Archive

January 30, 2024
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EA Stagnation Skirts Recession

  • The Euro area appears to have skirted a technical recession with a flat GDP in Q4. Even if revised down, the activity trend has been broadly stagnant for five quarters.
  • Only Ireland is in a proper recession, but Germany’s size means it subtracted more from the EA in Q4. Surveys have been recovering and remain robust for employment.
  • Resilient demand relative to supply suggests policy is not overly tight, which should discourage rate cuts from matching the deep mean reversion that markets price.

By Philip Rush


January 24, 2024
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Global Policy Isn't Squeezing That Tight

  • Surprising strength was broadly experienced across the flash PMIs for January. Demand growth is rebounding rather than slowing, prolonging inflationary excess demand.
  • Unemployment rates should rise with below-potential growth, but they broadly remain below their pre-pandemic levels and have mostly stopped falling rather than risen.
  • The failure of tight labour markets to loosen suggests global policy isn’t set far above a neutral level. That should postpone cuts and limit their future extent.

By Philip Rush


January 19, 2024
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UK: False Retail Trend Break in Dec-23

  • UK retail sales crashed by 3.2% m-o-m in the official estimates for Dec-23, appearing to break the well-established trends of rising values and flat volumes.
  • Expenditure for Christmas should be read across November and December, recognising that the sales events are challenging for the ONS to adjust for seasonally.
  • Non-seasonally adjusted sales were consistent with the performance in recent years, suggesting the trend break is a temporary statistical issue, not a fundamental one.

By Philip Rush


January 17, 2024
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China GDP Growth 5.2% y-o-y in Q4-23

- China's GDP grew by 5.2% year-on-year in Q4-23, marking the highest growth rate since Q2-23 and surpassing the long-run average by 1.09 percentage points.
- The quarter-on-quarter GDP growth rate in Q4-23 was 1.0%, indicating a positive trend of economic recovery.