Archive

March 18, 2024
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EA: HICP Converging Close to 2%

  • In the final print, headline EA inflation was confirmed as slowing by 0.2pp to 2.6%. The 0.1pp of upside from the flash was genuine and even worse in services.
  • January’s divergence in the underlying inflationary impulse was resolved with clustering nearer 2%, potentially consistent with a sustainable return to the inflation target.
  • Lower energy costs may flatter the picture, while strong services inflation suggests wage growth remains too high. We still see the ECB’s first cut rolling to September.

By Philip Rush


March 14, 2024
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On A Slow Boat To China

  • As expected, this month’s National People’s Congress did little to alleviate China’s immediate economic malaise. Furthermore, it confirmed Xi Jinping’s determination to follow a course that owes more to his obsession with power than his longer-term economic vision.

By Alastair Newton


March 13, 2024
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UK Recession Ends Before It Begins

  • UK GDP rebounded by 0.2% m-o-m in January 2024, as expected. The retail sector’s seasonal adjustment issue from December was already known to have unwound.
  • We currently see GDP growth of 0.3% q-o-q in Q1, restoring the level broadly held since 4Q22. January’s rebound means the recession ended before its February declaration.
  • This was never a recessionary regime that could crush inflationary pressures. Its likely end stops that risk from developing, negating that potential need for an early rate cut.

By Philip Rush


March 12, 2024
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UK: Less Excess in the Labour Market

  • UK unemployment increased in January 2024, contrary to the consensus, but tracking the rise we forecast for Q1. However, this looks like more than just residual seasonality.
  • The underlying changes signal slightly higher unemployment. Meanwhile, vacancies are falling after their seasonal rebound, and redundancies are off their lows.
  • Wage growth was also slightly softer than expected. Resilient pay settlements should limit how much further these data slow, postponing rate cuts relative to market pricing.

By Philip Rush