Archive

June 09, 2025
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Trade Avoidance Easing Shocks

  • China’s crashing exports to the US partly reflect avoidance measures, including rerouting through other countries and marking down import prices to subsidiaries.
  • Exports to the EU and UK are only trending slightly higher, making little difference to disinflation. ASEAN countries, and especially Vietnam, are seeing trade surge again.
  • The US may clamp down on avoidance measures that have eased the shock so far. It could make a painful example of one to encourage concessions from all trade partners.

By Philip Rush

May 29, 2025
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Underlying GDP Trends Unbroken

  • Imports frontloaded before tariff rises seemingly disappeared in broadly unrevised US GDP data. Underperformance is exaggerated as an unwind, or revisions, are likely in Q2.
  • Final domestic private sales maintained their rudely bullish US trend while drifting back towards stagnation in the EA and are distorted by residual seasonality in the UK.
  • Superior US productivity trends preserve its structural attractiveness. Unemployment’s stability also suggests monetary conditions are near neutral, with easing unnecessary.

By Philip Rush

May 22, 2025
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PMI Goods Vibes

  • Broad improvements in the flash manufacturing PMIs demonstrate ongoing resilience relative to consumers’ bad vibes. Goods trade seemingly shrugged off the tariff shock.
  • The UK was alone in weakening, but it is more susceptible to bad vibes, showing more noise than signal. April’s spurious lows were revised away and may repeat or rebound.
  • Transmission to unemployment also isn’t happening, leaving little case for easing unless recessionary pressures build, and the PMIs still hawkishly suggest that isn’t the case.

By Philip Rush

May 15, 2025
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UK: Spurious H1 Surge Again

  • GDP’s resurgence caught the consensus off guard, as it failed to recognise the residual seasonality still skewing activity growth into the first half of the year.
  • The 0.7% q-o-q outcome for Q1 matched our forecast and leaves a powerful carry-over to Q2, where GDP seems set to exceed the BoE’s 0.1% forecast at about 0.4% q-o-q.
  • Strength discourages another policy rate cut. Disappointment in H2 is the hangover, but we doubt it will motivate renewed easing amid excessive price and wage inflation.

By Philip Rush

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