Archive

December 16, 2024
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PMIs Serve A Festive Party

  • Flash PMIs for December broadly exceeded expectations in the services sector, with the UK and EA rebounding and the US surging to highs more consistent with hikes than cuts.
  • A slight trend rise in the US unemployment rate suggests strength is partly structural but could be noise around cyclical strength. Global rates still don’t look tight.
  • We still expect persistent underlying price and wage inflation to truncate easing cycles earlier than most expect, following the norm for cuts without recessions, like in 1998.

By Philip Rush

December 03, 2024
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UK Revisions Raise Inflationary Pressure

  • Updated UK population estimates and projections drove a 402k upward revision to the employment level while unemployment was broadly unchanged.
  • With output and wages unaffected, productivity was weakened into a slight trend decline while implied unit wage costs are 1.3pp higher and stuck above 5% y-o-y.
  • Full typical passthrough to consumer prices reinforces the underlying inflation problem. The BoE should discount labour market data and cautiously hold rates in December.

By Philip Rush

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