Archive

February 29, 2024
2024-02-29 uk_head.png

UK Housing Shock Has Blown Over Again

  • Interest rate spikes in 2022 and 2023 rattled the housing market, but prompt reversals in market rates dissipated the shocks before they were adequately felt.
  • UK mortgage rates are back to their lows from last spring, and approvals for new loans are higher than then. Lending values are set to turn positive again soon.
  • The risk to economic activity and RPI inflation increasingly appears to have blown over, with housing depreciation troughing and MIPs unlikely to turn negative soon.

By Philip Rush

February 28, 2024
2024-02-28 EA_head.png

EA Still Stuck in Stagnation

  • The flash services PMI’s bounce raised a risk that the Euro area’s stagnation might be ending. However, we still believe that is residual seasonality rather than substance.
  • ESI survey data corroborate this sceptical assessment as they were broadly unchanged at levels below the historical average for most sectors and countries.
  • Ongoing labour market resilience in the EEI and unemployment data sustains cyclical support for wage costs. Services and retail price expectations remain historically high.

By Philip Rush

February 16, 2024
2024-02-16 uk_head.png

UK: Retail Returns to Reality in Jan-24

  • UK retail sales fully recovered in Jan-24 from their Dec-23 crash, like we forecast. However, the 3.4% surge was double the consensus expectation.
  • We had branded the previous fall as a false trend break and identified it as a seasonal adjustment issue around Black Friday rather than a fundamental problem.
  • Trading between October and January was the best since 2015, with NSA and SA data back in agreement. GDP will also enjoy payback from this spurious volatility.

By Philip Rush

February 15, 2024
2024-02-15 uk_head.png

UK Stagnation is Technically a Recession

  • UK GDP disappointed as revisions meant December’s surprisingly modest decline was consistent with a much weaker Q4, falling by 0.3% q-o-q after Q3’s 0.1% contraction.
  • Although GDP is technically in recession, that definition is too easy to meet for a stagnant economy. The macro regime is not breaking into a traditional recession.
  • Surveys suggest that GDP is already rebounding without the dip loosening the labour market. In our view, excess demand and inflation remain inconsistent with rate cuts.

By Philip Rush

By country