Slightly confusing manufacturing data; but overall picture is robust.
19 October. 2016 Housing Construction has Faltered - Outlook is Cloudy (Publication Centre)
We have given up, more or less, on the idea that housing construction will be a serious driver of economic growth in this cycle. The next cycle should be different, but it was never realistic to expect the sector which brought down the economy to recover fully as soon as the dust settled.
16 February 2018 A Busy Electoral Calendar Ahead, the Outlook Remains Uncertain (Publication Centre)
The busy electoral calendar that lies ahead for the region is beginning to come into focus. Colombia kicks off the process, followed by Mexico and Brazil.
14 March 2019 EZ Industrial Production is on Track for a Small Increase in Q1 (Publication Centre)
Yesterday's EZ industrial production data for January confirmed the string of positive advance numbers from most of the individual economies.
19 October. 2016 EZ Construction Fell in August, but Q3 as a Whole Was Solid (Publication Centre)
We think the EZ construction industry stuttered in August, following a strong start to Q3. Advance data from Germany, France and Spain suggest that output fell 1.4% month-to-month, pushing the year-over- year rate down to 1.8%, from a revised 3.1% in July.
7 August 2018 Is China Supporting the RMB by More than it is Willing to Admit (Publication Centre)
China's unadjusted current account was effectively in balance in Q2, after the deficit in Q1.
10 August. 2016 Trade Data Show Depreciations Take Time to Boost Growth (Publication Centre)
June's trade figures yesterday highlighted that it takes more than just a few months for exchange rate depreciations to boost GDP growth. The trade-weighted sterling index dropped by 9% between November and June as the risk of Brexit loomed large and the prospect of imminent increases in interest rates receded.
5 September 2018 The Surge in August's ISM is Welcome but won't be Repeated (Publication Centre)
August's 14-year high in the ISM manufacturing index, reported yesterday, clearly is a noteworthy event from a numerology perspective, but we doubt it marks the start of a renewed upward trend.
21 Sept. 2015 Don't Focus on Industry - The U.S. is a Domestic Services Economy (Publication Centre)
The economy is bifurcating. Manufacturing is weak, and likely will remain so for some time, though talk of recession in the sector is overdone. Even more overdone is the idea that the softness of the industrial sector will somehow drag down the rest of the economy, which is more than seven times bigger.
19 October. 2016 Labour Data to Point to Slower Household Spending Growth Ahead (Publication Centre)
Today's labour market figures likely will cast doubt over the sustainability of strong growth in household spending. Growth in the three-month average level of employment likely weakened in August, from July's impressive 1.9% year-over-year rate.
21 August. 2015 What Does the Fed Need to See in Order to Hike in September? (Publication Centre)
When the Bernanke Fed embarked on the first of its 17 straight quarter-point tightenings, on 30 June 2004, the latest available GDP data showed that the economy expanded at a robust 3.9% annualized rate in the first quarter of the year. After being revised up to 4.5%, the latest estimate for growth in the first quarter of 2004 is just 2.3%.
19 September 2017 Housing Takes a Modest Hurricane Hit, so far, More to Come? (Publication Centre)
The September NAHB survey, released yesterday, shows, that the housing market took a knock from the hurricanes but the damage, so far at least, appears to be contained.
2 August. 2016 EZ Manufacturing Was Resilient in July, But Only Thanks to Germany (Publication Centre)
Industrial sector activity in the euro area was broadly stable at the beginning of the third quarter, despite the headline dip in the July manufacturing PMI. The Eurozone index fell to 52.0 in July, from 52.8 in June, but if it holds at this level it will be unchanged in Q3 compared with the second quarter.
BUSINESS INSIDER - US trade deficit balloons (Media Centre)
The US trade deficit unexpectedly widened by 17% to $46.6 billion in December from $39.8 billion in November.
6 September 2017 August's PMIs Show the Economy is too Brittle to Handle a Rate Hike (Publication Centre)
Our conviction that the economy continues to grow at a snail's pace increased yesterday following the release of August's Markit/CIPS services survey.
TELEGRAPH - Blistering US spending growth puts Fed on track for September rate hike (Media Centre)
Chief US economist Ian Shepherdson on US Consumer Spending
14 November. 2016 Britain Will Not Lead the Way With Fiscal Stimulus (Publication Centre)
Expectations are running high that the Autumn Statement on November 23 will mark the beginning of a more active role for fiscal policy in stimulating the economy. The MPC's abandonment of its former easing bias earlier this month has put the stimulus ball firmly in the new Chancellor's court.
13 Feb. 2015 Oil Chaos is Distorting the Trade Data - Focus on Domestic Demand (Publication Centre)
Most of the time we don't pay much attention to the monthly import and export prices numbers, which markets routinely ignore. Right now, though, they matter, because the plunge in oil prices is hugely depressing the numbers and, thanks to a technical quirk, depressing reported GDP growth.
6 Nov. 2015 Payroll Uncertainty (Even) Greater than Usual in October (Publication Centre)
Any model of payrolls based on the usual indicators--jobless claims, ISM hiring, NFIB hiring, and other sundry surveys--right now points to payroll growth at 250K or better. Indeed, the ISM non-manufacturing report on Wednesday is consistent with payroll growth closer to 400K, and the lagged NFIB hiring intentions number points to 300K. Yet the consensus forecast for today's October report is just 182K. Why so timid?
BUSINESS INSIDER - New home sales crush expectations (Media Centre)
Chief US Economist Ian Shepherdson on "Remarkable" New Home Sales Data for February
2 December. 2016 Friendly Seasonals Set to Push Payrolls Back Above 200K? (Publication Centre)
Our payroll model, which incorporates survey data as well as the error term from our ADP forecast, points to a hefty 225K increase in November employment. We have tweaked the forecast to the upside because of the tendency in recent years for the fourth quarter numbers to be stronger than the prior trend, as our first chart shows.
20 September 2018 August's Jump in CPI Inflation is More Noise than Signal (Publication Centre)
August's consumer price figures caught everyone by surprise. CPI inflation increased to 2.7%, from 2.4% in July, greatly exceeding the consensus and the MPC's forecast, 2.4%.
2 August 2017 An Advance Preview of July's Consumer Price Figures (Publication Centre)
July's consumer price figures--published on August 15th, while we are on vacation--look set to show that June's drop in CPI inflation was just a blip. We think that CPI inflation ticked up to 2.7% in July, from 2.6% in June, on track to slightly exceed 3% toward the end of this year.
21 August 2017 The Peak in CPI Inflation Still Hasn't Been Reached Yet (Publication Centre)
After soaring in the Spring, inflation has slipped back in the Summer. July's consumer prices report, released while we were away last week, showed that CPI inflation held steady at 2.6% in July, one -tenth below the consensus and three tenths below May's year-to-date peak.
6 September 2018 ADP Will Report Another Solid Gain in Private Payrolls for August (Publication Centre)
Labor demand appears to have remained strong through August, so we expect to see a robust ADP report today.
15 September 2016 August Retail Sales to Shatter Picture of Consumer Resilience (Publication Centre)
Today's retail sales figures for August likely will rebut the widespread view that spendthrift consumers will prevent a sharp economic slowdown. We look for a 1% month-to-month decline in retail sales volumes in August, well below the -0.4% consensus forecast.
21 August 2017 Growth Momentum and Slow Hikes Means no Recession Until 2019 (Publication Centre)
We have had something of a rethink about the likely timing of the coming cyclical downturn. Previously, we thought the economy would start to slow markedly in the middle of next year, with a mild recession--two quarters of modest declines in GDP-- beginning in the fourth quarter.
29 January 2018 Strong Q4 GDP Requires us to Tweak, not Overhaul, Our Rate Call (Publication Centre)
The preliminary estimate of Q4 GDP was unambiguously strong and has forced us to modify our view of the likely timing of the next interest rate increase.
TELEGRAPH - 'Robust' house price growth fuelled by buy-to-let and low supply (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Nationwide House Prices
Reuters. - U.K. house prices fall for second month in January (Media Centre)
30 June. 2016 The Fed's Focus Will Return to the Wage Outlook, Unchanged by Brexit (Publication Centre)
We aren't materially changing our U.S. economic forecasts in the wake of the U.K.'s Brexit vote, though we have revised our financial forecasts. The net tightening of financial conditions in the U.S. since the referendum is just not big enough--indeed, it's nothing like big enough--to justify moving our economic forecasts.
MAIL ONLINE - US home prices still trend lower in November (Media Centre)
US home prices rose in November from October but the underlying trend continued to point to a slowdown in price gains, according to the S&P/Case-Shiller index released Tuesday
The key labor market numbers from today's February NFIB report on small businesses--hiring intentions and the proportion of firms with unfilled job openings--were released last week, as usual, ahead of the official jobs report.
24 Nov. 2015 Bullish PMI Survey Won't Prevent Further ECB Stimulus (Publication Centre)
Yesterday's PMI reports repeated the message of a firm cyclical Eurozone recovery, despite investors' angst over deflation and the underwhelming Q3 GDP data earlier this month. The composite index in the zone rose to a 54-month high of 54.4 in November from 53.9 in October, lifted by strong output and solid new business growth. Our first chart shows the rise in the PMI points to slight upside risks in Q4 to the four quarter trend in real GDP growth of 0.4% per quarter.
08 Feb. 2016 Banxico Is Focused on the MXN, But the Fed Still Leads (Publication Centre)
Banxico left Mexico's benchmark interest rate at 3.25% last week, after increasing it by 25bp in December, when the U.S. Fed raised rates. Banxico's board maintained its neutral tone and indicated that the balance of risks has deteriorated for growth and short-term inflation. As usual, policymakers reiterated the importance of following the Fed closely to avoid financial instability, which in turn could spill over to inflation.
23 May 2017 Has the Outlook for Business Investment Brightened? (Publication Centre)
The recent deceleration in households' real spending means that either business investment or net exports will have to pickup if the economy is to avoid a severe slowdown this year.
18 Apr. 2016 Housing Demand Picking Up - Home Sales Will Rise in Q2 (Publication Centre)
We are becoming increasingly convinced that momentum is starting to build in the housing market. That might sound odd in the context of the recent trends in both new and existing home sales, shown in our first chart, but what has our attention is upstream activity.
08 Feb. 2016 If the Fed Focuses on Wages, They'll Hike in March (Publication Centre)
The Fed's decisions over the next few months hinge on the relative importance policymakers place on the apparent slowdown in payroll growth and the unambiguous acceleration in wages. We qualify our verdict on the payroll numbers because the January number was very close to our expectation, which in turn was based largely on an analysis of the seasonals, not the underlying economy.
9 May 2017 Colombian Inflation is Heading Lower, Despite the Pause in April (Publication Centre)
Colombia's disinflation since mid-2016 has been driven by easing pressures on food prices, weak demand, and the better performance of the COP. But higher regulated prices at the start of the second quarter have triggered a pause in the downward trend.
BBC - House prices in UK shift to lower gear (Media Centre)
Chief U.K. Economist Samuel Tombs discussing U.K. House Prices
17 September 2018 CPI Inflation Likely Returned to its Downward Path in August (Publication Centre)
We expect August's consumer price figures, released on Wednesday, to show that CPI inflation declined to 2.4%, from 2.5% in July, matching the consensus and the Bank of England's forecast.
22 Jan. 2016 Consensus Looks too Sanguine on December Retail Sales (Publication Centre)
The consensus forecast of a mere 0.3% month-to-month decline in retail sales volumes in December, following the 1.7% surge in November, looks far too timid. We anticipate a much bigger decline, about 1%, bringing volumes back in line with their underlying trend. We can't rule out a bigger fall.
24 May 2018 April's Inflation Data aren't a Blow to August Rate Hike Chances (Publication Centre)
CPI inflation dropped to 2.4% in April, from 2.5% in March, undershooting the no-change consensus and prompting many commentators to argue that the chances of an August rate hike have declined further.
DUKASCOPY TV - Claus Vistesen discussing how the ECB will respond to missed IMF payment (Media Centre)
Pantheon Macroeconomics Chief Eurozone Economist Claus Vistesen discusses how the ECB will respond to the missed IMF payment yesterday.
18 August. 2015 Can the Fed Hike if the Empire State Survey is Right? (Publication Centre)
Just how weak would the manufacturing sector have to be in order to persuade the Fed to hold fire this fall, assuming the labor market numbers continue to improve steadily? The question is germane in the wake of the startlingly terrible August Empire State manufacturing survey, which suggested that conditions for manufacturers in New York are deteriorating at the fastest rate since June 2009.
18 August. 2016 Headline Labour Market Numbers Flatter to Deceive (Publication Centre)
It's easy to claim from yesterday's labour market data that the economy is weathering the uncertainty caused by the E.U. referendum. Employment rose by 172K, or 0.5%, between Q1 and Q2, and the claimant count fell by 7K month-to-month in July. These numbers, however, flatter to deceive.
19 August. 2015 Services, Autos Will Push Core Inflation to 2%-plus by Year-End (Publication Centre)
If the rate of increase of the core CPI in the second half of the year matches the 0.19% average gains in the first half, the year-over-year rate will rise to 2.3% by December. In December last year, core inflation stood at just 1.6%, following a run of soft second half numbers. We can't rule out a slowdown in the monthly increases in the second half of this year too, given the evidence suggesting a small bias in the seasonal adjustments.
9 February 2017 Is the Jump in Wholesale Inventories Sustainable? (Publication Centre)
Total real inventories rose at a $48.7B annualized rate in the fourth quarter, contributing 1.0 percentage points to headline GDP growth. Wholesale durable goods accounted for $34B of the aggregate increase, following startling 1.0% month-to-month nominal increases in both November and December. The November jump was lead by a 3.2% leap in the auto sector, but inventories rose sharply across a broad and diverse range of other durables, including lumber, professional equipment, electricals and miscellaneous.
11 December 2017 200K-plus Payroll Gains Set to Continue, Wage Gains Will Rise (Publication Centre)
First things first: Payroll growth likely will be sustained at or close to November's pace.
24 May 2017 Weak Tax Receipts Cast Doubt on Business Surveys' Optimism (Publication Centre)
April's public finances indicate that the economy has remained weak in Q2, casting doubt on the suggestion from recent business surveys that the slowdown in Q1 was just a blip.
9 Jan. 2015 - Expect Another Robust Payroll Report - Watch Hourly Wages Too (Publication Centre)
Most of the evidence points to a robust December employment report today, though we doubt the headline number will match the heights seen in November, when the initial estimate showed payrolls up 321K. We look for 275K.
24 October. 2016 Why are Households Running Such Large Bank Balances? (Publication Centre)
The U.S. household sector carries substantial gross debts, even after the sustained deleveraging since the crash of 2008. The gross debt-to-income ratio stood at 105.3% in the second quarter of this year, down from the 135% peak in late 2007 but still well above the 88% average recorded in the 1990s, which was not a decade of restraint on the part of consumers.
BUSINESS INSIDER - Consumer confidence spikes in June (Media Centre)
Chief US economist Ian Shepherdson on June Consumer Confidence data
BBC - Freya Beamish Discussing US-China Trade Talks (Media Centre)
Freya Beamish, Chief Asia economist at Pantheon Macroeconomics, discussing US-China Trade Talks with Philippa Thomas on BBC World
FINANCIAL TIMES - German industrial production falls unexpectedly for July (Media Centre)
Chief Eurozone Economist Claus Vistesen on German Industrial Production
DAILY TELEGRAPH - Stock markets rocked by US consumer fears (Media Centre)
Chief US Economist Ian Shepherdson on Consumer Confidence figures for April
BBC - UK industrial production shrank in 2015 (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Industrial Production
25 August. 2016 Surging Net Exports Prevented a Q2 GDP Contraction in Germany (Publication Centre)
Yesterday's final Q2 GDP report in Germany confirmed the initial data showing that the economy slowed less than we expected last quarter. Real GDP rose 0.4% quarter-on-quarter in Q2, after a 0.7% jump in Q1. The working-day adjusted year-over-year rate fell marginally to 1.8%, from 1.9% in Q1.
25 August. 2015 Market Panic Puts Pressure on ECB, but Fed's Response is Key (Publication Centre)
Weakness in risk assets turned into panic yesterday with the Eurostoxx falling over 6%, taking the accumulated decline to 19% since the beginning of August, and volatility hitting a three-year high. Market crashes of this kind are usually followed by a period of violent ups and downs, and we expect volatile trading in coming weeks. Following an extended bull market in risk assets, the key question investors will be asking is whether the economic cycle is turning.
4 July 2017 Mr Abe Trounced in Tokyo Elections just as Recovery Gains Traction (Publication Centre)
The Tankan survey powered ahead in Q2, pulling away from Q1 and mostly beating consensus. This confirms our impression of the strength of the recovery ,just as Prime Minister Abe's Liberal Democratic Party is trounced at the polls in Tokyo. The drubbing is understandable as the main benefits of Abenomics have gone to the business sector, at the expense of the household sector.
13 May. 2015 Eurozone Q1 GDP Should Beat Consensus - Best since 2011 (Publication Centre)
Monthly manufacturing and retail sales data point to upside risk to the consensus expectation of 0.4% quarter-on-quarter in Q1 Eurozone real GDP growth. Advance country data indicate that industrial production was unchanged month-to-month in March, equivalent to a 0.9% increase quarter-on-quarter.
9 January 2018 Small Business Owners are Happy, so Why are Capex Plans Soft? (Publication Centre)
We already know that the month-to-month movements in the key labor market components of the December NFIB small business survey were mixed; the data were released last week, ahead the official employment report, as usual.
23 Mar. 2015 Manufacturing remains the key driver of the EZ business cycle (Publication Centre)
The Eurozone economy is becoming increasingly service-oriented. The private services sector has contributed just over 50% of gross value added-- GVA -- in the past three years, up from 44% in the seven years before the crash of 2008.
08 Jan. 2016 Expect Robust Jobs Data, but Downside Risk for Wages (Publication Centre)
The underlying trend in payroll growth is running at about 225K-to-250K, perhaps more, and the leading indicators we follow suggest that's a reasonable starting point for our December forecast. The trend in jobless claims is extraordinarily low and stable--the week-to-week volatility is eye-catching, especially over the holidays, but unimportant--and indicators of hiring remain robust. The unusually warm weather in the eastern half of the country between the November and December survey weeks also likely will give payrolls a small nudge upwards, with construction likely the key beneficiary, as in November.
17 October. 2016 Rising Inflation in 2017 Will Reflect More Than Just Import Prices (Publication Centre)
The MPC's forecast in August, which predicted that inflation would overshoot its 2% target over the next two years only modestly--giving it the green light to ease policy--assumed that inflation in sectors insensitive to swings in import prices would remain low. We doubt, however, that domestically generated inflation will remain benign.
CHANNEL NEWS ASIA - US weekly jobless claims fall 14% (Media Centre)
Initial jobless claims, a sign of the pace of layoffs, dropped to a seasonally-adjusted 265,000 in the week ending Jan 24, a hefty decline of 43,000 from the prior week's slightly upwardly revised level of 308,000
BUSINESS INSIDER - Car sales are going through the roof with Europe's surprising spending recovery (Media Centre)
Chief Eurozone Economist Claus Vistesen on European Car Sales
FINANCIAL TIMES - Eurozone industrial output drops in month after UK's Brexit vote (Media Centre)
Chief Eurozone Economist Claus Vistesen on Eurozone Industrial Production
FINANCIAL TIMES - Eurozone current account surplus hits fresh record (Media Centre)
Chief Eurozone Economist Claus Vistesen on Eurozone Current Account
18 August. 2016 What are the Chances of 4%-plus Growth in the Third Quarter? (Publication Centre)
The latest model-based third quarter GDP forecast from the Atlanta Fed is 3.6%, well above the 2.5% consensus forecast reported by Bloomberg. We are profoundly skeptical of so-called "tracking models" of GDP growth, because they are based mostly on forecasts and assumptions until very close to the actual GDP release.
24 Feb. 2016 Mortgage Applications are Rising, Despite the Usual February Drop (Publication Centre)
If, like us, you have been cheered by the upturn in mortgage applications since November, you don't need to worry about the apparent drop in activity in the past couple of weeks. The numbers don't look great: The MBA's index capturing the number of applications for new mortgages to finance house purchase has dropped from a peak of 237.7 in the third week of January--ignoring September's spike, which was triggered by a regulatory change--to 213.3 last week.
CITY AM - Halifax house price index: What tightening conditions? House price growth hits its highest since last August (Media Centre)
10 October 2017 Industrial Production Likely to Surprise to the Downside Again (Publication Centre)
Industrial production figures look set to surprise the consensus to the downside again today. We think that production was flat on a month-to-month basis in August, falling short of the consensus forecast of 0.2% growth.
8 Sept. 2015 No Loss of Momentum in August Employment, Despite Headline (Publication Centre)
The soft-looking August payroll number almost certainly will be revised up substantially, as the readings for this month have been in each of the past six years. Runs of remarkably consistent revisions--from 53K to 104K, with a median of 66K--don't happen by chance very often. A far more likely explanation is that the seasonal adjustments are flawed, having failed to keep up with changes in employment patterns since the crash. If the median revision is a good guide to what happens this year, the August number will be pushed up to 240K, in line with our estimate of the underlying trend and much more closely aligned with the message from a host of leading indicators.
Bloomberg - Why the Justice Department Went After the Wrong Deal (Media Centre)
Chief U.S. Economist Ian Shepherdson discussing U.S. Economy
4 Nov. 2015 ADP Tells Us Payrolls Mean- Revert, but That's Not News (Publication Centre)
The underlying trend in payroll growth ought to be running at 250K-plus, based on an array of indicators of the pace of both hiring and firing. The past few months' numbers have fallen far short of this pace, though, for reasons which are not yet clear. We are inclined to blame a shortage of suitably qualified staff, not least because that appears to be the message from the NFIB survey, which shows that the proportion of small businesses with unfilled positions is now close to the highs seen in previous cycles. If we're right, payroll growth won't return to the 254K average recorded in 2014 until the next cyclical upturn, but quite what to expect instead is anyone's guess.
EURO INSIGHT - Households Save the Day for Eurozone GDP (Media Centre)
Chief Eurozone Economist Claus Vistesen on Eurozone GDP
BBC - Samuel Tombs discussing the Energy Price Cap (Media Centre)
Samuel Tombs, Chief Eurozone Economist, discussing the Energy Price Cap on BBC News
BBC - US economic growth slows to 2.3 (Media Centre)
Chief U.S. Economist Ian Shepherdson discussing U.S. Q1 GDP
9 April 2018 March Payrolls Don't Signal a Shift in the Trend, Expect 200K-plus in April (Publication Centre)
March payrolls were constrained by both the impact of colder and snowier weather than usual in the survey week, and a correction in the construction and retail components, which were unsustainably strong in February.
24 August 2017 New Auto Sales Appear to have hit Bottom, Modest Gains in Q4? (Publication Centre)
Industry estimates for August light vehicle sales suggest that the downshift in sales which began at the turn of the year is over, at least for now.
Financial Times - Confidence in UK house prices wobbles despite October rise (Media Centre)
24 April 2018 Surveys are Stronger than Hard Data, but with no Common Cause (Publication Centre)
The levelling-off in the industrial surveys in recent months is reflected in the consumer sentiment numbers. Anything can happen in any given month, but we'd now be surprised to see sustained further gains in any of the regular monthly surveys.
24 August. 2015 The U.S. Will be A Net Gainer from EM Turmoil, Thanks to Cheap Oil (Publication Centre)
If the plunge in the stock market last week, and especially Friday, was a entirely a reaction to the slowdown in China and its perceived impact on other emerging economies, then it was an over-reaction. Exports to China account for just 0.7% of U.S. GDP; exports to all emerging markets account for 2.1%. So, even a 25% plunge in exports to these economies-- comparable to the meltdown seen as global trade collapsed after the financial crisis--would subtract only 0.5% from U.S. growth over a full year, gross.
24 August. 2016 "Breaking News": EZ PMIs Signal Unchanged GDP Growth in Q3 (Publication Centre)
Yesterday's advance EZ PMI data were virtually unchanged from previous months, yet again. The composite PMI rose trivially to 53.3 in August from 53.2 in July; this means that the index has been almost stable since February. The headline was lifted by a small increase in services, which offset a slight decline in manufacturing.
City AM - Rising confidence from consumers and businesses point to faster growth in second quarter (Media Centre)
Chief U.K. Economist Samuel Tombs discussing U.K. Consumer Confidence
24 August. 2016 Mexican Consumers' Spending Still Robust, but Set to Slow in H2 (Publication Centre)
Mexican consumers' spending improved toward the end of Q2. Retail sales jumped by 1.0% month-to-month in June, pushing the year-over-year rate up to 9.4%, from an already solid 8.6% in May. Still, private spending lost some momentum in the second quarter as a whole, rising by 2.5% quarter-on-quarter, after a 3.8% jump in Q1. A modest slowdown in consumers' spending had to come eventually, following surging growth rates in the initial phases of the recovery.
14 August 2017 July's Soft-Looking Core CPI was Different from Previous Weak Data (Publication Centre)
July's fifth straight undershoot to consensus in the core CPI was very different the previous four. Only one component--lodging away from home--prevented the first 0.2% month-to-month print since February.
14 August 2018 The Chaos in Turkey is Mainly a Political Risk for the Eurozone (Publication Centre)
Investors in the euro area have mostly been focused on downside risks this year, and the spectre of Turkey spinning out of control has done little to change that.
19 December 2018 November Retail Sales Set to Outperform the Gloomy Consensus (Publication Centre)
The consensus for retail sales volumes to rise by a mere 0.3% month-to-month in November, after falling by 0.4% in September and 0.5% in Oc tober, looks too downbeat.
13 June 2018 Labour Data are Simply too Weak for the MPC to Hike in August (Publication Centre)
April's labour market data show that slack in the job market is no longer declining, while wage growth still isn't recovering. As a result, we no longer think that the MPC will raise Bank Rate in August and now expect the Committee to stand pat until the first half of 2019.
23 Nov. 2015 If the Chancellor Wants A Budget Surplus, Taxes Will Have to Rise (Publication Centre)
The Chancellor claims he can eliminate public borrowing without raising taxes. But the latest borrowing overshoot and the continual optimistic bias of the OBR's forecasts cast doubt on whether his approach will be sufficient to meet his self-imposed surplus target.
19 August. 2016 Dear Fed, Please Don't Increase the Inflation Target. Thanks. (Publication Centre)
Everyone heard San Francisco Fed president Williams's suggestion Monday that central banks could raise their inflation targets in response to the sustained slow growth and lower-than-expected inflation of recent years. It's not clear, though, that markets grasped the scale of the increase he thinks might be appropriate.
4 Sept. 2015 Downside Risks for August Payrolls, but the Trend is Solid (Publication Centre)
We have no reason to think the underlying trend in payroll growth has changed--the 235K average for the past three months is as good a guide as any--but the balance of risks points clearly to a rather lower print for August. Two specific factors, neither of which have any bearing on the trend, are likely to have a significant influence on the numbers, and both will work to push the number below the 217K consensus.
13 October 2017 Brazilian Consumption is Picking Up, Despite August's Poor Data (Publication Centre)
Brazil's retail sales data undershot consensus in August, falling by 0.5% after four straight gains. But we think this merely a temporary softening, following the strong performance in recent months.
13 January 2017 The Eurozone Economy Remains Oblivious to Political Risks (Publication Centre)
The euro area economy continues to defy rising political uncertainty. Data yesterday showed that industrial production, ex-construction, in the Eurozone jumped 1.5% month-to-month in November, pushing the year-over-year rate up to 3.2% from a revised 0.8% in October. Output rose in all the major economies, but the headline was flattered by a 16.3% month-to-month leap in Ireland. This was due to a production jump in Ireland's "modern sector" which includes the country's large multinational technology sector.
CNBC - August payrolls should be strong (Media Centre)
August could be the month to break the mold with regards to payroll figures, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.
11 December 2018 Lacklustre October GDP is the Final Straw for February Rate Hike Bets (Publication Centre)
The combination of sluggish GDP growth in October and news that the Prime Minister will attempt to renegotiate the terms of the Brexit backstop, most likely pushing back the key vote in parliament until January, has extinguished any lingering chance that the MPC might be in a position to raise Bank Rate at its February meeting.
9 August 2017 Productivity Growth Might be Turning up, Labor Costs Subdued (Publication Centre)
We are a bit more optimistic than the consensus on the question of second quarter productivity growth, but the data are so unreliable and erratic that the difference between our 1.2% forecast and the 0.7% consensus estimate doesn't mean much.
23 Oct. 2015 U.K. Consumer Recovery is Not as Robust as Retail Sales Suggest (Publication Centre)
On the face of it, the surge in retail sales volumes in September suggests that the U.K. consumer is in fine fettle and can prevent the economic recovery from losing momentum as exporters struggle and government spending retrenches. But the underlying picture is less encouraging and consumers won't be able to sustain the recent robust growth in real spending when inflation revives next year.
14 August. 2015 Robust Real Spending Signals Consumers aren't Saving More (Publication Centre)
The robust July retail sales numbers, coupled with the substantial upward revisions to prior data, should finally put to bed the idea that consumers have chosen spontaneously to raise their saving rate, accelerating the pace of deleveraging seven years after the financial crash. People just don't behave like that unless interest rates are soaring and the economy is rolling over, and that's not happening.
22 July. 2016 Emerging Divisions on the MPC Signal Only Modest August Easing (Publication Centre)
Soon after last week's vote to keep Bank Rate at 0.50%, the MPC's doves were quick to assert that monetary easing is still imminent. A speech by Andy Haldane, published on July 15, called for "... a package of mutually complementary monetary policy easing measures" that should be "delivered promptly and muscularly". Meanwhile, Gertjan Vlieghe, who was alone in voting for a rate cut in July, wrote in The Financial Times last week that he also favours "a package of additional measures" in August.
07 August. 2015 EZ GDP likely rose 0.4% quarteron- quarter in Q2 due to Ne t Trade (Publication Centre)
This is the final report before your Eurozone correspondent dials down for the summer, and heads for the beach. Advance Q2 GDP data next week is the key release while we are away, with the latest Bloomberg consensus--published July 20th--looking for a 0.4% increase quarter-on-quarter. Everything we look at suggests the consensus is right on this one, with risks tilted to the upside due to strong net exports in Germany.
DUKASCOPY TV - Claus Vistesen discussing Italy's place in the Eurozone (Media Centre)
After disappointing Italian Industrial Output Data, Pantheon Macroeconomics Chief Eurozone Economist Claus Vistesen discusses the current situation in the Eurozone.
5 July 2017 ISM Signals Continued Industrial Recovery, but not a Boom (Publication Centre)
The June ISM manufacturing index signalled clearly that the industrial recovery continues, with the headline number rising to its highest level since August 2014, propelled by rising orders and production. But the industrial economy is not booming and the upturn likely will lose a bit of momentum in the second half as the rebound in oil sector capex slows.
25 Feb. 2015 Capex Needs to Pick up in Germany to Sustain GDP Growth (Publication Centre)
Real GDP in Germany grew 0.7% quarter-on-quarter in Q4, thanks mainly to a 0.4% contribution from private consumption, and a 0.2% boost from net trade. Household consumption grew 2.2% annualised in 2014, the best year for German consumers since 2006.
Financial Times - Halifax data strengthen evidence of uptick in UK house prices (Media Centre)
Chief U.K Economist Samuel Tombs on UK Halifax House Prices in July
DAILY TELEGRAPH - Dollar dives as weak US retail sales data raises growth fears (Media Centre)
Ian Shepherdson on December's low US retail sales.
Financial Times - US housing starts rise for second month in April (Media Centre)
Chief U.S. Economist Ian Shepherdson on U.S. housing starts
17 July. 2015 Colombia's Business Sector Continues to Feel the Oil Pain (Publication Centre)
Colombia is one of the fastest growing economies in LatAm but over the last few quarters the country has been adjusting to the collapse in oil prices, the depreciating currency and rising inflation. But the slowdown, especially on the domestic side of the economy, has been less dramatic than expected, so far. Our main scenario is that the adjustment process to challenging external conditions will continue over the coming quarters.
Business Insider - The 'Brexit boost' to Britain's economy categorically has not materialised -- and probably never will (Media Centre)
Chief U.K. Economist Samuel Tombs discussing U.K. GDP
Business Insider - The Tories might not get the crushing victory they expect in this election (Media Centre)
Chief U.K. Economist Samuel Tombs discussing the General Election in June
04 October. 2016 The August ISM Plunge was a Fluke, After all, What Happens Next? (Publication Centre)
The substantial, though incomplete, rebound in the September ISM manufacturing survey is consistent with our view that the outlook for the industrial economy right now is better than at any time since before the crash in oil prices
DAILY MAIL - US personal incomes rise, spending weak in February (Media Centre)
Chief US Economist Ian Shepherdson on US Personal Income, February
25 November. 2016 Don't Bank on Hammond Being Able to Use His Fiscal Headroom (Publication Centre)
The Chancellor hinted in the Autumn Statement that the fiscal consolidation might not be as severe as it appears on paper because he has built in some "fiscal headroom". By that, Mr. Hammond means that he could borrow more and still adhere to his new, self-imposed rules.
13 July. 2015 A deal inches closer, but the EU is gambling dangerously with Grexit (Publication Centre)
The draft Eurogroup document circulated Sunday evening indicates that European leaders seemingly are willing to offer Greece a new bailout. But it is conditional on passing required legislation reforming pensions and taxes on Wednesday. A "time-out" from the Eurozone, was discussed as a bizarre alternative, but this would be the equivalent of Grexit and default.
4 Feb. 2015 ADP Should Beat Consensus, but it's not a Reliable Indicator (Publication Centre)
The least-bad way to forecast the ADP employment number is to look at the official private payroll number for the previous month. ADP's methodology generates employment numbers from a model incorporating lagged data from the Bureau of Labor Statistics as well as information from companies which use ADP for payroll processing.
Financial Times - Uptick in French business confidence dulled by manufacturing (Media Centre)
Chief Eurozone Economist Claus Vistesen on French Business Confidence
8 February 2019 Brazil's Policymakers are in no Rush to Change Rates Reform is the Key (Publication Centre)
The Brazilian Central Bank's policy board--the Copom--voted unanimously on Wednesday to keep the Selic rate on hold at 6.50%.
CBS NEWS - European Central Bank unveils major stimulus program (Media Centre)
European Central Bank unveils major stimulus program...
23 August. 2016 Rental Inflation Set to Rise Further as Vacancies Hit a New Cycle Low (Publication Centre)
This week brings home sales data for July, which we expect will be mixed. New home sales likely rose a bit, but we are pretty confident that existing home sales will be reported down, following four straight gains. We're still expecting a clear positive contribution to GDP growth from housing construction in the third quarter, but from the Fed's perspective the more immediate threat comes from the rate of increase of housing rents, rather than the pace of home sales.
21 September 2018 Housing Activity is Faltering, but the Modestly (Publication Centre)
The New York Fed tweeted yesterday that "Housing market fundamentals appear strong.
2 Sept. 2015 August ADP and Official Payrolls Likely to be sub-200K (Publication Centre)
As a general rule, the best forecast of ADP payrolls in any given month is the official estimate for private payrolls in the previous month. This partly reflects the simple observation that payroll trends, once established, tend to persist, but it also is a consequence of ADP's methodology. The ADP number is generated from a model which combines both data collected from firms which use ADP for payroll processing, and lagged official data. The latter appear to be more important in determining in the month-to-month swings in the ADP number. ADP does not hide the incorporation of lagged official data in its model--you can read about it in the technical guide to the report--but neither does it shout it from the rooftops.
26 Apr. 2016 Focus on the Positive Details in Yesterday's German IFO Survey (Publication Centre)
Yesterday's German IFO survey suggests that economic momentum in the Eurozone's largest country remained modest at the start of Q2. The headline business climate index fell trivially to 106.6 in April, from 106.7 in March, lower than the consensus expectation of an increase to 107.2.
26 August. 2016 EZ Economic Bulls Checked by IFO and INSEE Business Surveys (Publication Centre)
Yesterday's IFO survey in Germany was a nasty downside surprise for markets. The business climate index slipped to 106.2 in August, from 108.3 in July, well below the consensus forecast for a modest rise. In addition, the expectations index slid ominously to 100.1, from a revised 102.1 in July.
21 September 2017 August's Jump in Retail Sales Just Looks Like a Flash in the Pan (Publication Centre)
Retail sales increased by 1.0% month-to-month in August, exceeding our no-change forecast and spurring markets to price-in a 65% chance that the MPC will raise interest rates at its next meeting on November 2, up from 60% beforehand.
26 August. 2015 U.S. ISM Will Follow China's PMI, But Not Yet - Services ISM Strong (Publication Centre)
The decline in China's unofficial PMI, which has dropped to a six-year low, signals increasing troubles ahead for U.S. manufacturers selling into China, and U.S. businesses operating in China. This does not mean, though, that the U.S. ISM will immediately fall as low as the Caixin/Markit China index appears to suggest in the next couple of months. Our first chart shows that in recent years the U.S. manufacturing ISM has tended hugely to outperform China's PMI from late spring to late fall, thanks to flawed seasonals.
26 Jan. 2016 Housing Wealth About to Breach the Pre-Crash Peak (Publication Centre)
Sometime very soon, likely in the second quarter of this year, the stock of net housing wealth will exceed the $13.1T peak recorded before the crash, in the fourth quarter of 2005. At the post-crash low, in the first quarter of 2009, net housing equity had fallen by 53%, to just $6.2T. The recovery began in earnest in 2012, and over the past year net housing wealth has been rising at a steady pace just north of 10%. With housing demand rising, credit conditions easing and inventory still very tight, we have to expect home prices to keep rising at a rapid pace.
14 Jan. 2016 Does Cost-Push Inflation Give the Fed the Luxury of Time? (Publication Centre)
In yesterday's Monitor we set out the risk that accelerating wages will force the Fed to raise rates more quickly than expected, but we didn't have space to address the underlying premise of this story, namely, the idea that inflation is largely a cost-push phenomenon. From the perspective of fixed income investors, it might not seem to matter whether this is a realistic description of the inflation process, because Fed Chair Yellen believes it wholeheartedly, and her hands are on the levers of monetary policy.
1 August 2017 Chinese Second Half Looking Increasingly Stagflationary (Publication Centre)
China's official manufacturing PMI, published on Monday, implies the industrial complex has maintained momentum going into Q3. The official manufacturing PMI moderated slightly to 51.4 in July from 51.7 in June. The July reading was unchanged from the average in Q2 and only modestly down from the 51.6 in Q1.
9 June. The Surge in April Industrial Production is Just Noise (Publication Centre)
April's 2.0% month-to-month leap in industrial production was the biggest upside surprise on record to the consensus forecast, which predicted no change. The surge, however, just reflects statistical and weather-related distortions. These boosts will unwind in May, ensuring that industry provides little support to Q2 GDP growth. Make no mistake, the recovery has not suddenly gained momentum.
9 June. 2015 A flying start to Q2 for German Industrial sector and exports (Publication Centre)
Economic reports released yesterday indicate that the German economy was off to a solid start early in the second quarter. Industrial production rose 0.9% month-to-month in April, equivalent to a 1.4% increase year-over-year, up from a revised tiny 0.2% gain in March. This is the biggest annual jump in production since July last year, but the underlying trend is turning up only slowly, in line with the moderate improvement in survey data this year.
26 August. 2015 Solid Net Trade Lifts German GDP in Q2, but Payback Likely in Q3 (Publication Centre)
The IFO did its part to alleviate the stock market gloom yesterday, with the business climate index rising slightly to 108.3 in August from 108.0 in July. The August reading doesn't reflect the panic in equities, though, and we need to wait until next month to gauge the real hit to business sentiment. The increase in the headline index was driven by businesses assessment of current output, with the key expectations index falling trivially to 102.2 from a revised 102.3 in July. This survey currently points to a stable trend in real GDP growth of about 0.4% quarter-on-quarter, consistent with our expectation of full year growth of about 1.5%.
9 Sept. 2015 Ignore Swings in Random Labor Force Data: Focus on Job Gains (Publication Centre)
We read after the employment report that the drop in the unemployment rate was somehow not significant, because it was due in p art to a reported 41K drop in the size of the labor force, completing a 404K cumulative contraction over the three months to August. In our view, though, analysts need to take a broader approach to the picture painted by the household survey, which is much more volatile and less reliable than the payroll survey over short periods.
5 August. 2016 German Manufacturing Orders Likely Jumped at the End of Q2 (Publication Centre)
The forecasts compiled by Bloomberg for today's June German factory orders data look too timid to us. The consensus is pencilling in a 0.5% month-to month rise, which would push the year-over-year rate down to -2.1%, from zero in May. But survey data point to an increase in year-over-year growth, which would require a large month-to-month rise due to base effects from last year.
5 August. 2016 The MPC Exceeds Expectations, but Inflation Will Constrain it Next Year (Publication Centre)
The MPC's package of stimulus measures, which exceeded markets' expectations, demonstrates that it is currently placing little weight on the inflation outlook. Even so, if inflation matches our expectations and overshoots the 2% target by a bigger margin next year than the MPC currently thinks is acceptable, it will have to consider its zeal for more stimulus.
22 September 2016 Poor Borrowing Trend Reduces Scope for Stimulus in November (Publication Centre)
Public borrowing continues to falling at a very slow pace, despite the major fiscal consolidation implemented this year. Public sector net borrowing excluding public sector banks--PSNB ex.--was £10.5B in August, only 8.1% less than the £11.5B borrowed a year ago.
18 October. 2016 September Inflation Jump Just a Prelude to its Upcoming Surge (Publication Centre)
We expect today's consumer price figures to show that CPI inflation jumped to 0.9% in September, from 0.6% in August.
26 April 2019 Disinflation Pauses in Brazil and Mexico, Central Banks Sidelined (Publication Centre)
Rising inflation is pressuring some LatAm central banks to take a cautious stance at a time when growth is subpar, particularly in the two biggest economies of the region.
11 August. 2015 Q2 Productivity Likely Constrained by a Surge in Self-Employment (Publication Centre)
The rebound in GDP growth in the second quarter seems not to have been enough to prevent year-over-year productivity growth slowing to about zero. The consensus forecast for the first estimate of Q2 productivity growth, due today, is a 1.6% annualized increase, pushing the year-over-year rate down to 0.3% from 0.6% in the first quarter, but we think this is too optimistic.
BLOOMBERG - Don't Need Any More Stimulus: Ian Shepherdson (Media Centre)
Pantheon Macroeconomics Founder Ian Shepherdson discusses Fed policy. He speaks on "Bloomberg Surveillance."
17 May 2019 The China-led Industrial Downturn is Ending, Trade War Permitting (Publication Centre)
Evidence in support of our view that the U.S. industrial slowdown is ending continues to mount, though nothing is yet definitive and the re-escalation of the trade war is a threat of uncertain magnitude to the incipient upturn.
23 Jan. 2015 Can Treasuries Focus on the U.S. Economy as Euro Risk Recedes? (Publication Centre)
The ECB's decision to go all-in and buy sovereign debt has three key consequences for U.S. markets. First, Treasuries will no longer benefit from safe-haven flows, because shorting Eurozone government debt has just become a fantastically risky proposition.
1 August. 2016 EZ GDP Growth Slowed in Q2, and Likely Will be Revised Down (Publication Centre)
Friday's data deluge suggests that EZ economic growth slowed less than we expected in the second quarter. The advance estimate indicates that real GDP in the euro area rose 0.3% quarter-on-quarter in Q2, down from a 0.6% jump in the first quarter. This was in line with the consensus, but it likely doesn't tell the whole story.
BUSINESS INSIDER - Europe's Largest Economy Is Officially In Deflation (Media Centre)
Germany's consumer price index fell 0.3% month-over-month in January. It's the first time the inflation rate went negative since September 2009. "Deflation has arrived," Pantheon Macroeconomics' Claus Vistesen said
22 August 2017 Don't Hold Your Breath for Euro-Sterling Parity (Publication Centre)
Sterling's renewed depreciation to just €1.10--just below last year's nadir--has fuelled speculation that it could reach parity against the euro within the next year.
06 August. 2015 Stabilisation, not Acceleration, in German New Orders Growth (Publication Centre)
We are wary of a downside surprise in today's German orders, due to weak advance data from the engineering organisation, VDMA. We think factory orders fell 0.5% month-to-month, pushing the year-over-year rate slightly lower to 4.5% in June from 4.7% in May. This is noticeably worse than the market expects, but the consensus forecast for a 0.3% rise implies a jump in the year-over-year rate, which is difficult to reconcile with leading indicators.
20 August. 2015 "Most" FOMC Members Think the Time to Hike is "Approaching" (Publication Centre)
FOMC pronouncements are rarely unambiguous; policymakers like to leave themselves room for maneuver. But when the statement says that "Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point" and that only "some" further improvement in labor market conditions is required to trigger action, it makes sense to look through the blizzard of caveats and objections--none of which were new--from the perma-doves.
22 August 2017 Is the Worst Over for State and Local Government Spending? (Publication Centre)
Consumption and investment spending by state and local government accounts for just over 10% of the U.S. economy, making it more important than exports or consumers' spending on durable goods, and roughly equal to all business investment in equipment and intellectual property.
FINANCIAL TIMES - UK house price falls - how much is down to Brexit? (Media Centre)
22 August. 2016 Financial Services are Set to Push Core PCE Inflation Higher (Publication Centre)
The rate of increase of the financial services and insurance component of the PCE deflator has slowed from a recent peak of 5.8% in May 2014 to 3.3% in June this year. This matters, because it accounts for 8.4% of the core deflator, a much bigger weight than in the core CPI.
Bloomberg - US core capital goods orders lend support to dollar (Media Centre)
Chief U.S. Economist Ian Shepherdson discussing Durable Goods Orders in May
Business Insider - The pound's general election jump faces a 'swift reversal' as reality takes hold (Media Centre)
Chief U.K. Economist Samuel Tombs discussing the effect the general election will have on the pound,
1 August. 2016 Negative Interest Rates Won't Be Part of the MPC's Policy Response (Publication Centre)
The collapse in business activity and consumer confidence since the referendum has sealed the deal on policy easing from the MPC on Thursday. The Committee has cut Bank Rate by 50 basis points when the composite PMI has been near July's level in the past, as our first chart shows.
BUSINESS INSIDER - Europe's mightiest river is drying up, causing a recession in Germany. Yes, really. (Media Centre)
An unusual factor may have contributed to the German economy's likely fall into a shallow recession at the tail end of 2018, a new report from research house Pantheon Macroeconomics suggests.
FINANCIAL TIMES - Lower oil prices cut two ways for US economy (Media Centre)
Lower oil prices cut two ways for US economy
22 Apr. 2015 Sustained job gains are key to Eurozone consumers sentiment (Publication Centre)
Advance April consumer survey data will likely confirm that households remain the standout driver of the cyclical recovery in the euro area. We think the headline EC consumer sentiment index rose to -1.0 in April from -3.7 in March.
8 June 2017 Hiring Plans Signal 200K-plus Summer Payroll Gains (Publication Centre)
Our core view on the May payroll number remains that the single most likely cause of the unexpectedly modest increase is a seasonal adjustment error, triggered when the survey is conducted early in the month.
22 August. 2016 Will Inflation be the Dog That Doesn't Bark, Again? (Publication Centre)
The period of surprisingly low inflation following sterling's plunge when the UK left the Exchange Rate Mechanism in September 1992 appears to challenge our view that inflation will overshoot the MPC's 2% target over the next couple of years. As our first chart shows, CPI inflation averaged just 2.5% in 1993 and 2% in 1994, even though trade-weighted sterling plunged by 15% and import prices surged.
Claus Vistesen has several years' experience in the independent macro research space, as a freelancer, consultant and, latterly, as Head of Research of Variant Perception, Inc. He holds Master's degrees in economics and finance from the Copenhagen Business School and the University of Hull.
WALL STREET JOURNAL - Ian Shepherdson wins US Forecasters award, 2014 (Media Centre)
The Wall Street Journal is pleased to annouce that Ian Shepherdson, of Pantheon Macroeconomics, has won the US Forecaster of 2014 award.
CNBC - Approving US fiscal stimulus is completely crazy: Pantheon (Media Centre)
Ian Shepherdson, chief economist at Pantheon Macroeconomics, discusses the impact of recent market volatility and fiscal reform in the U.S.
*August 2018 - U.S. Economic Chartbook* (Publication Centre)
The fed will keep hiking each quarter...they are chasing unemployment, not inflation
Chief Eurozone Economist Claus Vistesen discussing the latest Eurozone Construction data (Media Centre)
Chief Eurozone Economist Claus Vistesen discussing the latest Eurozone Construction data
CNBC - Bull markets die because the Fed kills them, says economist (Media Centre)
Ian Shepherdson, Pantheon Macroeconomics chief economist, discusses his outlook on the U.S. economy and the long-lasting bull market.
Bloomberg - Ian Shepherdson Sees Trump Confusion on U.S. Dollar (Media Centre)
Ian Shepherdson, founder and chief economist at Pantheon Macroeconomics, and Paul De Grauwe, London School of Economics professor and former Belgian MP, talk about confusion surrounding the Trump administration's approach to the U.S. dollar.
IG - US labour market driving the need for a rate rise from the Fed (Media Centre)
Dr Ian Shepherdson, chief economist at Pantheon Macroeconomics, says that while US rates will rise by 0.25% on 14th December, the central bank needs to continue to move rates up or wages will spiral up out of control.
Bloomberg - Macron Suspends Planned Fuel-Tax Hike as Protests Rage (Media Centre)
Ian Shepherdson, chief economist at Pantheon Macroeconomics, examines the French government's move to suspend a planned fuel-tax hike that sparked three weeks of protests.
CNBC - US is in a stronger negotiating position than China on trade... (Media Centre)
Ian Shepherdson, Pantheon Macroeconomics, and Said Haidar, Haidar Capital Management, discuss the market, economic and geopolitical impacts of the Trump administration's trade actions.
*October 2018 - U.S. Economic Chartbook* (Publication Centre)
A Serious Slowdown is Still Some Way Off...So the Fed has to Keep Turning the Screws
BBC NEWS - German economy narrowly avoids recession (Media Centre)
Chief Eurozone Economist Claus Vistesen on Germany's economy
*April 2019 - U.S. Economic Chartbook* (Publication Centre)
Don't be Deceived by the Consumer Slowdown...It's a One-Time Transition to Sustainability
*December 2017 - U.S. Economic Chartbook* (Publication Centre)
Growth, inflation to challenge the Fed in 2018...faster wage growth will push them too
*May 2019 - U.S. Economic Chartbook* (Publication Centre)
Q1 Growth Is Unsustainable...But The Labor Market Will Continue To Tighten
Financial Times - Lending growth among EU member states diverges (Media Centre)
Claus Vistesen on Eurozone Business Lending
Financial Times - What China wants: Brad Setser, and Freya Beamish (Media Centre)
Chief Asia Economist Freya Beamish discussing China.
*May 2017 - EZ Economic Chartbook* (Publication Centre)
The Eurozone optimists are out in numbers...But don't expect economic miracles just yet
WALL STREET JOURNAL - Economists React to First-Quarter GDP: 'Pretty Lackluster' (Media Centre)
Chief U.S. Economist Ian Shepherdson on U.S. Q1 GDP
BUSINESS INSIDER - Top economist throws shade at the 'research institute' that releases a widely followed jobs number (Media Centre)
Ian Shepherdsonon why the ADP report is simply not a reliable indicator
Business Insider - There's a coming storm set to 'batter' the UK economy -- and it has nothing to do with Brexit (Media Centre)
Chief U.K. Economist Samuel Tombs the recent increase in Oil
BUSINESS INSIDER - The idea that Brexit isn't totally screwing the economy is 'baloney' (Media Centre)
Chief U.K. Economist Samuel Tombs on the impact of the Referendum
BUSINESS INSIDER - One bleak chart shows how awful the next few years will be for the British economy (Media Centre)
Chief Eurozone Economist Samuel Tombs on Brexit
BBC NEWS - US jobs shock as growth slows (Media Centre)
Chief U.S. Economist Ian Shepherdson on the latest employment data.
The Guardian - Fears of no-deal Brexit push British export orders close to year low (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Manufacturing
DAILY TELEGRAPH - US unemployment takes shock tumble to 5.5pc (Media Centre)
Ian Shepherdson on strong non-farm payroll numbers for February
DAILY TELEGRAPH - Germany's economic revival threatened by Greek crisis and Russian uncertainty (Media Centre)
A closely watched indicator of the German economy has come in weaker than analysts had anticipated, dampening hopes for the country's revival
BLOOMBERG - Fiscal spending cushions Chile's first contraction in 6 years (Media Centre)
Senior International Economist Andres Abadia on Chile GDP.
Financial Times - Analysts weighs in on 'status quo' round of Fed minutes (Media Centre)
Chief U.S. Economist Ian Shepherdson comments on the Fed Monetary Policy Meeting in March
BUSINESS INSIDER - Wages for American workers still look like they are about to go higher (Media Centre)
In January, average hourly wages grew 0.5% over the prior month, the biggest month-on-month increase since November 2008......Ian Shepherdson at Pantheon Macro said the outlook for wage growth is still strong
Bloomberg - Brexit: London's status as a Financial Hub (Media Centre)
Chief U.S. Economist Ian Shepherdson on Bloomberg Surveillance
BBC - US jobless rate at lowest since 1969 (Media Centre)
Chief U.S. Economist Ian Shepherdson on U.S. payroll gains
BBC NEWS - US economic growth continues to slow (Media Centre)
Chief U.S. Economist Ian Shepherdson on U.S. GDP in Q4
Business Insider - The analyst who called the 2017 election exactly right says Theresa May could be forced to call a second Brexit referendum (Media Centre)
Chief U.K. Economist Samuel Tombs on the chances of a second Brexit Referendum
NEWS.MARKETS - Sterling markets accused of inflation complacency (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Inflation
BUSINESS INSIDER - It was a rough morning for the US economy (Media Centre)
Ian Shepherdson comments on Retail Sales data for June
Business Insider - The only analyst who called the June 8 election correctly now says there is 'clear evidence that the Brexit vote has been bad for the economy' (Media Centre)
A look back on Chief U.K. Economist Samuel Toombs' predictions ahead of the U.K. General Election
Business Insider - We just got another sign that Brexit is ending the consumer boom (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Retail Sales
BUSINESS INSIDER - Brits are hoarding cash post-Brexit -- and it's a 'worrying signal' for the economy (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Money Supply
NEW YORK TIMES - U.S. Economy Grew Faster in First Quarter Than Previously Thought (Media Centre)
Chief U.S. Economist Ian Shepherdson on U.S. economy growth
BUSINESS INSIDER - Britain's government could make the pound's crash even worse (Media Centre)
Chief U.K. Economist Samuel Tombs on the government's fiscal policy
Business Insider U.K. - These 4 charts will define the British economy at the start of 2018 (Media Centre)
Chief U.K. Economist Samuel Tombs on the U.K. Economy in 2018
BUSINESS INSIDER UK - BRITAIN BEATS -- GDP figures shrug off Brexit and smash expectations (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Q3 Preliminary GDP data
MARKETWATCH - You should trust the BLS more than the Dow, economist says (Media Centre)
Chief U.S. Economist Ian Shepherdson on the U.S. Economy
BUSINESS INSIDER - Homebuilder sentiment dropped in November (Media Centre)
Chief U.S. Economist Ian Shepherdson on NAHB
FINANCIAL TIMES - UK housing market stabilises after Brexit vote (Media Centre)
Chief U.K. Economist Samuel Tombs on U.K. Mortgage Approvals
BBC - Banks report new year buy-to-let rush (Media Centre)
REUTERS - Cheaper petrol pushes UK inflation to lowest since March 2017 (Media Centre)
BUSINESS INSIDER - The US trade deficit tumbled to a 5-month low in November (Media Centre)
Chief U.S. Economist Ian Shepherdson on the U.S. Trade Deficit
Question of the Week, WC 6th August (Media Centre)
BUSINESS INSIDER - ECONOMIST: 'The wage number is wrong, payrolls are strong.' (Media Centre)
Chief U.S. Economist Ian Shepherdson on U.S. Employment
Business Insider - HOLD ON TO YOUR WALLET: Trump's trade war with China is about to start hitting the goods you buy most (Media Centre)
Chief U.S. Economist Ian Shepherdson on U.S.-China Trade Wars
GUARDIAN - UK service companies anxious about year ahead (Media Centre)
Chief U.K.. economist Samuel Tombs comments on U.K. PMI
Business Times - Hawkish Fed, weak yuan signal more trouble ahead for emerging markets (Media Centre)
Chief Asia economist Freya Beamish on the weak yuan
CNBC - Here's how Trump's threats toward Iran and China could impact the economy (Media Centre)
Ian Shepherdson, chief economist at Pantheon Macroeconomics, joins 'Squawk Box' to discuss how the tensions between the U.S., Iran and China might impact the economy.
CNBC The Fed is addressing the inflation rate (Media Centre)
Ian Shepherdson, Pantheon Macroeconomics chief economist, and Vinay Pande, UBS Global Wealth Management head of trading strategies, join "Squawk on the Street" to discuss their forecast for the markets amid strong jobs data.
Bloomberg - China's Economy an Incentive for Xi to Do a Trade Deal, Economist Says (Media Centre)
Freya Beamish, chief Asia economist at Pantheon Macroeconomics, discusses how China's economy can influence a U.S. trade agreement and looks forward to U.S.-European trade talks.
CNBC - Why two experts don't expect surprises from the Fed (Media Centre)
Kathy Jones, chief fixed income strategist at Schwab Center for Financial Research, and Ian Shepherdson, chief economist at Pantheon Macroeconomics, sit down with "Squawk Box" to discuss what they expect of the Fed's announcement on it's monetary policy plan.
CBS News - Federal Reserve is reluctant to cut interest rates, latest minutes show (Media Centre)
Ian Shepherdson discussing the FOMC
15 Apr. 2015 Plunging utility output and oil well-drilling to depress March IP (Publication Centre)
The combination of weather effects and the meltdown in the oil sector make it very hard to spot the underlying trend in manufacturing activity. The sudden collapse in oil-related capital spending likely is holding down production of equipment, but the data don't provide sufficient detail to identify the hit with any precision.
10 June 2019 Job Gains will Rebound, May's Slowdown is no Reason to Cut Rates (Publication Centre)
Payroll growth has slowed, no matter how you slice and dice the numbers.
10 June 2019 Governor Gang Hints at the Trade War Policy Path (Publication Centre)
In an interview with Bloomberg on Friday, PBoC Governor Yi Gang hinted at the intended policy if the trade war escalates.
14 May 2018 China's M1 Points to a Substantial GDP Growth Downtrend (Publication Centre)
China's monetary conditions remain tight, pointing to a substantial downtrend in GDP growth this year and next.
1 July 2019 Brazil's Inflation Report Opened the Door for Rate Cuts as Early as July (Publication Centre)
Recent economic weakness in Brazil, particularly in domestic demand, and the ongoing deterioration of confidence indicators, have strengthened the case for interest rate cuts.
10 September 2018 Inflation in Mexico is Edging Higher, but it Will Fall in the Fourth Quarter (Publication Centre)
The Mexican economy's brightest spot continues to be private consumption.
10 July 2018 China's FX Reserves Suggest the June RMB Slide was a Warning Shot (Publication Centre)
China's FX reserves were little changed in June, at $3,112B.
14 September. 2016 Brazil's Soft July Retail Sales Don't Change the Improving Trend (Publication Centre)
The Brazilian consumer will continue to suffer from high interest rates and a deteriorating labour market this year. But sentiment data imply that the fundamentals are stabilising, at least at the margin. The headline consumer sentiment gauge, published by the FGV, has improved significantly in the past five months, and we expect another modest increase later this month
10 July 2019 The BoJ Faces a Slew of Very Nasty Data, it Still won't Ease (Publication Centre)
We think Japanese monetary policy easing essentially is tapped out, both theoretically and by political constraints.
15 February 2019 Seasonal Problems and Sampling Error Explain December's Sales Drop (Publication Centre)
We can't remember the last time a single economic report was as surprising as the December retail sales numbers, released yesterday.
1 February 2019 The Mexican Economy Slowed in Q4 Can it Rebound in Q1 (Publication Centre)
Wednesday's first estimate of full-year 2018 GDP in Mexico indicates that growth lost momentum in Q4.
14 October. 2016 Will the Supply of Homes for Sale Continue to Dwindle? (Publication Centre)
The number of existing homes for sale continued to fall in September, ensuring that modestly increasing demand is putting renewed upward pressure on prices.
14 September 2018 A Tough Fiscal Overhaul to Avoid a Collapse Can Macri Succeed (Publication Centre)
Argentina's central bank held interest rates at 60% on Wednesday, as was widely expected.
15 January 2019 China's Trade Data will get Nastier but Expect a V-Shaped Recovery (Publication Centre)
China's December foreign trade numbers were unpleasant, with both exports and imports falling year-over-year, after rising, albeit slowly in November.
11 Apr. 2016 Economic Weakness Starting To Reduce Inflation in Brazil and Chile (Publication Centre)
Brazil's March report reinforced recent evidence indicating that inflation is decelerating. The headline CPI surprised to the downside again, slowing to a nine-month low of 9.4% year-over-year from 10.4% in February. The index rose 2.6% quarter-to-quarter in Q1, well below the 3.8% increase in the same period last year.
15 June 2017 Core Inflation Pressures in Germany are Rising, Slowly (Publication Centre)
German inflation eased in May, but the underlying upward pressure on the core is increasing. Yesterday's data showed that inflation fell to 1.5% year-over-year in May, from 2.0% in April, as the boost from the late Easter reversed. Inflation in leisure and entertainment services was driven down to +0.8%, from +3.3% in April, as a result of sharply lower inflation in package holidays and airfares.
15 April 2019 What Does the Art 50 Extension Say About the EU's Brexit View (Publication Centre)
The EU's decision to grant the U.K. an extension under Article 50, until October 31, reveals two key aspects of continental Europe's position on Brexit.
15 April 2019 And Breathe Chinese Monetary Conditions are Loosening (Publication Centre)
In the last two months, we have suggested that monetary conditions have turned the corner, but have cautioned that Lunar New Year distortions make the March data critically important.
15 Apr. 2016 Downside Risk to March Output, but Worst is Over - Gains Ahead (Publication Centre)
In the wake of the uptick in the March ISM manufacturing survey, we think today's official production data for the same month are likely to disappoint. Our model of the month-to-month output numbers incorporates the ISM data, but it is substantially driven by manufacturing hours worked, which fell in both February and March.
10 December 2018 Not a Great Moment for a Rise in China's FX Reserves (Publication Centre)
China's FX reserves rose to $3,062B in November, from $3,053B on October. On the face of it, the increase is surprising.
10 January 2019 We have Seen this Movie Before in French Consumer Confidence (Publication Centre)
History is repeating itself in France. When the Republican Nicolas Sarkozy defeated the Socialist candidate Ségolène Royal in April 2007, consumer sentiment briefly soared to a six-year high, before plunging to an all-time low a year later.
1 February 2018 China PMIs Distorted by Holiday E ects, Missing the Curbs Impact (Publication Centre)
China's manufacturing PMIs have softened in Q4. Indeed, we think the indices understate the slowdown in real GDP growth in Q4, as anti-pollution curbs were implemented. More positively, though, real GDP growth should rebound in Q1 as these measures are loosened.
15 Apr. 2016 Chile's Central Bank Holds Rates and Relaxes its Tightening Bias (Publication Centre)
Chile's central bank left rates unchanged on Tuesday for the fourth consecutive month, as recent data confirmed the sluggish pace of the economic recovery and inflation edges down closer to the target range. In the statement accompanying the decision, the BCCh kept its tightening bias, saying that the normalisation of monetary policy needs to continue at a data-dependent pace, in order to achieve its 3% target.
14 May 2019 Rising Trade Tensions Keep Andes' Central Banks on the Sideline (Publication Centre)
Chile and Peru faced similar growth trends in 2018, namely, a solid first half, followed by a poor second half, particularly Q3.
15 January 2019 Mexican Capex Improved Slightly in Early Q4, but Uncertainty is a Drag (Publication Centre)
Data released yesterday showed that gross fixed investment in Mexico started Q4 on a decent note, increasing on the back of healthy purchases of imported machinery and equipment and construction spending.
15 Dec. 2014 - U.S. Approaching the Monetary Policy Crossing Point (Publication Centre)
All policymaking is about trade-offs; very few government decisions confer only benefits. Someone, or more likely some group, loses. Monetary policy is no exception to the trade-off rule.
15 January 2019 The Trade War is not the Only Factor Hurting Stocks, but it's the Biggest (Publication Centre)
In our Monitor of January 10, we argued that the market turmoil in Q4 was largely driven by the U.S.- China trade war, and that a resolution--which we expect by the spring, at the latest--would trigger a substantial easing of financial conditions.
10 December 2018 LatAm Inflation is Ending the Year at a Comfortable Rate (Publication Centre)
With the exception of Mexico, November inflation was or below expectations in LatAm. Mexico's overshoot increases the likelihood that Banxico will hike its reference rate at the next board meeting on December 20.
15 December 2017 Strong November Sales Mean Q3 Consumption Heading for 3% (Publication Centre)
The 0.8% jump in nominal November retail sales is consistent with a 0.4% rise in real total consumption, which in turn suggests that the fourth quarter as a whole is likely to see a near-3% annualized gain.
10 November. 2016 A Trump Victory Means Revisions to EU Leaders' Playbooks (Publication Centre)
EZ equity futures predictably fell out of bed as the news of the Trump victory gradually became clear overnight yesterday. The reaction was less violent than after the U.K. Brexit referendum, though, and Mr. Trump's balanced victory speech appears to have calmed nerves for now.
10 May 2019 Is the Risk of a No-Deal Brexit Rising Again? (Publication Centre)
Unsurprisingly, cross-party Brexit talks are not going well.
15 February 2018 The Eurozone Recovery is Over, Welcome to the Expansion (Publication Centre)
Yesterday's second estimate of Q4 Eurozone GDP confirmed the upbeat story from the advance report, despite the dip in headline growth.
10 December 2018 Parliamentary Maths Points to Only One Plan B for the Prime Minister (Publication Centre)
Unless it blinks and delays, the government is on course for a hefty defeat on Tuesday, when it asks parliament to vote to approve the Withdrawal Agreement--WA--and Political Declaration.
10 January 2018 Japan's Regular Wage Uptrend Remains Intact. More to Come (Publication Centre)
Japan's regular wage growth continued to edge up in November, maintaining the rising trend. The headline is volatile, with growth in labour cash earnings rising to 0.9% year-over-year in November, up from a downwardly revised 0.2% in October.
14 November 2018 Banxico Likely Will Hike Tomorrow Interventionist Threats are Growing (Publication Centre)
After recent interventionist moves and plans in Mexico from AMLO's incoming administration and his political party, uncertainty and soured sentiment are the name of the game.
15 February 2019 Japan's Q4 GDP Growth Looks Poor, but the Details are Better (Publication Centre)
Japan's 0.3% quarter-on quarter increase in Q4 GDP was disappointing, on the face of it, after a downwardly-revised 0.7% fall in Q3.
15 February 2018 One Outsized Core CPI Gain does not Make a Trend, it Looks Like Noise (Publication Centre)
The January core CPI numbers are consistent with our view that the U.S. faces bigger upside inflation risks than markets and the Fed believe.
1 February 2019 It's Official China will Enter PPI Deflation, Though Only Briefly (Publication Centre)
China's official manufacturing PMI was little changed in January, ticking up to 49.5, from 49.4 in December, with the output and new orders sub-indices largely stable.
15 December 2017 The Hawks Will Squawk Again Soon, but the Next Rate Hike is Still Distant (Publication Centre)
The MPC chose not to rock the boat yesterday, deferring any reappraisal of the economic outlook until its next meeting in early February.
10 July 2018 Modest Inflation Pressures will Help Central Banks in Q3 and Most of Q4 (Publication Centre)
Inflation in Mexico edged higher in the second half, but we expect both the headline and core rates to continue falling, allowing Banxico to keep interest rates on hold.
14 May 2019 French Manufacturing Output is Headed for a Fall in Q2 (Publication Centre)
Data on Friday showed that the upturn in French manufacturing petered out at the end of Q1.
14 May 2018 Could Foreign Trade Propel Second Quarter GDP Growth to 5%? (Publication Centre)
To answer the question: Yes, growth could hit 5% in the second quarter.
10 May 2019 See No Evil, Hear No Evil in Today's U.S. China Trade Talks (Publication Centre)
As we head to press, investors are holding their breath over whether today's trade talks between the U.S. and China will be enough for Mr. Trump to step back from his pledge to increase tariffs on $200B of Chinese goods to 25%.
1 February 2019 Consumer Confidence Indices Likely are Giving an Overly Downbeat Steer (Publication Centre)
It's tempting to conclude from the recent decline in consumers' confidence that growth in real spending will continue to weaken over the coming quarters, from the already modest 1.8% year-over-year rate in Q3.
14 November 2018 Expect a Rebound in October's Core CPI, but the Trends are Benign (Publication Centre)
The near-term U.S. inflation outlook is benign, but it is not without risk.
10 June 2019 Rising Threats of Protectionism is Making Central Banks Very Uneasy (Publication Centre)
LatAm's growth outlook is deteriorating, despite decent domestic fundamentals and political transitions toward more market-oriented governments in some of the region's main economies.
10 May 2019 The PBoC will Stick to Loose Policy, Despite a Host of New Challenges (Publication Centre)
China's money and credit numbers for April were a mixed bag. M2 growth merely inched down, to 8.5% year-over-year, from 8.6% in March, keeping its gradual uptrend intact.
14 May 2019 Trade Stand-off won't Last Forever, but Expect a Few Painful Weeks (Publication Centre)
Markets are caught in a trade loop.
15 February 2019 January Retail Sales Will Stop the Flow of Downbeat News (Publication Centre)
We expect the run of downbeat news on the U.K. economy to be punctuated today by January's retail sales figures.
1 February 2018 New Wage Data Do Not Meaningfully Re-Write History (Publication Centre)
Experimental figures, released earlier this week, suggest that wages have increased at a faster rate than indicated by the average weekly earnings--AWE--data.
10 July 2018 Should we be Excited About the Rebound in EZ Investor Sentiment (Publication Centre)
It has been mostly doom and gloom for euro area investors in equities and credit this year.
14 November 2017 Are Investors Complacent to Expect a Smooth Brexit Transition in 2019? (Publication Centre)
Sterling weakened yesterday, to $1.31 from $1.32, following news that 40 Conservative MPs have agreed to sign a letter of no-confidence in the Prime Minister.
14 November. 2016 Brazil's Private Spending was Weak in Q3 (Publication Centre)
Volatility and risk will remain high in L atAm for the foreseeable future. President-elect Donald Trump's uncertain foreign policies could have a considerable impact on LatAm economies in the months and years ahead.
10 March 2017 A Guide to ECB Speak: Getting Better, but We're not Done Yet (Publication Centre)
The ECB made no major policy changes yesterday. The central bank kept its refinancing and deposit rates unchanged at 0.00% and -0.4% respectively, and the scheduled reduction in the pace of QE to €60B per month was confirmed. The core part of the central bank's language retained its dovish bias.
14 November 2017 Mexico's Manufacturing Remains Resilient, but NAFTA Risk is High (Publication Centre)
LatAm's economies are starting to expand at a relatively healthy pace, inflation is more or less under control and near-term growth prospects are positive.
14 November 2018 German GDP Growth Crashed in Q3, but Inflation is Firming (Publication Centre)
We remain confident--see here--that today's Q3 GDP report in Germany will be a shocker, but this already is priced-in by markets.
10 May 2019 The BCB, with no Near Term Room for Manoeuvre, Sees Slow GDP (Publication Centre)
Brazil's economy remains mired in a renewed slowdown, and low--albeit temporarily rising-- inflation, which is allowing the BCB to keep interest rates on hold, at historic lows.
14 November 2018 Still Enough Slack to Prevent Wage Growth From Rising Further (Publication Centre)
September's labour market report suggests that wage growth won't continue to rise for much longer.
15 February 2018 New Weights Won't Affect Inflation's Trend, But Will Influence its Path (Publication Centre)
The ONS published provisional new weights for the main components of the CPI on Tuesday. The changes boost our forecast for the average rate of CPI inflation this year by a trivial 0.03 percentage points.
11 July 2019 Only a Run of Very Strong Numbers Now Could Stop the Fed this Month (Publication Centre)
At least some investors clearly were expecting Fed Chair Powell yesterday to offer a degree of resistance to the idea that a rate cut at the end o f this month is a done deal.
12 November 2018 September's Sombre GDP Report Sets the Tone for the Rest of the Year (Publication Centre)
September's GDP report laid bare the economy's sluggishness.
12 May. 2016 EZ Inflation Expectations are Low, But Will Creep Higher Soon (Publication Centre)
The renewed decline in bond EZ bond yields has raised the question of whether inflation expectations will recover at all in this cycle. We think they will, and we also believe 10-year yields will rise towards 1%-to-1.2% towards the end of the year. But two factors will keep inflation expectations and yields in check in the near term.
12 May. 2015 A Recipe for Growth in the Eurozone - Revival of SMEs (Publication Centre)
The four-quarter average growth trend in private investment, excluding dwellings, fell to 0.1% in Q4, and the recent improvement in the PMIs indicates only a modest upturn in Q2. The dearth of investment by non-financial corporates remains one of the biggest threats to long-term growth in the Eurozone.
12 October 2017 China's Real GDP Growth Should Continue to Trend Down in Q3 (Publication Centre)
Next week is a big one for China. The five yearly Party Congress opens on Wednesday, and on Thursday, the monthly raft of activity data is published, along with Q3 GDP.
12 October 2018 Sticking to our Call for the Bank of Korea to Remain on Hold (Publication Centre)
The Board of the Bank of Korea will meet again in less than a week's time for this year's penultimate meeting.
1 November 2018 More Trick and Less Treat as the BoJ Leaves Market Hanging (Publication Centre)
The BoJ kept policy unchanged, as expected, at its meeting yesterday.
11 Nov. 2015 Mexico Relying on the Fed - Chile Looking for China's Recovery (Publication Centre)
Mexico's inflation remains the envy of LatAm, having consistently outperformed the rest of the region this year. Headline inflation slowed marginally to 2.5% in October, a record low and below the middle of Banxico's target, 2-to-4%, for the sixth straight month. The annual core rate increased marginally to 2.5% in October from 2.4% in September, but it remains below the target and its underlying trend is inching up only at a very slow pace. We expect it to remain subdued, closing the year around 2.7% year-over-year. Next year it will gradually increase, but will stay below 3.5% during the first half of 2016, given the lack of demand pressures and the ample output gap.
12 September 2018 How Much is the Spanish Economy Slowing This Year (Publication Centre)
The Spanish economy remains the stand-out performer in the Eurozone, but recent data suggest that growth is slowing.
1 November 2017 Will the PMIs Show the Economy Resilient to the Looming Rate Hike? (Publication Centre)
This week's manufacturing, construction and services PMIs for October will demonstrate how well the economy is coping with the prospect of higher interest rates.
12 May 2017 Will Mr. Macron Unleash Animal Spirits in Eurozone Equities? (Publication Centre)
Emmanuel Macron's victory in France has lifted investors' hopes that the good times in the Eurozone economy and equity markets are here to stay. On the face of it, we share markets' optimism. Mr. Macron and his opposite number in Germany--our base case is that Ms. Merkel will remain Chancellor--will form a strong pro-EU axis in the core of the Eurozone.
12 March 2018 January Data Point to Slower GDP Growth in Q1 (Publication Centre)
Last week's official data supported our forecast that GDP growth likely will slow further in Q1, suggesting that a May rate hike is not the sure bet that markets assume.
11 November. 2016 Eyes of Hurricanes Pass, then the Real Uproar Begins (Publication Centre)
Uncertainty about the U.S. economic and political outlook, following Donald Trump's presidential win, likely will cast a long shadow over EM in general and LatAm in particular. On the campaign trail, Mr. Trump argued for tearing up NAFTA and building a border wall.
11 October 2017 Peru's Central Bank Likely Will Ease Tomorrow, but Room has Shrank (Publication Centre)
Peru's central bank likely will cut its main interest rate by 25bp to 3.25% on Thursday. Inflation dipped in September and likely will increase only marginally in October, while economic growth was relatively sluggish at the start of Q3.
1 July. 2015 LatAm Markets Threatened by the Deepening Greek Crisis (Publication Centre)
A mix of political and economic events have triggered outflows of capital from emerging markets this year. Tensions in Europe, due to the "Grexit" saga, together with China's slowdown and concerns about Fed lift-off have weighed on EM flows. In recent months, though, some of the pressure on EM currencies has eased as the markets have come to expect fewer U.S. rate hikes in the near term.
1 November 2017 BoJ Signals Intransigence as Global Central Banks Tighten (Publication Centre)
The BoJ kept monetary policy unchanged yesterday, as expected, with the signal coming through loud and clear: Japan's central bank will continue its aggressive easing policy until the inflation cows come home...
12 March 2019 The Data are Choppy, but Chinese Monetary Conditions are Loosening (Publication Centre)
Monetary policy loosening over the last year implies that China's M1 growth already should be picking up.
1 June 2018 Do All Roads in Italian Politics Lead to New Elections Later this Year? (Publication Centre)
The political limbo in Italy currently appears to have three possible solutions, in the short term. The 5SM and Lega can try to form a coalition, again.
12 September 2018 The MXN Remains Resilient, but Can it Withstand Broad EM Pressure (Publication Centre)
Mexico has been one of LatAm's highlights in terms of financial markets and currency performance in recent months.
12 September. 2016 Mexico's 2017 Budget Proposals Signal Fiscal Discipline (Publication Centre)
The Mexican government last week unveiled its 2017 fiscal budget proposal. The plan makes clear that the shocks which have battered the economy and public finances since 2015 will linger in to next year. Mexico's government has been eager to cut spending in recent years.
11 May 2018 Mexico's Economy on the Mend, but Politics is Now the Biggest Risk (Publication Centre)
This week's data confirmed Mexico's strong economic performance over the first few months of this year.
10 April 2018 China's Capital Outflows Remain Modest, but will Pick up (Publication Centre)
China's FX reserves were relatively stable in March, with the minimal increase driven by currency valuation effects.
13 December 2018 The Rise in Jobless Claims is Convincing Evidence of... Not Much (Publication Centre)
On the face of it, the upturn in initial jobless claims since late September appears to signal a softening in the economy.
*Jan. 2017 - U.S. Economic Chartbook* (Publication Centre)
The Fed is fretting over fiscal easing......upside risk to growth, inflation and interest rates
13 February 2018 Is a Second Referendum May's Only Way to Break the Impasse? (Publication Centre)
Suggestions that the U.K. government might choose to hold a second referendum have been constantly rebuffed by the Prime Minister.
13 January 2017 BCB to Continue Easing Rapidly, Amid Falling Inflation (Publication Centre)
Brazil's central bank started the year firing on all cylinders. The Copom surprised markets on Wednesday by delivering a bold 75bp rate cut, bringing the Selic rate down to 13.0%. In October and November, the Copom eased by only 25bp, but inflation is now falling rapidly and consistently. The central bank said in its post-meeting communiqué that conditions have helped establish a "new rhythm of easing", assuming inflation expectations hold steady.
13 February 2019 Is the Collapse in the Argentinian Survey and Real Data over (Publication Centre)
We will be paying special attention to the sentiment surveys for Argentina over the coming weeks.
10 April 2018 Q1 was a write-off for the German economy (Publication Centre)
Yesterday's trade data added to the evidence that momentum in the German economy slowed sharply at the start of the year.
10 April 2017 Will the Inflation Dichotomy in the Big LatAm Economies Persist? (Publication Centre)
Brazilian inflation hit its lowest rate in almost seven years in March, while Mexico's rate is the highest since July 2009. Yet we expect Mexico to tighten policy only modestly in the near term, while Brazil will ease rapidly.
1 September 2017 Banxico's QIR Report is Upbeat, But Rates are on Hold Until 2018 (Publication Centre)
Banxico's Quarterly Inflation Report--QIR--for Q2 2017, published this week, confirmed that the central bank has become more upbeat about the economic recovery and the outlook for inflation. Banxico believes that the balance of risks to inflation and growth are neutral.
05 October. 2016 Construction Still Set to Struggle, Despite the Looser Fiscal Stance (Publication Centre)
Promises of new money to facilitate construction on public sector land from the Chancellor and the pick-up in the construction PMI have fostered optimism that the sector's downturn is over.
13 April 2018 French Inflation is Shooting Higher (Publication Centre)
Inflation pressures in France increased significantly at the start of the year.
*July 2019 - U.S. Economic Chartbook* (Publication Centre)
No further easing needed, if a trade deal is done...but this is a dovish fed, on a hair-trigger
13 December 2017 Will the Fed Forecast Sub-4% Unemployment Next Year? (Publication Centre)
Today's rate hike will be accompanied by a new round of Fed forecasts, which will have to reflect the faster growth and lower unemployment than expected back in September.
1 October 2018 First Round of Brazil's Elections on Sunday, the Outcome is Uncertain (Publication Centre)
The first round of Brazil's presidential elections will take place this Sunday, followed by a probable runoff on October 28.
06 May. 2015 Latest Data Enhances Divergent Activity Trends in LatAm (Publication Centre)
Mexican manufacturing sector kicked off the year on a soft note, due mainly to the sharp drop in oil prices, and the sharp weather-induced slowdown in the U.S. Mexico's northern neighbor is its largest trading partner, by far, accounting for about 85% of total exports last year and close to 80% of total non-oil exports.
11 May. 2016 Inflation Pressures Easing in LatAm Following FX Appreciation (Publication Centre)
Mexican inflation pressures eased towards the start of Q2. Inflation fell to 2.5% year-over-year in April from 2.6% in March, due to a sharp fall in energy inflation--as a result of the introduction of new electricity tariffs in the warm season--and a fall in the rate of increase of fresh food prices. Depressed energy prices will continue to constrain inflation in coming months, but base effects will reduce the drag later this year.
12 March 2018 As Good as it Gets, Provided Participation Keeps Rising (Publication Centre)
It's hard to find anything to dislike in the February employment report.
12 June 2019 Rising Wage Growth Bolsters the Case for Gradual Rate Hikes (Publication Centre)
The case for continuing to increase Bank Rate gradually--recently reiterated by MPC members Andy Haldane and Michael Saunders-- strengthened yesterday with the release of April's labour market report, which revealed renewed momentum in wage growth.
12 December 2018 Mr. Macron Signals a Policy Shift in France, and for the EZ too? (Publication Centre)
The outlook for the French economy is changing on a daily basis these days.
12 Dec. 2014 Mexico's Data have been Upbeat but Downside Risks are Growing (Publication Centre)
Recent Mexican data have been upbeat, supporting our view that a gradual recovery is underway. In the key auto sector, for example, production increased 11.4% year-over-year in November, while exports rose 5.8% year-over-year in October.
1 May 2018 China's Manufacturing PMI Points to Reflation Revival Temporarily (Publication Centre)
China's official manufacturing PMI implies a modest gain in momentum in Q2, at 51.4, compared with 51.0 on average in Q1.
*Oct. 2016 - U.S.. Economic Chartbook* (Publication Centre)
The FOMC is split on everything......but a clear majority will vote to hike in December
1 May 2019 The Eurozone Economy Defied the Pessimists in the First Quarter (Publication Centre)
Yesterday's economic headlines in the Eurozone were pleasant reading.
12 February 2019 The Details Matter Much More than the NFIB Survey's Headline Index (Publication Centre)
We're very interested in the detail of today's January NFIB survey; the headline index, not so much.
12 February 2019 Japan's GDP Bounce-Back in Q4 will be Driven by Domestic Demand (Publication Centre)
Japan's preliminary GDP report for Q4 is out on Thursday, and we expect to see a punchy number.
12 February 2019 GDP Likely Will Still Rise Marginally in Q1, Despite December's Dip (Publication Centre)
On the face of it, the latest GDP data look awful. December's 0.4% month-to-month fall in GDP closed a poor Q4, in which quar ter-on-quarter growth slowed to 0.2%, from 0.6% in Q3.
1 May 2018 Why has Consumers' Confidence Suddenly Deteriorated Again? (Publication Centre)
On the face of it, the timing of the drop in the E.C.'s measure of consumers' confidence, to its lowest level since July 2016 in April, is peculiar.
*Nov. 2016 - U.S.. Economic Chartbook* (Publication Centre)
More Public Spending and Higher Rates in 2017...Whoever Wins
04 Jan. 2016 While We Were Out... (Publication Centre)
...The data were all over the map, with existing home sales plunging while consumer confidence rose; Chicago-area manufacturing activity plunged but national durable goods were flat; real consumption rose at a decent clip but pending home sales dipped again. Markets, by contrast, are little changed from the week before the holidays. What to make of it all?
12 December 2017 After Micro-loans Crackdown, China's Offshore Borrowing is Next (Publication Centre)
Chinese monetary conditions show signs of a temporary stabilisation. M2 growth picked up to 9.1% year-over-year in November from 8.8% in October, though largely as a correction for understated growth in recent months.
1 May 2018 Is the EZ Economy Slowing Faster Than Markets Expect? (Publication Centre)
Yesterday's money supply data in the Eurozone were alarmingly poor.
12 December 2017 Banxico Likely Will Keep Rates on Hold, but Options Are Wide Open (Publication Centre)
November's inflation data in Mexico, showing a modest increase in the headline rate, have strengthened the case for further monetary tightening. But we stick to our long-standing view that the Board will leave rates at 7.0% on Thursday.
12 December 2016 Brazilian Inflation Dropped in November (Publication Centre)
Friday's inflation report for Brazil confirmed that inflation is rapidly falling towards the BCB's target range, helping to make the case for stepping up the pace of monetary easing to 50bp at the Copom's January meeting.
04 May. 2015 Andean Countries Will Continue To Recover Despite a Tough Quarter (Publication Centre)
The major Andean economies had a very challenging first quarter. In Colombia, the effect of the sharp fall in oil prices has become more evident in the last few months. The ISE economic activity index--a monthly proxy for GDP--fell considerably during 2014, with a significant deceleration over the last half of the year.
12 December 2018 Mexico's Leading Indicators Signal a Challenging Near-term Outlook (Publication Centre)
Mexico's economy is not accelerating, but it is holding up very well in difficult circumstances, with rising domestic political risk and stifling interest rates.
12 January 2018 Core CPI to Rebound (Publication Centre)
The downside surprise in the November core CPI, which rose by 0.1%, a tenth less than expected, was due entirely to an unexpected 1.3% drop in apparel prices. This alone subtracted 0.05% from the core, but we think the chance of a reversal in December is quite high.
12 January 2018 Inflation in Brazil Ended 2017 Below the Target Range, 2018 Will be Fine (Publication Centre)
Inflation in Brazil ended 2017 well under control, despite December's modest overshoot. This will allow the BCB to cut rates further in Q1 to underpin the economic recovery.
03 October. 2016 The Economy's Near-Term Resilience Has Brittle Foundations (Publication Centre)
Last week's official data unequivocally indicated that the Brexit vote has not had a detrimental impact on the economy yet.
04 October. 2016 Manufacturing Revival Bolsters Case for the MPC to Hold Fire (Publication Centre)
The odds of the MPC cutting interest rates again in November took another knock yesterday after further signs that the manufacturing sector is getting back on its feet quickly.
12 Apr. Do Leading Indicators Signal Impending Recession? (Publication Centre)
Another day, another downbeat survey. The British Chamber of Commerce's comprehensive and long-running Quarterly Economic Survey was published yesterday, and it added to evidence of a Q1 slowdown.
12 June 2017 China's Policy Choices are all Difficult, can Disaster be Averted? (Publication Centre)
China faces three possible macro outcomes over the next few years. First, the economy could pull off an active transition to consumer-led growth. Second, it could gradually slide into Japan-style growth and inflation, with government debt spiralling up. Third, it could face a full blown debt crisis, where the authorities lose control and China drags the global economy down too
12 June 2018 Should Eurozone Investors Fear U.S. Import Tariffs on Cars? (Publication Centre)
Predictably, last weekend's G7 meeting in Canada ended in acrimony between the U.S. and its key trading partners.
11 September 2017 Hurricane Reconstruction Will Lift Wages, Inflation, and the Deficit (Publication Centre)
As we reach our Sunday afternoon deadline, Hurricane Irma is pounding Florida's west coast with an intensity not seen since Andrew, in 1992.
12 June 2019 Markets Having Cake and Eating it will be Caught out by the BoJ (Publication Centre)
Central bankers globally are full of market- appeasing but conditional statements.
12 April 2018 Base Effects Kick-in to Core Inflation, Much More to Come (Publication Centre)
The month-to-month core CPI numbers in March were consistent, in aggregate, with the underlying trend.
12 April 2019 Inflation in Brazil Jumped in Q1, but Temporary Factors are to Blame (Publication Centre)
Inflation in Brazil surprised to the upside this week, with a sharp rebound that looks alarming at face value.
1 November 2016 Will Core PCE Inflation hit 2% This Year? (Publication Centre)
In the absence of an unexpected surge in auto sales or a sudden burst of unseasonably cold weather, lifting spending on utilities, fourth quarter consumption is going to struggle to rise much more quickly than the 2.1% annualized third quarter increase.
12 July 2017 Yellen Will Re-affirm Fed Policy. Expect no Revelations, or Dates (Publication Centre)
Chair Yellen has become quite good at not giving much away at her semi-annual Monetary Policy Testimony.
1 May 2019 Uncertainty in Mexico Triggered a Sharp Economic Slowdown in Q1 (Publication Centre)
Yesterday's first estimate of Q1 GDP in Mexico confirmed that growth was under severe pressure at the start of the year.
12 April 2019 The CPI Easter Effect Confirmed Now Brace for a Jump in April (Publication Centre)
Yesterday's detailed CPI data in Germany and France broadly confirmed the message from the advance data in the Eurozone as a whole.
*March 2017 - U.S. Economic Chartbook* (Publication Centre)
The Fed Is On Course For Four Hikes This Year...And Another Four In 2018
12 July 2019 A Preview of the CPI Challenges Faced by Ms. Lagarde at the ECB (Publication Centre)
Yesterday's accounts from the June ECB meeting broadly confirmed markets' expectations of further easing between now and the end of the year.
1 March 2018 The PM's Inevitable Capitulation is Still a Way Off ,Clouding Sterling's Outlook (Publication Centre)
Sterling fell to $1.38, from $1.39, in the hour following the EU's publication of a draft Article 50 withdrawal treaty, which set out the practical consequences of the principles the U.K. agreed to in December.
10 April 2019 Brazil's Retail Sector Slowed in Q1 Better Credit Conditions will Help (Publication Centre)
Brazil's economic activity data have disappointed in recent months, firming expectations that the Q1 GDP report will show another relatively meagre expansion.
11 March 2019 Labor Demand Slowing, but February Payrolls Overstate the Downshift (Publication Centre)
The 20K increase in February payrolls is not remotely indicative of the underlying trend, and we see no reason to expect similar numbers over the next few months.
14 February 2018 Elections and Economic Turnaround Key Factors to Watch in Colombia (Publication Centre)
Legislative and presidential elections in Colombia will be held on March 11 and May 27, respectively, with a run-off presidential election on June 17 if no candidate secures more than half the votes.
14 December. 2016 No Change in Median Dots, Yellen Will Stonewall on Fiscal Easing (Publication Centre)
The Fed will raise rates by 25bp today, but we expect no change in the median expectation-the dotplot-for two rate hikes both next year and in 2018. We fully appreciate that fiscal easing on the scale proposed by President-elect Trump, or indeed anything like it, very likely would propel inflation to a pace requiring much bigger increases in rates.
11 January 2019 How to Read the Recent Collapse in the EZ Economic Data (Publication Centre)
Economic data in the euro area are still slipping and sliding.
1 April 2019 The PM Will Pick a Softer Brexit over No-deal (Publication Centre)
The Prime Minister is in a position on Brexit all chess players dread: zugzwang.
1 December 2017 The BoK Jumps on the Global Tightening Wave. Rocky Ride Ahead (Publication Centre)
President Moon was elected earlier this year on a promise to rebalance the economy toward domestic demand and reduce export dependency. It's not the first time politicians have received such a mandate.
14 January 2019 Inflation in Brazil is Still Benign, but the Outlook Will Depend on Politics (Publication Centre)
Inflation in Brazil ended 2018 under control, despite slightly overshooting expectations.
11 January 2019 Chinese Inflation will Fall a bit Further, but Deflation is Off the Table (Publication Centre)
Yesterday's price data for China showed continued declines in both CPI and PPI inflation.
14 January 2019 Après le Déluge, What Happens to Employment and Core Inflation (Publication Centre)
Many economists describe the EZ as the sick man of the global economy, thanks to its incomplete monetary union, low productivity growth and a rapidly ageing population.
14 December 2018 Remainer Tory Rebels now have Greater Leverage (Publication Centre)
After the drama of the last few days, Brexit developments now are set to proceed at a slower pace.
1 April 2019 The BCCh Finally Admits that the Economy is not Overshooting (Publication Centre)
Chile's central bank left its policy rate on hold last Friday at 3.0%, in line with market expectations, amid easing inflationary pressures and a struggling economy.
1 April 2019 Don't Be Fooled, Japan's Labour Market Won't Tighten Further (Publication Centre)
Japan's unemployment rate returned unexpectedly to its 26-year low of 2.3% in February, falling from 2.5% in January.
1 Apr. 2015 Tightening Bias Remains as Chile's Inflation Forecast is Increased (Publication Centre)
Chile's economic sector survey, released on Monday, provides further evidence that the cyclical recovery in the economy continues, albeit at a moderate pace. On the demand side, the rebound is still in place, with retail sales jumping 2.0% month-to-month in February and the underlying trend firm.
13 September 2018 Expect a Dovish Session From the ECB Today (Publication Centre)
We are easily excitable when it comes to monetary policy and macroeconomics, but we are not expecting fireworks at today's ECB meetings.
11 July 2018 What Ailed French Manufacturers in the First Half of 2018 (Publication Centre)
Yesterday's manufacturing data in France were in stark contrast to last week's upbeat German numbers.
11 July 2017 Political Risk Return this Week in Brazil, but a Catastrophe is Unlikely (Publication Centre)
Political risks in Brazil recently have simmered alongside the modest cyclical recovery, but they are now increasing. President Michel Temer's future remains hard to predict as circumstances change by the day.
13 September. 2016 Manufacturing is Improving in Mexico, Other Sectors Weaker (Publication Centre)
Economic growth in Mexico will remain relatively modest over the second half of the year, and the outlook for 2017 remains cloudy, for now. The core fundamentals suggest that growth will increase, but we think that depressed mining output and fiscal tightening might limit the pace of the upturn.
11 January 2019 MPs Will Steer the PM to a Softer Brexit After Next Week's Defeat (Publication Centre)
The government remains on course to lose next Tuesday's Commons vote on the Withdrawal Agreement--WA--by a huge margin.
11 January 2018 November Data Point to a Slight Slowdown in GDP Growth in Q4 (Publication Centre)
Yesterday's deluge of output and trade data broadly supported our call that quarter-on-quarter GDP growth likely slowed to 0.3% in Q4, from 0.4% in Q3.
11 Jan. 2016 Plunging Oil Prices Won't Distract the MPC as Inflation Rises (Publication Centre)
Investors have lowered once again their expectations for official interest rates and now do not anticipate any rate hikes this year. Markets appear to have judged that the plunge in oil prices will ensure that inflation is too low for the Monetary Policy Committee to tighten policy. Oil prices, however, are not the be-all and end-all for inflation or monetary policy, and we doubt they will distract the MPC from the continued firming of domestic price pressures this year.
14 July. 2015 Light at the End of The Tunnel in Greece, as New Bailout is Close (Publication Centre)
The EU and Greece finally managed to agree on the framework for a third bailout yesterday, conditional on ratification in the Greek and EU parliaments this week. Mr. Tsipras' capitulation to EU demands will increase tensions within Syriza, but we expect the opposition comfortably to offset any government dissenters in this week's vote.
14 July 2017 Core Inflation Pressures in the Eurozone Will Rise in Q3 and Q4 (Publication Centre)
Bond investors in the Eurozone are licking their wounds following a 40 basis point backup in 10-year yields since the end of last month. Nothing goes up in a straight line, but we doubt that inflation data will provide much comfort for bond markets in the short term.
1 February 2017 Mexico's Economy Was Strong in Q4, but the Outlook has Darkened (Publication Centre)
Yesterday's first estimate of full-year 2016 GDP in Mexico indicates that growth gathered momentum over the second half of last year. But risks are now tilted to the downside, following the U.S. election. GDP rose 0.6% quarter-on-quarter in Q4, after a 1.0% increase in Q3. Growth was much slower in the firs t half, as shown in our char t below.
14 July. 2016 Faster Pay Gains for Job-Switchers Forcing Employers to Pay More (Publication Centre)
The details of the substantial pay raises being offered to some 18K JP Morgan employees over the next three years are much less important than the signal sent by the company's response to the tightening labor market. In an economy with 144M people on payrolls, hefty raises for JP Morgan employees won't move the needle in the hourly earnings data.
14 June 2018 The Countdown to the End of QE in the Eurozone Begins Today (Publication Centre)
The ECB will leave its main refinancing and deposit rates unchanged at 0.00% and -0.4%, respectively,
14 March 2018 Services and Construction are Boosting French Employment (Publication Centre)
Unemployment in France remains high, but the trend is turning. The mainland rate of joblessness fell to a five-year low of 8.6% in Q4, and yesterday's employment report continued the good news.
14 Mar. 2016 Three Big Questions are the Key to the Fed's Actions this Year (Publication Centre)
A huge wave of data will break over markets this week, along with the FOMC meeting, new dot plots and Chair Yellen's press conference. But today is calm, with no significant data releases and no Fed speeches; policymakers are in purdah ahead of the meeting.
14 June 2019 Johnson is a Shoo-In For the Final Round, but He'll Face a Soft Brexiteer (Publication Centre)
After the first round of voting by Tory MPs, Boris Johnson remains the clear favourite to be the next Prime Minister.
11 April 2018 Brazil's Inflation Fell Rapidly in March, Chile's Economy Rebounding (Publication Centre)
Data released yesterday reinforced our forecast of a further rate cut in Brazil next month.
14 July 2017 Brazilian Consumption Slowed in Q2, but it will Rebound in H2 (Publication Centre)
Brazil's economic situation has improved this year, and we still expect the recovery to continue over the second half, despite recent political volatility and soft Q2 data.
14 January 2019 The Shutdown is Starting to do Real Damage to Q1 Growth (Publication Centre)
The partial government shutdown is now the longest on record, with little chance of a near-term resolution.
14 January 2019 November's Pick up in GDP Growth is Noise, not Signal (Publication Centre)
A cursory glance at November's GDP report gives the misleading impression that the U.K. economy is ticking over nicely, despite Brexit.
11 December 2018 Oil and FX Pass-through to Inflation Are Crosswinds in the Andes (Publication Centre)
The recent FX depreciation and falling oil prices are driving the dynamics of inflation across the Andean economies.
11 December 2017 Has Japanese Domestic Demand Reached Escape Velocity? (Publication Centre)
Japan's Q3 real GDP growth was revised up substantially to 0.6% quarter-on-quarter in the final read, compared with 0.3% in the preliminary report.
11 April 2019 Mr. Draghi Kicks the Can on TLTROs and a Tiered Deposit Rate (Publication Centre)
The ECB made no changes to its policy stance yesterday.
11 April 2018 President Xi Jinping Says the Grand Bargain is There for the Taking (Publication Centre)
President Xi Jinping yesterday reiterated China's commitment to reform and the opening of its economy at a highly-anticipated speech at the Boao forum.
11 April 2019 Above-Trend GDP Growth in Q1 Puts the Spotlight Back on the MPC (Publication Centre)
The economy has remained remarkably resilient in the face of intense political uncertainty.
13 September 2017 Korean Borrowing Begins to Recover, but the Fed isn't Done yet (Publication Centre)
Korean credit markets have begun tentatively to recover after the rise in global interest rates at the end of last year.
11 July 2018 Will the Strength of Mexican Capex and Consumption Continue in Q3 (Publication Centre)
Recent economic indicators in Mexico have been relatively positive.
10 April 2019 Headline Data will Hide the Extent of China's Q1 GDP Weakness (Publication Centre)
Official Chinese real GDP growth likely slipped to 6.3% year-over-year in Q1, the lowest on record, from 6.4% in Q4, which matched the trough in the Great Financial Crisis.
10 April 2019 Core Inflation is Steady Expect Mean Reversion in the March Core (Publication Centre)
Core CPI inflation has been 2.1-to-2.2% year-over- year for the past seven months, a remarkably stable run which likely will persist for a few more months.
11 Mar. 2015 Fed Rate Hike Fears Now the Key Worry For LatAm Central Banks (Publication Centre)
Inflation appears no longer to be an issue for Mexican policymakers. The annual headline rate slowed to 3.0% year-over-year in February from 3.1% in January, in the middle of the central bank's target range, for the first time since May 2006.
13 June 2017 The Eurozone and Asia's Big Economies are Joined at the Hip (Publication Centre)
In her inaugural Monitor, our Chief Asia Economist Freya Beamish plots three scenarios for the Chinese economy. The best-case scenario is that China makes a smooth transition to consumer-led growth.
13 June 2018 Is Japan's Consumer Price Index Fit for Purpose? Will the BoJ Change it? (Publication Centre)
For more than two years, the BoJ has fretted, in the outlook for economic activity and prices, that "there are items for which prices are not particularly responsive to the output gap."
11 June 2019 What's Happening to Small Firms' Capex and Pricing Plans (Publication Centre)
We already know that the key labor market numbers in today's May NFIB survey are strong.
13 June 2019 China's M1 Growth Uptick is a Relief, with Firms Wary of Borrowing (Publication Centre)
We held our breath this month.
10 April 2019 The ECB will Double-Down Today on its Recent Dovish Shift (Publication Centre)
The ECB will rest on its laurels today.
11 Mar. 2016 Inflation in Brazil Starts to Slow - Better Odds for Rate Cuts in H2 (Publication Centre)
Brazil's headline CPI has been well above the upper limit of the BCB's target zone since January 2015. We expect this situation will continue for some time, due to the lagged effect of last year's sharp increases in regulated prices, El Niño, the BRL's sell-off in 2015, and, especially, widespread price indexation.
11 March 2019 Early Evidence Points to Solid EZ Manufacturing Data in Q1 (Publication Centre)
Friday's manufacturing data in the Eurozone were mixed.
13 July 2018 China's Official Real GDP Growth will Paint a Muddled Picture for Q2 (Publication Centre)
Official, real GDP growth was low in Q1, at 1.4% quarter-on-quarter, down from 1.6% in Q4.
13 July 2017 Yellen Expects the Labor Market to Tighten Further, and Rates to Rise (Publication Centre)
Chair Yellen broke no new ground in her Testimony yesterday, repeating her long-standing view that the tightening labor market requires the Fed to continue normalizing policy at a gradual pace.
11 March 2019 Inflation Data in the Andes Validate Forecasts for Stable Interest Rates (Publication Centre)
Inflation in the Andes remains in check and the near term will be benign, suggesting that central banks will remain on hold over the coming months.
13 July 2018 Consumers' Spending Was Resilient in Q2, but Growth Will Slow in Q3 (Publication Centre)
Yesterday's economic data in Brazil suggest that retailers suffered in the second quarter, hit by the effect of the truckers' strike, but private consumption remains somewhat resilient.
13 July 2018 Did Sluggish Manufacturing Hold Back the EZ Economy in Q2 (Publication Centre)
Manufacturing in the Eurozone rebounded midway through the second quarter.
*Feb 2017 - U.S. Economic Chartbook* (Publication Centre)
How and when will the Fed respond to Fiscal Easing?
13 June 2017 Debt-Fuelled Korean Consumption is at Risk as Rates Rise (Publication Centre)
When Park Geun-hye came to power in Korea 2013, it was to cheers of "economic democratisation". At the time, I wrote a report with a list of reforms that would be needed for Korea to "economically democratise".
13 March 2017 Signs of a Slowdown in Q1 Ease Pressure on the MPC to Hike Rates (Publication Centre)
The MPC's meeting on Thursday looks set to be a perfunctory affair. Signs that the economy has lost momentum this year, alongside downward surprises from CPI inflation in January and wage growth in December, mean the Committee won't give the idea of hiking rates a moment's thought.
13 March 2018 February's Core CPI Likely to Mean-Revert (Publication Centre)
Today's February CPI report is very unlikely to repeat January's surprise, when the core index was reported up 0.3%, a tenth more than expected.
08 May. 2015 French GDP Next Week Should Comfortably Beat Expectations (Publication Centre)
The headline 0.9% month-to-month increase in German factory orders--a 1.9% increase year-over-year-- is not enough to change the picture of an overall sluggish first quarter.
13 Nov. 2015 Will the Drag on the Recovery From Construction Fade? (Publication Centre)
The underlying health of the construction sector isn't as poor as today's official output figures likely will imply. Nonetheless, growth in construction output, which accounts for 6% of GDP, probably won't return to the stellar rates seen in 2013 and 2014, and the sector can't be relied upon to provide much support to overall growth.
03 October. 2016 First Signs of Recovery in Brazilian Private Consumption? (Publication Centre)
Brazil's recession has been severe, triggered by the downturn in the commodity cycle, which revealed the underlying structural weaknesses in the economy. This set off an acute shock in domestic demand, but it has bottomed in recent months and we now expect a gradual recovery to emerge.
13 November 2018 Will Poor Sentiment and Political Uncertainty Knock EZ Investment (Publication Centre)
The outlook for private investment in the Eurozone has deteriorated this year, especially in manufacturing.
11 July 2019 GDP Growth Still isn't Slow Enough to Warrant a Rate Cut (Publication Centre)
The economy looks to be in better shape following May's GDP report than widely feared.
13 September 2017 Brazilian Consumers' Spending set to Keep Rising Steadily (Publication Centre)
Data released yesterday in Brazil are consistent with our view that private consumption will continue to drive the recovery over the second half, offsetting the ongoing weakness in private investment.
13 October 2017 A Lending Slowdown Will Keep GDP Weak Even as Inflation Fades (Publication Centre)
The worst phase of the squeeze on real wages is nearly over; CPI inflation looks set to peak at slightly above 3% in October, before falling back steadily to about 2% by the end of 2018.
13 May 2019 Latest U.S. Tariff Rise against China isn't the Death Knell for Trade Talks (Publication Centre)
The U.S. pulled the trigger on Friday, following through on President Donald Trump's tweeted threat to raise the tariffs on $200B-worth of Chinese goods, under the so-called "List 3", to 25% from 10%.
15 June 2017 The MPC's Minutes Will Sound Balanced, Despite Surging Inflation (Publication Centre)
Today's MPC meeting and minutes are the first opportunity for Committee members to speak out in over a month, now that election "purdah" rules have lifted.
13 March 2018 Scandals Could Take Down Abe Would Abenomics Survive (Publication Centre)
Japan's Ministry of Finance yesterday admitted falsifying documents submitted to the country's parliament during a corruption probe last year.
08 Jan. 2016 Colombia's Economic Resilience Will be Challenged - Oil Is Still Key (Publication Centre)
Colombia was likely the fastest growing economy in LatAm in 2015, but it is set to slow this year as monetary and fiscal policy are tightened, and commodity prices remain under pressure during the first half of the year, at least. Economic activity was surprisingly resilient during 2015, especially during the second half, despite the COP's sell-off, high inflation, and subdued consumer confidence.
13 March 2018 Piñera Takes Office in Chile Will he be Able to Deliver on his Promises? (Publication Centre)
The second presidency of Chile's conservative Sebastián Piñera, a billionaire turned politician, began on Sunday, March 11, in favourable economic circumstances.
11 June 2019 What is the Threshold for Further Monetary Easing by the ECB (Publication Centre)
The big story in financial markets at the moment is the idea that major global central banks are about to embark on a policy easing cycle.
13 March 2019 Brexit Uncertainty Set to Continue into Q2, but the Economy Can Cope (Publication Centre)
As we go to press, Mrs. May's last-minute scramble to Strasbourg appears to have failed to persuade enough rebels to back the government.
13 March 2019 Durable Goods Orders are Noisy, but the Near-term Outlook is Grim (Publication Centre)
Our default position for core durable goods orders over the next few months is that they will fall, sharply.
11 June 2019 Chile's Central Bank Folded in the Face of the Trade War (Publication Centre)
The border security agreement between the U.S. and Mexico has strengthened hopes that the Sino- U.S. trade war will end soon.
11 April 2017 Markets Still aren't Fully Prepared for a Further Rise in RPI Inflation (Publication Centre)
Investors have been caught out by the speed of the recent rise in RPI inflation and have revised up their expectations. Even so, inflation swaps imply that markets expect RPI inflation to be 3.6% in one year's time, not much above the latest print, 3.2% in February. We still think RPI inflation will exceed markets' expectations.
22 February 2018 Labour Market Wobble Should Instil Some Caution on the MPC (Publication Centre)
The stand-out news yesterday was the increase in the headline, three-month average, unemployment rate to 4.4% in December, from 4.3% in September.
3 April 2018 GDP Growth in the Eurozone is Slowing, but Not Collapsing (Publication Centre)
The economic data in the Eurozone were mixed while we were away.
3 April 2019 Is there a Majority in the Commons for Any Brexit Proposal? (Publication Centre)
Once again, MPs failed to coalesce around any way forward for Brexit in the indicative votes process on Monday.
3 Dec. 2014 Colombia's Central Bank Will Remain Neutral in H1 Nex t Year (Publication Centre)
Colombia's central bank--Banrep--decided last Friday to leave its benchmark interest rate at 4.5% for the third consecutive month, concerned by the slowdown in oil prices, which is affecting economic activity in the fastest growing economy in the region.
3 April 2017 Expect Strength in Both the ISM and Construction Data Today (Publication Centre)
We'd be very surprised to see a material weakening in today's March ISM manufacturing survey. The regional reports released in recent weeks point to another reading in the high 50s, with a further advance from February's 57.7 a real possibility.
3 April 2017 Brazil's Labour Market is Still Poor, but Likely Will Stabilize Soon (Publication Centre)
Economic data released on Friday underscored our view that bolder rate cuts in Brazil are looming. The BCB's latest BCB's inflation report, released on Thursday, showed that policymakers now see conditions in place to increase the pace of easing "moderately" .
29 September 2017 Catalonia Will Not Become Independent this Weekend (Publication Centre)
Sunday's referendum on independence in Catalonia is a wild-card. The central government has taken drastic steps to ensure that a vote doesn't happen.
29 September 2017 External Accounts no Longer Improving in Brazil and Mexico (Publication Centre)
Brazil's current account deficit is stabilizing following an substantial narrowing since early 2015, thanks to the deep recession.
29 September 2017 Inventories Look set to Boost Q3 GDP Growth Substantially (Publication Centre)
With almost two thirds of the nominal data for the third quarter now available, we can make a stab at the contribution of inventories to real GDP growth.
3 December 2018 March 29 Is Not an Immovable Deadline for Brexit (Publication Centre)
Both the E.U. and the U.K. government have been keen to emphasise, since the Withdrawal Agreement was provisionally signed off, that March 29 is a hard deadline for Brexit.
3 January 2017 Slowing Real Income Growth Will Define the 2017 U.K. Economy (Publication Centre)
The U.K. economy retained its momentum last year, despite the seismic shock of the vote to leave the EU. Quarter-on-quarter GDP growth averaged 0.5% in the first three quarters of 2016, matching 2015's rate and the average pace of growth across the Atlantic.
3 July 2018 The EZ Economic Reform Agenda Lives to Fight Another Day (Publication Centre)
Last week's EU summit was an exercise in political pragmatism rather than the bold step forward on reforms that investors had been hoping for.
3 July 2019 Japan's Tankan Highlights Underlying Economic Weakness (Publication Centre)
Japan's Q2 Tankan survey wasn't all bad news, but the positives won't last long. The large manufacturers index dropped to 7 in Q2, after the decline to 12 in Q1.
3 July 2019 Not All Construction Sector Indicators are Flashing Red (Publication Centre)
Don't write off the outlook for the construction sector purely on the basis of June's grim Markit/CIPS survey.
3 January 2019 No Respite for Eurozone Manufacturing at the end of 2018 (Publication Centre)
Yesterday's sole economic report in the Eurozone confirmed that the economy slowed further at the end of 2018.
3 January 2019 Huge External Deficit Points to Big No-Deal Downside for Sterling (Publication Centre)
The U.K.'s balance of payments leaves little room for doubt that sterling would sink like a stone in the event of a no-deal Brexit.
3 January 2018 See no Evil, Hear no Evil in Eurozone Manufacturing? (Publication Centre)
The Eurozone manufacturing sector finished 2017 on a strong note. The headline PMI increased to a cyclical high of 60.6 in December, from 60.1 in November, in line with the initial estimate.
3 January 2018 Synchronized Recovery in the Andes. Inflation Continues to Fall (Publication Centre)
Data released in recent weeks have confirmed that the Andean economies retained a degree of momentum in Q4, with inflation well under con trol.
29 October 2018 Is the Only Way Up for Public Borrowing from Here? (Publication Centre)
Later today, the Chancellor likely will take the first step towards abandoning plans for further fiscal tightening. In
29 October 2018 Bolsonaro Likely Won Brazil's Presidency, the Hard Work Begins (Publication Centre)
Recent polls suggest that Jair Bolsonaro has comfortably beaten Fernando Haddad, to become Brazil's president.
29 June 2018 Surveys Continue to Weaken the Case for a Rate Hike (Publication Centre)
Surveys released yesterday failed to support the MPC's view that the economy has bounced back in Q2.
29 March 2017 Consumers are Happy, but Spending Will Lag Sentiment (Publication Centre)
Yesterday's data don't significantly change our view that first quarter GDP growth will be reported at only about 1%, but the foreign trade and consumer confidence numbers support our contention that the underlying trend in growth is rather stronger than that.
29 March 2017 Triggering Article 50 Won't End the "Phoney War" Immediately (Publication Centre)
The Prime Minister will invoke Article 50 today, marking the end of the beginning of the U.K.'s departure from the EU. The move likely will not move markets, as it has been all but certain since MPs backed the Government's European Union Bill on February 1.
29 June 2018 Core PCE Inflation is Nudging Towards the Target (Publication Centre)
Our base-case forecast for the May core PCE deflator, due today, is a 0.17% increase, lifting the year-over-year rate by a tenth to 1.9%.
29 January 2019 External Accounts in Brazil and Mexico are no Threat, For Now (Publication Centre)
Brazil's external accounts were a relatively bright spot last year, once again.
29 January 2018 Brazil External Accounts Are Authorities' Least Source of Concern (Publication Centre)
Brazil's external accounts were a bright spot last year, again.
29 January 2018 Japanese CPI inflation is Half Energy and Half Food, BoJ in a Bind (Publication Centre)
Japan's CPI inflation jumped to 1.0% in December from 0.6% in November, driven by food prices.
29 January 2018 The Dollar is not yet an Inflation Threat, but it Likely Hasn't Bottomed (Publication Centre)
We learned last week that the U.S. no longer has a coherent dollar policy.
29 March 2018 Another Big Fall in the Saving Rate Likely Boosted GDP Growth in Q4 (Publication Centre)
The national accounts, released today, likely will restate that quarter-on-quarter GDP growth held steady at 0.4% in Q4.
29 March 2019 Expect Banxico to Start Easing in Q3, but Risks of Delay Remain (Publication Centre)
Banxico yesterday left its policy rate unchanged at 3%, the highest level in a decade.
29 November 2017 Eurozone GDP Growth Will Slow Soon, Will Markets Care? (Publication Centre)
Headline money supply growth in the Eurozone has averaged 5% year-over-year since the beginning of 2015; yesterday's October data did not change that story.
29 November 2017 Signs Mount that the BoJ is Concerned About the Curve (Publication Centre)
BoJ Governor Kuroda has piqued interest with his recent comments on the "reversal rate", the rate at which easy monetary policy becomes counterproductive, due to the negative impact on financial intermediation.
29 November 2018 The Bank's Brexit Deal Scenarios are Consistent with a May Rate Hike (Publication Centre)
Predictably, the Bank of England's estimate that GDP would plunge by 8% in the first year after a disorderly no-deal, no transition Brexit and that interest rates would need to rise to 5.5% to contain inflation grabbed the headlines yesterday.
29 May 2019 Real M1 in is Now Telling a More Positive Story on EZ GDP Growth (Publication Centre)
Headline money supply growth in the Eurozone accelerated further at the start of Q2.
15 June 2018 A Classic ECB Decision Day A Dovish Tightening of Policy (Publication Centre)
On a headline level, the ECB conformed to expectations yesterday.
29 May 2018 EM Markets Remain Under Stress, but will LatAm Resist the Pressure? (Publication Centre)
A long period of extremely accommodative U.S. monetary policy generated sizable capital inflows and asset price appreciation in EM countries.
29 May 2018 GDP will Rebound in Q2, but a Real Revival will have to Wait Until 2019 (Publication Centre)
Last week's second estimate of GDP reaffirmed that quarter-on-quarter growth declined to 0.1% in Q1--the lowest rate since Q4 2012--from 0.4% in Q4.
3 June 2019 China's Faltering "Recovery" will Keep its Trade Negotiators Engaged (Publication Centre)
The sharp fall in China's manufacturing PMI in May makes clear that its recovery is nowhere near secured.
3 June 2019 Economic Data Still Don't Warrant the Gilt Market's Gloom (Publication Centre)
Gilts continued to rally last week, with 10-year yields dropping to their lowest since October 2016, and the gap between two-year and 10-year yields narrowing to the smallest margin since September 2008.
31 July 2018 Brazil's Solid External Accounts Offsetting Fiscal Risk, For Now (Publication Centre)
Brazil's external accounts remain solid, despite the recent modest deterioration.
31 July 2018 Japanese Q2 GDP Growth Should Rebound Strongly (Publication Centre)
Japan's June retail sales data add to the run of numbers suggesting a strong rebound in real GDP growth in Q2, after the 0.2% contraction in activity in Q1.
31 May 2018 Will Chinese Authorities Allow Developer Defaults? Probably (Publication Centre)
Defaults by Chinese companies have been on the rise lately. Most recently, China Energy, an oil and gas producer with $1.8B of offshore notes outstanding, missed a bond payment earlier this week. We've highlighted the likelihood of a rise in defaults this year, for three main reasons.
31 July 2018 Money and Credit Data Cast Doubt Over the Viability of Q2's Upturn (Publication Centre)
June's money and credit figures showed that the economy still doesn't have much zing, even though lending has picked up since Q1.
31 January 2019 The French Economy Was More Resilient than Expected in Q4 (Publication Centre)
Yesterday's data dump in the EZ delivered something investors haven't seen for a while, namely, positive surprises.
31 January 2018 Japan's Labour Market Squeeze is set to Intensify Further (Publication Centre)
Japan's headline jobless rate edged up to 2.8% in December, from 2.7% in November, but the increase was negligible, with the rate moving to 2.76% from 2.74%.
31 January 2019 Japanese Retail Sales Demand a Q4 Private Consumption Upgrade (Publication Centre)
The value of Japanese retail sales bounced back strongly in December, rising 0.9% month-on-month, after a 1.1% drop in November.
31 January 2019 Powell Says No Fed Put, but Stocks Jump and the Curve Steepens (Publication Centre)
The FOMC has gone all-in, more or less, on the idea that the headwinds facing the economy mean that the hiking cycle is over.
31 May 2019 The First GDP Contraction in Brazil Since 2016 Will it Improve (Publication Centre)
Brazil's economic recovery faltered in the first quarter and the near-term outlook remains challenging.
31 May 2019 The Ins and Outs of Last Week's Parliamentary Elections in the EU (Publication Centre)
On a headline level, last week's European Parliament elections were an excellent occasion for the EU.
31 October 2018 Eurozone GDP Growth hit a Speed Bump in the Third Quarter (Publication Centre)
Yesterday's barrage of economic data in the Eurozone offered a good snapshot of the grand narrative.
4 April 2017 Sterling's Depreciation is a Mixed Blessing for Manufacturers (Publication Centre)
The latest Markit/CIPS manufacturing survey has dashed hopes that sterling's depreciation and the pickup in global trade will facilitate strong growth in U.K. production this year. The PMI dropped to 54.2 in March, from 54.6 in February.
4 April 2019 More Evidence of a Relatively Resilient Domestic EZ Economy (Publication Centre)
Yesterday's economic reports added to the evidence the euro area economy as a whole is showing signs of resilience in the face of still-terrible conditions in manufacturing.
31 October 2017 The Slowdown in Bank Lending will Gather Momentum Soon (Publication Centre)
Growth in the broad money supply slowed further in September, providing more evidence that the economy is losing momentum.
31 October 2017 The Mexican Economy Remained Resilient in Q3, Despite Headwinds (Publication Centre)
Today's advance Q3 GDP report for Mexico will show that the economy performed relatively well at the start of the second half, despite external and domestic shocks.
31 October 2017 China's Developers Increase Risky Debt Issuance as Property Cools (Publication Centre)
In yesterday's Monitor we suggested that China's profits surge has been party dependent on developers' risky debt issuance practices.
31 October 2017 Consumption Set for a Sluggish Q4, Capex Will Take up the Slack (Publication Centre)
The September consumption data were a bit better than median expectations, with real spending rebounding by 0.6%, led by an 15.1% leap in the new vehicle component.
31 January 2018 FOMC Likely More Bullish on Growth, but No Policy Changes (Publication Centre)
Chair Yellen's final FOMC meeting today will be something of a non-event in economic terms.
30 September. 2016 Trump Fears Prompts a Rate Hike in Mexico, the MXN Rallies, for Now (Publication Centre)
Mexico's central bank, Banxico, last night capitulated again to the depreciation of the MXN and increased interest rates by 50bp, for the third time this year. This week's rebound in the currency was not enough to prevent action.
30 January 2018 Is Sterling's Strong Start to 2018 Warranted? (Publication Centre)
Sterling has begun this year on the front foot, rising last week to its highest level against the U.S. dollar since June 2016.
30 January 2019 Colombia's Economic Growth Prospects will Improve Soon (Publication Centre)
Recently released data in Colombia signal that the economy ended last year quite strongly.
30 July 2018 Mexican Data are Upbeat, Strong Retail Sales and Low Unemployment (Publication Centre)
Economic data in Mexico continue to come in strong.
30 April 2018 A Tough Week for the BRL, Any Relief Likely will be Temporary (Publication Centre)
The deterioration of global risk appetite and, in particular, domestic politics have put the Brazilian real under severe pressure in recent weeks.
3 October 2018 Are Higher Wages Squeezing EZ Manufacturing Margins? (Publication Centre)
Producer price inflation in the euro area almost surely peaked over the summer.
3 June 2019 Trade is Now Trump's Weapon for Everything, but it Shoots Backwards (Publication Centre)
The chance of a self-inflicted, unnecessary weakening in the economy this year, and perhaps even a recession, has increased markedly in the wake of the president's announcement on Friday that tariffs will be applied to all imports from Mexico, from June 10.
3 November 2017 The EZ Manufacturing Sector is in No Mood for a Slowdown (Publication Centre)
Survey data signal that Eurozone manufacturing retained momentum at the start of Q4. Yesterday's final PMI reports showed that the EZ manufacturing index rose to 58.5 in October from 58.1 in September, trivially below the first estimate.
30 June. 2016 Will the New Government Sweeten the Fiscal Pill? (Publication Centre)
Fiscal policy is in limbo until a new leader of the Conservative party has been elected on September 9. Shortly after, however, a new Budget--or a Budget disguised as an Autumn Statement--will be held.
30 May 2018 Argentina's Economy had a Solid Q1, but the Pain is Starting to Show (Publication Centre)
Hard data released in Argentina over recent weeks showed that the economy was resilient in Q1 and early Q2.
30 November 2017 Moderating Credit Flows Signal the Economy has Little Momentum (Publication Centre)
October's money and credit report indicates that the economy had little momentum at the start of the fourth quarter.
30 November 2018 Fraying Confidence and Slowing Money Growth Point to a Weak Q4 (Publication Centre)
Further political wrangling yesterday distracted from data showing that the risk of no -deal Brexit is placing increasing strain on the economy.
30 November 2018 Japan's Retail Sales Deliver a Rosy October Jump - Blip or Trend? (Publication Centre)
Japan's retail sales values jumped 1.2% month-on-month in October, after the upwardly-revised 0.1% increase in September.
30 November 2017 Headline and Core Inflation in the Eurozone Rebounded in November (Publication Centre)
Today's data likely will show that inflation in the Eurozone rebounded in November.
30 November 2017 A Strong Start to Fourth Quarter Consumption, Probably (Publication Centre)
The rate of growth of third quarter consumers' spending was revised up by 0.3 percentage point to 3.3% in the national accounts released yesterday.
30 May 2018 Will Japan's Labour Market Begin to Soften Later this Year? (Publication Centre)
Japan's domestic demand has underperformed in the last three quarters, while exports were strong last year but weakened--due to temporary factors--in Q1.
30 May 2019 China's Manufacturing PMIs will Give the First Hint of Trade War Hit (Publication Centre)
China's official manufacturing PMI for May, out tomorrow, will give the first indication of the coming hit from the resumption of its tariff war with the U.S.
29 April 2019 More Soft Surveys in the EZ, but the Q1 GDP Data Should Be Solid (Publication Centre)
The EZ economic survey data for April were disappointing in our absence.
29 April 2019 Mexico's Economy is Stabilizing, Despite Stifling Monetary Policy (Publication Centre)
Inflation in Mexico remains relatively sticky, limiting Banxico's capacity to adopt a more dovish approach, despite the subpar economic recovery.
26 November 2018 Is a May Rate Hike Nailed-on if a No-Deal Brexit Is Avoided (Publication Centre)
The Bank of England will be dragged into the political arena on Thursday, when it sends the Treasury Committee its analysis of the economic impact of the Withdrawal Agreement and the Political Declaration, as well as a no-deal, no- transition outcome.
26 November 2018 Mexico's Economy Had a Good 2018 Will it Pivot to an Ugly 2019 (Publication Centre)
Mexico's economic picture remains positive, although the outlook for 2019 is growing cloudy as the economy likely will lose momentum if AMLO's populist approach continues next year.
26 October 2017 Politburo Appointments Ensure Policy Continuity, Nothing More (Publication Centre)
The Chinese Communist Party revealed the new members of its top brass yesterday, with the line-up ensuring policy continuity.
26 November 2018 An Amber Alert Warning from the Eurozone PMIs in November (Publication Centre)
Friday's economic reports delivered more sobering news for the euro area economy.
26 May. 2015 All Eyes on the U.S. and the FOMC for Next Big Move in the Euro (Publication Centre)
The euro has so far defied the most bearish forecasters' predictions that it is on track for parity with the dollar. Currencies can disregard long-run parity conditions, however, for longer than most investors can hold positions.
26 March 2019 A Few Bright Spots in the IFO, but Still an Overall Subdued Story (Publication Centre)
Yesterday's IFO offered a rare upside surprise in the German survey data.
26 March 2019 Consumers are Cash-Rich and Confident Don't Worry About Them (Publication Centre)
When Fed Chair Powell said last week that the "surprise" weakness in the official retail sales numbers is "inconsistent with a significant amount of other data", we're guessing that he had in mind a couple of reports which will be updated today.
26 May 2017 Soft GDP Shows Sterling's Drop to be the Least Successful Ever (Publication Centre)
The second estimate of Q1 GDP made for grim reading. Quarter-on-quarter GDP growth was revised down to 0.2%--the joint-slowest rate since Q4 2012--from the preliminary estimate of 0.3%.
26 October 2017 Q3 GDP Will Spur a Rate Hike Next Week, but a Growth Relapse Looms (Publication Centre)
The pick-up in GDP growth in Q3 means that we now expect a majority of MPC members to vote to raise interest rates next week.
26 October 2018 Inventories and Consumption Drove up Q3 Growth Q4 will be Slower (Publication Centre)
We have tweaked our third quarter GDP forecast in the wake of the September advance international trade and inventory data; we now expect today's first estimate to show that the economy expanded at a 4.0% annualized rate.
27 December 2018 The President is the Problem, not the Federal Reserve or Jay Powell (Publication Centre)
The biggest single problem for the stock market is the president.
27 February 2018 Indefinite Xi-ism will mean Spikes in Volatility, as big Decisions Roll Out (Publication Centre)
The Chinese Communist Party looks set to repeal Presidential term limits, meaning that Xi Jinping likely intends to stay on beyond 2023.
27 February 2018 Is Shorting Italian Government Bonds the New Widowmaker? (Publication Centre)
Eurozone bond traders of a bearish persuasion are finding it difficult to make their mark ahead of Italy's parliamentary elections next weekend.
27 April 2018 Mexico and Argentina had Good First Quarters, but Risks Remain (Publication Centre)
This week's Mexican retail sales report for February offered more support to our view that domestic conditions improved at the end of Q1.
26 September 2018 Brazil's External Accounts Will Remain Resilient the BRL Will Help (Publication Centre)
Brazilian financial assets lately appear to be responding only to developments in the presidential election race and external jitters.
26 October 2018 It Would Take a Lot to Turn the ECB Away from Ending QE in Q4 (Publication Centre)
The ECB kept its cool yesterday, at the headline level, amid crashing stock markets, volatile BTPs and souring economic data.
26 October. 2016 Soybean Exports Set to Hold Down the Trade Deficit, Again (Publication Centre)
Today's September international trade report will be the third to be distorted by hugely elevated soybean exports. The surge began in July, when soybean exports jumped by $3.6B--that's a 220% month-to-month increase--to $5.2B.
26 March 2018 Smoot and Hawley are Still Dead, Trump is not Resurrecting them... Yet (Publication Centre)
Everyone needs to take a deep breath: This is not 1930, and Smoot-Hawley all over again.
26 March 2018 Market Sell-offs have Stayed the MPC's Hand Before, Why Not Again? (Publication Centre)
The MPC held back last week from decisively signalling that interest rates would rise when it meets next, in May.
26 Feb. 2016 Core PCE Inflation Set to Jump - Fed Target is Within Reach in 2016 (Publication Centre)
All eyes will be on the core PCE deflator data today, in the wake of the upside surprise in the January core CPI, reported last week. The numbers do not move perfectly together each month, but a 0.2% increase in the core deflator is a solid bet, with an outside chance of an outsized 0.3% jump.
26 Feb. 2016 The Foundations of the U.K. Recovery are Remarkably Fragile (Publication Centre)
The preliminary estimate of a 0.5% quarter-on-quarter rise in GDP in the fourth quarter of 2015 was left unrevised, but that was the only nugge t of good news from yesterday's second GDP release. The expenditure breakdown hardly could have looked more troubling.
26 February 2018 Inflation in Mexico is Starting to Fall Rapidly, but Banxico will Hike in April (Publication Centre)
Mexico's inflation is finally falling, giving policymakers room for manoeuvre.
26 Feb. 2015 Downside Risks for January CPI and Durable Orders? (Publication Centre)
Two key reports today, on January consumer prices and durable goods orders, have the power to move markets substantially. We think both will undershoot market expectations, though we would be deeply reluctant to read too much into either report; both are distorted by temporary factors.
26 April 2019 Will an Inventory Unwind Stymie the Economy in Q2? (Publication Centre)
The economy's resilience in the first quarter of this year, in the midst of heightened Brexit uncertainty, can be attributed partly to a boost from no-deal Brexit precautionary stockpiling.
25 September 2018 Mexico's Inflation Edged Lower in mid-September Pressures are Tame (Publication Centre)
Inflation in Mexico surprised to the downside in late Q3, supporting our core view that it will continue to fall gradually over the coming months.
26 April 2017 Poor Q1 Data Puts Pressure on BanRep to Cut Rates Rapidly (Publication Centre)
Colombia's economy activity is deteriorating rapidly, suggesting that BanRep will have to cut interest rates on Friday. Incoming data make it clear that the economy has moved into a period of deceleration, painting a starkly different picture than a year ago.
26 February 2018 The Era of Abnormally Low U.S. Long Real Yields is Coming to an End (Publication Centre)
After many years in which the phrase "twin deficits" was never mentioned, suddenly it is the explanation of choice for the weakening of the dollar and the sudden increase in real Treasury yields since the turn of the year, shortly after the tax cut bill passed Congress.
26 February 2019 No-Deal Brexit Risk Likely Will Fall Further this Week (Publication Centre)
The Prime Minister's announcement on Sunday that the meaningful vote in parliament on her Brexit deal will be delayed from this week, until March 12, came as no surprise after a series of prior postponements.
26 January 2018 The Euro and EZ Bond Yields are not for Turning, Even by Mr Draghi (Publication Centre)
As expected, the ECB made no changes to its policy stance today. The refi and deposit rates were left at 0.00% and -0.4%, respectively, and the pace of purchases under QE was maintained at €30B per month.
26 June 2017 Equity Markets will Worry if EZ PMIs Fall Further in Q3 (Publication Centre)
The Eurozone PMIs stumbled at the end of Q2. The composite index slipped to a five-month low of 55.7 in June, from 56.8 in May, constrained by a fall in the services index. This offset a marginal rise in the manufacturing index to a new cyclical high. The dip in the headline does not alter the survey's upbeat short- term outlook for the economy.
26 June 2018 Treat Surveys Pointing to Faster Wage Growth Sceptically (Publication Centre)
This was supposed to be the year that wage growth finally would pick up and signal clearly to the MPC that the economy needs higher interest rates.
26 January 2018 Q4 Growth Likely Near 3%, but Real Uncertainties in Trade, Inventories (Publication Centre)
need to add docMea culpa: We failed to spot the press release from the Commerce Department announcing the delay of the release of the advance December trade and inventory data, due to the government shutdown.
26 January 2018 Mexico's Inflation Prospects Are Improving, but Banxico Will Hike (Publication Centre)
Mexico's inflation is heading down. Wednesday's advance CPI report showed that inflation pressures are finally fading, following temporary shocks in recent months, and the end of the "gasolinazo" effect.
26 February 2019 Your Guide to the New HICP Inflation Data in the Eurozone (Publication Centre)
For a central bank already fighting for every decimal in its attempt to convince markets that underlying inflation is slowly edging higher, the recent shift in HICP methodology drives home an increasingly problematic issue.
26 January 2018 Korean Exports hit a Perfect Storm in Q4 but Should Rebound in H1 (Publication Centre)
Korean GDP unexpectedly declined in Q4, for the first time since the financial crisis, falling 0.2% quarter-on-quarter after a 1.5% jump in Q3.
27 February 2018 The Q4 Surge in the Trade Deficit is set for a Substantial Reversal (Publication Centre)
The closer we look at the startling surge in imports in the fourth quarter, the more convinced we become that it was due in large part to a burst of inventory replacement following the late summer hurricanes.
27 February 2019 Brazil's External Accounts Likely will Remain a Bright Spot this Year (Publication Centre)
Brazil's external accounts are well under control, despite the wider deficit in January, mainly driven by seasonal deterioration on the trade account.
28 February 2019 The Probable Delay to Brexit Makes a Q3 Rate Hike a Closer Call (Publication Centre)
We have no choice but to revise down our forecast for GDP growth in Q2, now that the threat of a no-deal Brexit likely will hang over the economy beyond March, probably for three more months.
28 January 2019 Inflation Remains Benign in Mexico, Despite Temporary Shocks (Publication Centre)
Mexican economic data was surprisingly benign last week.
28 June 2018 Services Data to Highlight Downside Risk to the MPC's GDP Forecast (Publication Centre)
The MPC will be looking for the Q1 national accounts and April's index of services data, both released on Friday, to support its view that the economy hasn't lost momentum this year.
28 February 2019 Expect Underwhelming Q4 GDP Growth Data Today Q1 Likely Worse (Publication Centre)
We expect to learn today that the economy expanded at a 2.1% annualized rate in the fourth quarter, slowing from 3.4% in the third.
28 February 2018 The BoK is in Wait-And-See Mode, Consumer Confidence Dented (Publication Centre)
Data and events have gone against the idea of further BoK policy normalisation since the November hike.
28 Apr. 2016 Eurozone Real Narrow Money Growth Continues to Slow (Publication Centre)
Monetary dynamics in the Eurozone were virtually unchanged last month. M3 growth rose trivially to 5.0% year-over-year in March from a revised 4.9% in February. It was lifted by stronger growth in medium-term deposits and issuance of short-term debt.
28 February 2018 Eurozone Inflation Fell in February, but the Core Rate Likely Rose (Publication Centre)
Yesterday's advance CPI data in Germany and Spain suggest that inflation in the Eurozone as a whole dipped slightly in February.
28 February 2018 Powell Plays the Continuity Card, Mostly, but he's Bullish on Growth (Publication Centre)
Fed Chair Powell sounded a lot like Janet Yellen yesterday, at least in terms of substance.
28 June 2019 Downside Risk for the core PCE Deflator, Again, Expect H2 Rebound (Publication Centre)
The downshift in core PCE inflation this year has unnerved the Fed, along with the intensification of the trade war and slower global growth.
28 June 2019 More Modest Pre-tax Front-Loading for Japan this Time Around? (Publication Centre)
Japan's May retail sales rebound was underwhelming at a mere 0.3% month-on-month, after a 0.1% fall in April.
28 September 2018 Confidence is Starting to Fray as the Brexit Deadline Nears (Publication Centre)
The persistence of no-deal Brexit risk has taken a toll on confidence across the economy over the last month.
28 September 2018 The New IMF Agreement Diminishes the Default Risk at Least until 2020 (Publication Centre)
The Argentinian government and the IMF have finally reached a new agreement to "strengthen the 36-month Stand-By Program approved on June 20".
29 April 2019 Growth Will be Slower in Q2, but not Slow, What Will the Fed Say? (Publication Centre)
The definition of "yesbutism": Noun, meaning the practice of dismissing or seeking to diminish the importance of data on the grounds that the next iteration will tell the opposite story.
28 October. 2016 Markets Are Complacent About the Chances of Another Rate Cut (Publication Centre)
The preliminary estimate of Q3 GDP, showing quarter-on-quarter growth slowing only to 0.5% from 0.7% in Q2, has kiboshed the chance that the MPC cuts Bank Rate next Thursday.
28 May 2019 Raising the Alarm on German Private Investment in Q2 and Q3 (Publication Centre)
We covered the detailed German Q1 GDP report in Friday's Monitor--see here--but the investment data could do with closer inspection. The headline numbers looked great.
28 May 2019 Brazil's Inflation Remains Benign, Mexico's GDP Brings Bad News (Publication Centre)
Brazil's economic prospects continue to deteriorate rapidly, due to a combination of rising political uncertainty, the failure of the new government to advance on reforms, and ongoing external threats.
28 May 2019 Japan's CPI Inflation Uptrend Lacks Legs, Holiday Distortions Prevalent (Publication Centre)
CPI inflation last Friday gave Japanese policymakers a break from the run of bad data, jumping to 0.9% in April, from 0.5% in March.
27 September. 2016 Current Account Improving in Brazil, But Momentum is Fading (Publication Centre)
Brazil's external accounts have recovered dramatically this year, and we expect a further improvement--albeit at a much slower pace--in the fourth quarter. The steep depreciation of the BRL last year, and the improving terms of trade due to the gradual recovery in commodity prices, drove the decline in the current account deficit in the first half.
27 September 2017 Winter is Coming for the Mortgage Market (Publication Centre)
Figures yesterday from U.K. Finance--the new trade body that has subsumed the British Bankers' Association--showed that the mortgage market recovered over the summer.
27 June 2019 Deal or No Deal Fed Cut or No Fed Cut What Does the PBoC Do (Publication Centre)
In this Monitor, befitting these uncertain times, we set out the decision tree facing Chinese policymakers.
27 June 2019 Orders, Trade and Inventory Data Suggest Q2 Growth Headed for 21⁄4% (Publication Centre)
Yesterday's raft of data had no net impact on our forecast for second quarter GDP growth, which we still think will be about 21⁄4%.
27 Mar. 2015 Banxico Still Eyeing a Rate Hike After the Fed Moves in June (Publication Centre)
This week's economic data for the Mexican economy have been encouraging, especially for Banxico, which left its main interest rate unchanged yesterday at 3.0%. Inflation remained on target for the second consecutive month in the first half of February, and the closely-watched IGAE economic activity index--a monthly proxy for GDP--continued to grow at a relatively solid pace, despite the big hit from lower oil prices.
27 June 2018 Mexico's Soft Retail Sales Will Change Course Soon, for the Better (Publication Centre)
Mexico's private spending stumbled at the start of the second quarter.
27 June 2018 Is the EU About to Adopt a Poison-Pill Defence on Migration (Publication Centre)
Judging by the media coverage of the Europe's "migrant crisis", you would think that the number of North African asylum seekers arriving at EU's southern borders is soaring.
27 February 2019 Consumer Sentiment Signal better EZ Consumption Data in H1 (Publication Centre)
Yesterday's consumer sentiment data in the two major euro area economies were mixed, but they still support our view that a rebound in EZ consumption growth is underway.
27 July. 2016 Firm Q2 GDP Unlikely to Signal Post-Referendum Resilience (Publication Centre)
The preliminary estimate of Q2 GDP, published today, likely will show that growth was immaterially different from Q1's 0.4% quarter-on-quarter rate. But this should not be interpreted as a sign that the economy will be able to shrug off the impact of last month's vote to leave the E.U.
27 March 2017 Could the MPC Adopt a "One and Done" Hike Strategy? (Publication Centre)
A series of events have forced markets and analysts to re-evaluate their assumption that Bank Rate will remain on hold throughout 2017. First, the minutes of the MPC's meeting had a hawkish tilt.
27 March 2018 A Good Start to Q1 for Mexico and Colombia, Fears are Easing (Publication Centre)
Recent upbeat economic reports have mitigated the downside risks we had been flagging to our growth forecast for Mexico for the current quarter.
27 September 2017 Is Abe Pulling a May? Consumption Tax and BoJ Head are at Stake (Publication Centre)
The last few years have thrown up surprise after surprise for establishment parties. Mr. Abe's Liberal Democrat Party is about as establishment as they come.
27 September 2017 Venezuela's Economic Woes Continue, and the Clock is Ticking (Publication Centre)
Venezuelan bond markets have been on a rollercoaster ride this year, with yields rising significantly in response to heightened political uncertainty and then declining when the government pays its obligations or when protests ease.
27 September 2017 Yellen is Following the Tightening Labor Market, it's Telling her to Hike (Publication Centre)
Fed Chair Yellen's speech in Cleveland yesterday elaborated on the key themes from last week's FOMC meeting.
27 October 2017 Third Quarter Growth Should be Solid, Despite the Hurricanes (Publication Centre)
We expect today's first estimate of third quarter GDP growth to show that the economy expanded at a 2.4% annualized rate over the summer.
27 November 2018 Do Q3's Healthy Sales Data Signal Further Strength in Mexico (Publication Centre)
Improving fundamentals have supported private spending in Mexico during the current cycle.
27 March 2019 Part Two Q&A from our Meetings Last Week RMB Stability (Publication Centre)
The main thing on investors' minds is how much more pain the global economy has to take as a result of China's slowdown.
27 November 2017 Brazil's Politics and Economy are Both Heading in the Right Direction (Publication Centre)
President Temer seems to be advancing on his reform agenda.
4 December 2017 No End in Sight to Upturn in EZ Manufacturing PMI? (Publication Centre)
The upside to manufacturing survey data in the Eurozone appears endless.
4 December 2017 Hefty Tax Cuts at Full Employment Make no Sense, but they're Coming (Publication Centre)
It's not our job to pontificate on the merits, or otherwise, of the tax cut bill from a political perspective.
8 February 2018 Higher-Paid People Drove up January Wages, but Data are Noisy (Publication Centre)
Given the light flow of data this week we want to go back for a closer look at the market-shattering January hourly earnings data.
8 February 2019 Evidence of a German Recession is Mounting, but It's Old News (Publication Centre)
The verdict is in.
8 February 2019 The MPC has Gone only Half-Way to Endorsing Markets' Lower Rate Path (Publication Centre)
In the midst of heightened and potentially longerlasting Brexit uncertainty, the MPC revised down its forecast for GDP growth sharply yesterday and came close to endorsing investors' view that the chances of a 25bp rate hike before the end of this year have slipped to 50:50.
8 December 2017 Brazil's Central Bank Leaves the Door Open for More Easing in Q1 (Publication Centre)
The Brazilian central bank cut its benchmark Selic interest rate by 50bp, to 7.0%, on Thursday night and confirmed our view that the end of the easing cycle is not far off.
8 April 2019 The Plot Thickens in Germany's Manufacturing Data (Publication Centre)
Last week's manufacturing data in Germany left investors with more questions than answers.
7 September 2018 First Signs of EM Weakness in the Eurozone Hard Data (Publication Centre)
Yesterday's manufacturing data in German threw off a nasty surprise.
8 April 2019 Andean Economies Hoping for a U.S.-China Trade Deal Soon (Publication Centre)
Fears of a Chinese hard landing have roiled financial and commodity markets this past year and have constrained the economic recovery of major raw material exporters in LatAm.
8 April 2019 Payroll Gains set to be Close to 200K in Q2 Labor Market Still Tightening (Publication Centre)
The return to normal in the March payroll numbers, with a 196K headline increase, is another nail in the coffin of the "imminent recession" theory.
8 January 2018 Japan's Services Sector will Pick Up in Q1, Wage Pressure Mounts (Publication Centre)
Japan's services sector PMI last week was disappointing.
8 January 2018 The Labor Market is Still Tightening, Don't Fret over December Payrolls (Publication Centre)
We aren't perturbed by the undershoot in December payrolls, relative both to the October and November numbers and all the leading indicators.
8 March 2018 The Spring Statement Really Will Be a Non-Event (Publication Centre)
The Treasury has tried to dampen expectations for Tuesday's Spring Statement, which has replaced the Autumn Statement since the Budget was moved last year to November.
8 May 2017 Mr. Macron Easily Defeats Ms. Le Pen: Now the Hard Work Begins (Publication Centre)
Early results suggest that Mr. Macron has comfortably beat Marine Le Pen to become French president, defying a leak of emails and other documents from his En Marche campaign over the weekend. The final results won't be published until Monday morning, but the initial estimate indicates that Mr. Macron will edge Ms. Le Pen by 65.1% to 34.9%.
8 May 2019 Chile's Economy Slowed in Q1, but Expect a Modest Q2 Rebound (Publication Centre)
Economic growth in Chile slowed in Q1, despite a relatively strong end to the quarter, and the chances of an accelerating recovery remains disappointingly low, due to both global and domestic headwinds.
8 June 2018 The FX Sell-off has Put Central Banks Under Stress, will they Act? (Publication Centre)
EM risk sentiment remains grim as the Trump administration dispenses protectionist trade measures. LatAm's biggest economies, Brazil and Mexico, have been hit the hardest, with their currencies falling 3.3% and 2.2% respectively in the last week, the most in the EM world.
8 June 2018 Did German Manufacturers Take a Long Break in Q1 and Q2? (Publication Centre)
New orders data increasingly suggest that German manufacturers all but shut their production lines at the start of the year.
8 January 2019 Colombia's Economic Resilience Will be Challenged in the First Half (Publication Centre)
Colombia was one of the fastest growing economies in LatAm in 2018, and prospects for this year have improved significantly following June's presidential election, with the market-friendly candidate, Iván Duque, winning.
8 June 2018 China is Ill-equipped to Keep up with Fe