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25 Nov. 2015 Q3 Inventory Revisions Limit the Potential for Q4 Growth Rebound (Publication Centre)

The hefty upward revision to Q3 inventories means we have to lower our working assumption for fourth quarter GDP growth, because the year-end inventory rebound we previously expected is now much less likely to happen. Remember, the GDP contribution from inventories is equal to the change in the pace of inventory accumulation between quarters, and we're struggling to see a faster rate of accumulation in Q4 after the hefty revised $90B third quarter gain. Inventory holdings are in line with the trend in place since the recession of 2001; firms don't need to build inventory now at a faster pace.

22 Jan. 2016 How Long Will the Inventory Correction Last? (Publication Centre)

We're expecting a substantial inventory hit in the fourth quarter, subtracting about 1¼ percentage points from headline GDP growth. Businesses very likely added to their inventories in Q4, in real terms, but the we reckon the increase was only about $30B, annualized, compared to the $85.5B jump in the third quarter. Remember, the contribution to GDP growth is the change in the pace of inventory-building between quarters.

26 June 2018 Low Inventory Still Lifting Home Prices Ignore So Case Shiller Data (Publication Centre)

Today brings more housing market data, in the form of the Case-Shiller home price report for April.

23 August. 2016 The Inventory Cycle is About to Turn, Worsening the Downturn (Publication Centre)

Whether the economy enters recession will hinge more on corporate behaviour than on consumers. Household spending accounts for about two thirds of GDP, but it is a relatively stable component of demand. By contrast, business investment and inventories--which are often overlooked--are prone to wild swings.

4 September 2018 Is Fear of Further Tariffs Boosting Capex and Inventory-Building? (Publication Centre)

While we were out, most of the core domestic economic data were quite strong, with the exception of the soft July home sales numbers and the Michigan consumer sentiment survey.

9 June. 2016 The Inventory Rundown isn't Over, but the Intensity Will Soon Diminish (Publication Centre)

The collapse in capital spending in the oil sector last year was the biggest single drag on the manufacturing sector, by far. The strong dollar hurt too, as did the slowdown in growth in China, but most companies don't export anything. Capex has fallen in proportion to the drop in oil prices, so our first chart strongly suggests that the bottom of the cycle is now very near.

26 Jan. 2016 Housing Wealth About to Breach the Pre-Crash Peak (Publication Centre)

Sometime very soon, likely in the second quarter of this year, the stock of net housing wealth will exceed the $13.1T peak recorded before the crash, in the fourth quarter of 2005. At the post-crash low, in the first quarter of 2009, net housing equity had fallen by 53%, to just $6.2T. The recovery began in earnest in 2012, and over the past year net housing wealth has been rising at a steady pace just north of 10%. With housing demand rising, credit conditions easing and inventory still very tight, we have to expect home prices to keep rising at a rapid pace.

26 January 2018 Q4 Growth Likely Near 3%, but Real Uncertainties in Trade, Inventories (Publication Centre)

need to add docMea culpa: We failed to spot the press release from the Commerce Department announcing the delay of the release of the advance December trade and inventory data, due to the government shutdown.

26 October 2018 Inventories and Consumption Drove up Q3 Growth Q4 will be Slower (Publication Centre)

We have tweaked our third quarter GDP forecast in the wake of the September advance international trade and inventory data; we now expect today's first estimate to show that the economy expanded at a 4.0% annualized rate.

07 Jan. 2016 Will Inventories Accentuate the Slowdown? (Publication Centre)

The rate of inventory-building regularly is a major influence on GDP growth, but often is overlooked by analysts. Much slower inventory accumulation than in 2014 was the key source of downside surprise to the 2015 consensus GDP growth forecast, and we think inventories likely will be a sustained drag on GDP growth this year too.

6 March 2018 Inventories Rebounding in Q1 (Publication Centre)

The wide spread in first quarter GDP growth "trackers"--which at this point are more model and assumption than actual data--is indicative of the uncertainty surrounding the international trade and inventory components.

25 July 2019 Today's Array of Data Could Shift the Needle on Q2 GDP Growth (Publication Centre)

The June durable goods, trade and inventory reports today, could make a material difference to forecasts for the first estimate of second quarter GDP growth, due tomorrow.

23 Sept. 2015 Expansions don't die of old age - the Fed kills them, with rates (Publication Centre)

The theory of spontaneous combustion of the U.S. economy appears to be making something of a comeback, if our inbox and market chat is to be believed. The core idea here is that expansions die of old age, and can be helped on their way to oblivion by factors like falling corporate earnings and rising inventory. The current recovery, which began in June 2009 and is now 63 months old, already looks a bit long-in-the-tooth.

22 Apr. 2015 Do rising Inventories pose a threat to growth? (Publication Centre)

A classic indicator of impending recession is the emergence of excessive levels of inventory across the economy. The pace of businesses inventory accumulation typically lags sales growth, so when activity slows, usually in response to higher interest rates, firms are left with unsold goods.

25 January 2018 Rising Oil Prices Will Reduce Q4 Real Inventories, but by How Much? (Publication Centre)

Today's advance inventory and international trade data for December could change our Q4 GDP forecast significantly.

23 June 2017 Will French Domestic Demand in Rebound in Q2? (Publication Centre)

The June batch of the French statistical office's business surveys continues to signal a firming cyclical recovery. The aggregate business index rose to cyclical high of 106 in June from a revised 105 in May, continuing an uptrend that began in the middle of 2016.

26 July 2019 The Inevitable Q2 Slowdown Leaves H1 Growth at 21⁄2%, at the Trend (Publication Centre)

We're nudging down our estimate of Q2 GDP growth, due today, by 0.3 percentage points to 1.8%, in the wake of yesterday's array of data.

24 Apr. 2015 Core capital goods orders heading down through summer (Publication Centre)

Orders for core capital goods began to fall outright in September last year; we can't blame the severe winter for the 11.1% annualized decline in the fourth quarter of last year. Indeed, the drop in orders in the first quarter will be rather smaller than in the fourth, unless today's March report reveals a catastrophic collapse.

27 April 2018 Korean GDP Rebounds Unspectacularly after Q4 Distortions (Publication Centre)

Korean real GDP growth rebounded to 1.1% quarter-on-quarter in Q1, after GDP fell 0.2% in Q4. Growth in Q4 was hit by distortions, thanks to a long holiday in October, which normally falls in September.

26 January 2018 Korean Exports hit a Perfect Storm in Q4 but Should Rebound in H1 (Publication Centre)

Korean GDP unexpectedly declined in Q4, for the first time since the financial crisis, falling 0.2% quarter-on-quarter after a 1.5% jump in Q3.

27 October 2017 Third Quarter Growth Should be Solid, Despite the Hurricanes (Publication Centre)

We expect today's first estimate of third quarter GDP growth to show that the economy expanded at a 2.4% annualized rate over the summer.

28 Aug 2019 A Few Bright Spots in an Overall Grim Q2 German GDP Report (Publication Centre)

Yesterday's detailed GDP data in Germany confirmed that the economy shrank slightly in the second quarter, by 0.1% quarter-on-quarter, following the 0.4% increase in Q1.

28 March 2019 Growth is Slowing, but Q1 Unlikely to be as Bad as Feared (Publication Centre)

Fourth quarter GDP growth is likely to be revised down today.

27 September. 2016 Jobs Seen as Plentiful, but Payroll Gains Will Remain Low (Publication Centre)

In contrast to surveys of manufacturing activity and sentiment, the Conference Board's measure of consumer confidence rose sharply in August, hitting an 11-month high. People were more upbeat about both the current state of the economy and the outlook, with the improving job market key to their optimism. The proportion of respondent believing that jobs are "plentiful" rose to 26%, the highest level in nine years.

24 April 2019 Industrial Sentiment is Stabilizing, Despite the Richmond Fed Drop (Publication Centre)

Yesterday's data were mixed, though disappointment over the weakening in the Richmond Fed survey should be tempered by a quick look at the history, shown in our first chart.

27 May. Q1 GDP Just the Beginning of a Prolonged Slowdown (Publication Centre)

The second estimate of Q1 GDP confirmed that the recovery has lost momentum and revealed that growth would have ground to a halt without consumers. GDP growth likely will slow further in Q2, as Brexit risk undermines business investment.

27 April 2018 The Likely Q1 GDP Growth Slowdown Probably Didn't Happen (Publication Centre)

The first point to make about today's Q1 GDP growth number is that whatever the BEA publishes, you probably should add 0.9 percentage points.

26 April 2018 March Trade and Durable Orders Data to Boost Q1 GDP Forecasts? (Publication Centre)

The key data today, covering March durable goods orders and international trade in goods, should both beat consensus forecasts.

25 April 2018 Korean Q1 GDP Growth will Bounce Back, A er Q4 Distortions (Publication Centre)

Korean real GDP growth--to be published on Thursday--should bounce back in Q1 to 1.0% quarter-on-quarter, after the 0.2% drop in Q4.

24 Nov. 2015 Q3 Growth Will be Revised Up, but 2015 Will Fall Short (Publication Centre)

An array of data today will be mostly positive, and even the most likely candidate for a downside surprise--the October advance trade numbers--is very unlikely to change anyone's mind on the Fed's December decision. On the plus side, the first revision to third quarter GDP growth should see the headline number dragged up into almost respectable territory, at 2.4%, from the deeply underwhelming 1.5% initial estimate.

24 June. 2015 Q1 GDP to be Revised up, But the Big Shift Will Come Next Month (Publication Centre)

The third estimate of first quarter GDP growth, due today, will not be the final word. The BEA will revise the data again on July 30, when it will also release its first estimate for the second quarter and the results of its annual revision exercise. Quarterly estimates back to 2012 will be revised. The revisions are of greater interest than usual this year because the new data will incorporate the first results of the BEA's review of the seasonal problems.

24 August. 2016 Chainstore Sales Still Pitifully Weak, Despite the Dip in the Dollar (Publication Centre)

We are a bit troubled by the persistent weakness of the Redbook chain store sales numbers. We aren't ready to sound an alarm, but we are puzzled at the recent declines in the rate of growth of same-store sales to new post-crash lows. On the face of it, the recent performance of the Redbook, shown in our first chart, is terrible. Sales rose only 0.5% in the year to July, during which time we estimate nominal personal incomes rose nearly 3%.

28 May 2019 Raising the Alarm on German Private Investment in Q2 and Q3 (Publication Centre)

We covered the detailed German Q1 GDP report in Friday's Monitor--see here--but the investment data could do with closer inspection. The headline numbers looked great.

25 February 2019 The IFO is still Bleak, but the German GDP Data are Nuanced (Publication Centre)

Friday's economic data in Germany left markets with a confused picture of the Eurozone's largest economy.

24 August 2017 New Auto Sales Appear to have hit Bottom, Modest Gains in Q4? (Publication Centre)

Industry estimates for August light vehicle sales suggest that the downshift in sales which began at the turn of the year is over, at least for now.

25 September 2018 US Home Prices are Still Rising, but Momentum is Slowly Fading (Publication Centre)

In recent months we have argued that housing market activity has peaked for this cycle, with rising mortgage rates depressing the flow of mortgage applications.

25 July 2018 More Signs Today that Housing Market Activity is Peaking (Publication Centre)

New home sales surprised to the upside in May, rising 6.7% to 689K, a six-month high.

25 July 2017 Korean Q2 GDP Growth to Provide Evidence of Chinese Slowdown (Publication Centre)

After strong real GDP growth in Q1, China commentators called the peak, claiming that growth would slow for the rest of 2017.

26 February 2019 The Impending China Trade Deal will Pose Questions for the Fed (Publication Centre)

A trade deal with China is in sight. President Trump tweeted Sunday that the planned increase in tariffs on $200B of Chinese imports to 25% from 10%, due March 1, has been deferred--no date was specified-- in light of the "substantial progress" in the talks.

3 May 2019 Inventories Could Spoil the Party for the EZ Economy in Q2 and Q3 (Publication Centre)

Manufacturers in the Eurozone are still suffering, but yesterday's final PMI data for April offered a few bright spots.

7 June. 2016 Are Eurozone Equity Markets Complacent About Brexit? (Publication Centre)

Recent polls in the U.K. have reminded markets that the vote is too close to call at this point, but investors in the Eurozone appear unfazed, so far. The headline Sentix index rose to 9.9 in June, from 6.2 in May, lifted by the expectations index, which increased to a six-month high of 10.0 from 5.5 in May.

8 June 2018 Q2 Growth is Looking Very Strong, but Inventories Set to Disappoint? (Publication Centre)

The latest iteration of the Atlanta Fed's GDPNow model of second quarter GDP growth shows the economy expanding at a 4.5% annualized rate.

7 February 2019 November's Drop in Imports won't be Repeated, but it will Lift Q4 Growth (Publication Centre)

The startling November international trade numbers, released yesterday, greatly improve the chance that the fourth quarter saw a third straight quarter of 3%- plus GDP growth.

7 February 2017 Don't Be Fooled by Jump in German Factory Orders (Publication Centre)

German manufacturing is in good shape, but probably is not as strong as implied by yesterday's surge in new orders. Factory orders jumped 5.2% month-to-month in December, rebounding strongly after a downwardly revised 3.6% fall in November. December's jump was the biggest monthly increase in two years, but it was flattered by a leap in bulk investment goods orders, mainly in the domestic market and other EZ economies.

5 October 2018 Jobs Likely Weaker than ADP but Still Solid (Publication Centre)

In the wake of the ADP report released Wednesday, we moved up our payroll forecast to 150K from 100K, but we've now taken a closer look at the post-Florence path of jobless claims.

8 Oct 2019 Does China Want a Comprehensive Trade Deal with Trump (Publication Centre)

We have argued for a while that China and the U.S. will not reach a comprehensive trade deal until after the next election.

9 Dec. 2015 Sub-$40 WTI Boosts Consumers' Cashflow - Oil Capex to Fall Further (Publication Centre)

OPEC's decision at the weekend to turn the oil market into a free-for-all means that the rebound in headline inflation over the next few months will be less dramatic than we had been expecting. Falling retail gas prices look set to subtract 0.2% from the headline index in both November and December, and by a further 0.1% in January. These declines are much smaller than in the same three months a year ago, so the headline rate will still rise sharply, to about 1.3% by January from 0.2% in October, but it won't approach 2% until the end of next year or early 2017,

9 Sept 2019 The Trade War is Hurting Payroll Growth will Slow Further (Publication Centre)

Payroll growth in September and October probably won't be materially worse than August's meager 96K increase in private jobs.

9 November 2018 Stockbuilding Won't Temper the Near-Term Slowdown (Publication Centre)

A flawed theory still is circulating that the economy might outperform over the next two quarters because firms will stockpile goods due to the risk of a no-deal Brexit.

9 January 2019 Small Firms are Cutting their Capex Plans but Raising Prices (Publication Centre)

The only way to read the December NFIB survey and not be alarmed is to look at the headline, which fell by less than expected, and ignore the details.

9 December. 2016 The Oil Hit Spread Widely Across the Economy - Now, it's Over (Publication Centre)

A core element of our relatively upbeat macro view before the implementation of fiscal stimulus under the new administration is that the ending of the drag from falling capex in the oil sector will have quite wide, positive implications for growth. The recovery in direct oil sector spending is clear enough; it will just track the rising rig count, as usual.

5 May. 2016 Growth in Eurozone Consumers' Spending is Slowing (Publication Centre)

Evidence of slowing growth in Eurozone consumers' spending continues to mount. Retail sales in the euro area fell 0.5% month-to-month in March, pushing the year-over-rate down to 2.1% from a revised 2.7% in February. The headline likely was depressed by the early Easter. March had one trading day less than February, which was not picked up the seasonals.

30 Oct. 2015 The Third Quarter ECI is Set to Rebound, but How Far? (Publication Centre)

We have been asked by a few readers how much confidence we have in our forecast of a 1% rebound in the third quarter employment costs index, well above the 0.6% consensus and the mere 0.2% second quarter gain. The answer, unfortunately, is not much, though we do think that the balance of risks to the consensus is to the upside.

29 June 2017 GDP Seasonal Adjustment Problems Persist, a Fix is Promised in July (Publication Centre)

The third estimate of first quarter GDP growth, due today, will not be the final word on the subject. Indeed, there never will be a final word, because the numbers are revised indefinitely into the future.

29 March 2017 Consumers are Happy, but Spending Will Lag Sentiment (Publication Centre)

Yesterday's data don't significantly change our view that first quarter GDP growth will be reported at only about 1%, but the foreign trade and consumer confidence numbers support our contention that the underlying trend in growth is rather stronger than that.

29 Feb. 2016 The Eurozone is Back in Deflation, but the Relapse is Temporary (Publication Centre)

Advance inflation data on Friday added to the gloom on the Eurozone economy. Reports from Germany, France, and Spain all surprised to the downside, indicating the euro area as a whole slipped back into deflation in February. Inflation in Germany dipped to 0.0% year-over-year in February, from 0.5% in January, and France slid back into deflation as the CPI index fell 0.2%, down from a 0.2 increase last month.

29 Aug 2019 Is the Growth Drag from Foreign Trade set to Persist (Publication Centre)

Net foreign trade was a drag on GDP growth in the second quarter, subtracting 0.7 percentage points from the headline number.

28 September. 2016 Expect Weak Headline Durable Orders (Publication Centre)

A third outright decline in the past four months seems a decent bet for today's August durable goods orders, thanks to the malign influence of the downward trend in orders for civilian aircraft. The global airline cycle is maturing, and orders for both Boeing and Airbus aircraft have been slowing for some time.

29 March 2018 Net Trade Will be a Drag on Q1 GDP, but Inventories are Rocketing (Publication Centre)

If we're right with our forecast that real consumers' spending rose by just 0.1% month-to-month in February -- enough only to reverse January's decline -- then it would be reasonable to expect consumption across the first quarter as a whole to climb at a mere 1.2% annualized rate.

22 November. 2016 Soybean Exports Still High, but Falling Sharply (Publication Centre)

Surging soybean exports contributed 0.9 percentage points, gross, to third quarter GDP growth, though the BEA said that this was "mostly" offset by falling inventories of wholesale non-durable goods.

30 January 2018 Core PCE Inflation has Bottomed, and Will Rise Sharply in March (Publication Centre)

The 0.18% increase in the core PCE deflator in December was at the lower end of the range implied by the core CPI. It left the year-over-year rate at just 1.5%.

30 January 2017 Can the Second Half Growth Momentum Carry into this Year? (Publication Centre)

We were nervous ahead of the GDP numbers on Friday, wondering if our forecast of a 1.5 percentage point hit from foreign trade was too aggressive. In the event, though, the trade hit was a huge 1.7pp, so domestic demand rose at a 3.5% pace.

30 August 2017 ADP Looks set to Report Another Solid Gain in Payrolls (Publication Centre)

We're expecting a hefty increase in private payrolls in today's August ADP employment report. ADP's number is generated by a model which incorporates macroeconomic statistics and lagged official payroll data, as well as information collected from firms which use ADP's payroll processing services.

30 April 2019 Q1 Data have Spooked Japanese Policymakers is it Temporary (Publication Centre)

Japan's Q1 is coming more sharply into focus.

28 October. 2016 Upside Risk for Third Quarter Growth,Watch Inventories (Publication Centre)

Two entirely separate factors point to significant upside risk to the first estimate of third quarter GDP growth, due today. First, we think it likely that farm inventories will not fall far enough to offset the unprecedented surge in exports of soybeans, which will add some 0.9 percentage points to headline GDP growth.

20 July 2018 Japan's Trade Balance Continues to Whipsaw Where is it Going Next (Publication Centre)

Japan's trade surplus has whipsawed recently. Sharp changes are to be expected in January and February, due to the shifting timing of Chinese New Year.

15 October 2018 The Stock Market Wobble isn't Enough to Deter the Fed (Publication Centre)

A 45bp rise in long-term interest rates--the increase between mid-August and last week's peak--ought to depress stock prices, other things equal.

15 May 2018 Autos Likely Constrained April Retail Sales, Core Trend is Gently Upwards (Publication Centre)

The story of U.S. retail sales since last summer is mostly a story about the impact of the hurricanes, Harvey in particular.

15 Dec. 2015 Solid Industrial Production in the Eurozone Given Global Weakness (Publication Centre)

Industrial production in Eurozone had a decent start to the fourth quarter. Output ex-construction rose 0.6% month-to-month in October, pushing the year-over-year rate up to 1.9% from a revised 1.3% in September. Production was lifted by gains in the major economies, and surging output in the Netherlands, Portugal and Lithuania. Across sectors, increases in production of capital and consumer goods were the main drivers, but energy output also helped, due to a cold spell lifting demand and production in France.

16 Oct 2019 Did Pre-Tariff Spending Boost September Retail Sales (Publication Centre)

Tariffs are a tax on imported goods, and higher taxes depress growth, other things equal.

17 December 2018 Corporate Debt Service Still Falling, Three Years After the First Fed Hike (Publication Centre)

This week brings the third anniversary of the first rate hike in this cycle, on December 16, 2015.

18 Apr. 2016 EZ Demand for New Cars Slowed in Q1, and will Slow A gain in Q2 (Publication Centre)

Growth in Eurozone car sales slowed slightly at the end of the first quarter. New car registrations in the euro area rose 5.8% year-over-year in March, down from a 14.4% increase in February. But the 12-month average level of new registrations jumped to new cyclical highs of 440,000 and 252,000 in the core and periphery respectively.

17 January 2019 Can we still Blame New Emissions Rules for Soggy EZ Car Sales (Publication Centre)

We are still waiting for the promised rebound in EZ car sales.

14 November 2017 Poor EZ Production Data Won't Dent Second Q3 GDP Estimate (Publication Centre)

Soft September data in Germany and Italy suggest that today's industrial production report in the Eurozone will be poor. Our first chart shows that data from the major EZ economies point to a 0.8% month-to- month fall in September.

22 May 2017 What Does the Path to the Recession of 2019 Look Like? (Publication Centre)

In recent years only one event has made a material difference to the growth path of the U.S. economy, namely, the plunge in oil prices which began in the summer of 2014. The ensuing collapse in capital spending in the mining sector and everything connected to it, pulled GDP growth down from 2½% in both 2014 and 2015 to just 1.6% in 2016.

05 October. 2016 GDP Inventories Set to be Adjusted to O set Soybean Export Surge (Publication Centre)

We have written a good deal recently about the likely impact of the sudden explosion of U.S. soybean exports on third quarter GDP growth.

03 Mar. 2016 ISM Non-manufacturing Set to Rebound, Lagging Core Sales (Publication Centre)

The headline ISM non-manufacturing index is not, in our view, a leading indicator of anything much. The survey covers a broad array of non manufacturing activity, including mining, healthcare, and financial services, but most of the time it tends to follow the track of real core retail sales, as our first chart shows.

01 Feb. 2016 Outlook Improving as Oil Capex Hit Fades and Consumers Step Up (Publication Centre)

The pitiful 0.7% expansion of the economy in the fourth quarter is not, in our view, a sign of things to come. It is also not, by any means, a definitive verdict on what happened in the fourth quarter; the data are subject to indefinite revision. As they stand, the numbers are impossible to square with the 2.0% annualized increase in payroll employment over the quarter, so our base case has to be that these data will be revised upwards.

1 May 2019 The Eurozone Economy Defied the Pessimists in the First Quarter (Publication Centre)

Yesterday's economic headlines in the Eurozone were pleasant reading.

11 April 2019 Mr. Draghi Kicks the Can on TLTROs and a Tiered Deposit Rate (Publication Centre)

The ECB made no changes to its policy stance yesterday.

13 July 2017 Yellen Expects the Labor Market to Tighten Further, and Rates to Rise (Publication Centre)

Chair Yellen broke no new ground in her Testimony yesterday, repeating her long-standing view that the tightening labor market requires the Fed to continue normalizing policy at a gradual pace.

12 June. 2015 Consumption Back on Track as the Winter Weather Hit Reverses (Publication Centre)

Consumers' spending in the second quarter is still set to be less than great, thanks in part to unfavorable base effects from the first quarter, but a respectable showing of about 2¾% now seems likely. The core May retail sales numbers were a bit stronger than we expected, with gains in most sectors, and the upward revisions to April and March were substantial.

18 December 2018 The Plunge in Oil Prices Injects Uncertainty into Q4 GDP Growth (Publication Centre)

In the wake of last week's strong core retail sales numbers for November, the Atlanta Fed's GDPNow model for fourth quarter GDP growth shot up to 3.0% from 2.4%.

14 May 2019 French Manufacturing Output is Headed for a Fall in Q2 (Publication Centre)

Data on Friday showed that the upturn in French manufacturing petered out at the end of Q1.

21 August 2018 Could Stockpiling for a No-Deal Brexit Boost the Economy? (Publication Centre)

We have been asked several times in recent days whether a pick-up in stockbuilding, as part of businesses' contingency planning for a no-deal Brexit, could cause the economy to gather some pace in the run-up to Britain's scheduled departure from the EU in March 2019.

20 September 2018 Business Surveys Wobbling in the Face of Higher Rates (Publication Centre)

In the wake of the unexpectedly weak September Empire State survey, released Monday, we are now very keen to see what today's Philadelphia Fed survey has to say.

20 July 2017 Do we Need to be Afraid of Chinese Ghost Cities? (Publication Centre)

Stories of Chinese ghost cities are plentiful and alarming. The aggregate data present a startling picture. Between 2012 and 2015, China started around six billion square meters of residential floorspace but sold only around five billion.

21 June 2017 Home Sales set for new Cycle Highs, but not in May (Publication Centre)

Over the past couple of weeks, the number of applications for new mortgages to finance house purchase have reached their highest level since late 2010, when activity was boosted by the impending expiration of a time-limited tax credit for homebuyers.

21 June 2018 Business Surveys Set to Suffer from Tariffs, but the Hit will be Uneven (Publication Centre)

The startling jump in the Philly Fed index in May, when it rose 11.2 points to a 12-month high, seemed at first sight to be a response to fading tensions over global trade.

18 May 2018 Did Markets Jump the Gun on Japan's Recovery? (Publication Centre)

Downward revisions to Japan's Q4 real GDP growth, published on Wednesday, lead us to revisit our main worry over the durability of the recovery; namely, that monetary conditions appear to be signalling a slowdown.

22 March 2019 Existing Home Sales have Bottomed, but Price Gains Still Slowing (Publication Centre)

Existing home sales peaked last February, and the news since then has been almost unremittingly gloomy.

20 Aug 2019 Third Quarter Growth Looks OK on the Surface Details Less Good (Publication Centre)

Halfway through the third quarter, we have no objection to the idea that GDP growth likely will exceed 2% for the third straight quarter.

2 September. 2016 The Manufacturing PMI Overstates the Sector's Recuperation (Publication Centre)

On the face of it, the rebound in the manufacturing PMI, to 53.3 in August from 48.3 in July, directly challenges our view that the economy is set to slow sharply over the coming quarters. A close look at the survey, however, suggests that the manufacturing PMI exaggerates the extent of the sector's recovery in August.

19 July 2017 China's Rolling Ball of Money: Out of Top-Tier Cities and into Tier three (Publication Centre)

China is a collection of hugely disparate provinces and cities. Managing all these cities with one interest rate is always difficult but in this cycle it is proving to be nearly impossible.

19 December 2017 New Home Sales and Construction Appear Set to Rocket Next Year (Publication Centre)

In the short-term, all the housing data are volatile. But you can be sure that if the recent pace of new home sales is sustained, housing construction will rise.

19 July 2018 China's Domestic Activity Likely Recovered in Q2 (Publication Centre)

China's official GDP data, published on Monday, showed year-over-year growth edging down to 6.7% in Q2, from 6.8% in Q1.

19 July. 2016 Why is Homebuilding not Keeping Pace with Demand? (Publication Centre)

The sustained upturn in mortgage applications since last fall ought to have driven up the pace of new home construction quite sharply. But our first chart shows that single-family building permit issuance--we use permits rather than starts, as they are much less volatile--rose only 8.3% year-over-year in the three months to May, while applications for new mortgages to finance house purchase jumped by 18.8% over the same period.

2 January 2018 While we Were Out... (Publication Centre)

Most of the data were consistent with the idea that fourth quarter growth will be a two-part story, with real strength in domestic final demand partly offset by substantial drags from net foreign trade and inventories.

19 Oct. 2015 No Slowdown Yet in EZ Car Sales, But Next Year Will be Different (Publication Centre)

Car sales continue to offer solid support for consumption spending in the Eurozone. Growth of new car registrations in the euro area fell trivially to 10.6% year-over-year in September, from 10.8% in August, consistent with a stable trend. Surging sales in the periphery are the key driver of the impressive performance, with new registrations rising 22.1% and 17.1% in Spain and Italy respectively, and surging 30% in Portugal. Favorable base effects mean that rapid growth rates will continue in Q4, supporting consumers' spending.

19 May. 2015 Rising Mortgage Demand Set to Boost Summer New Home Sales (Publication Centre)

The level of mortgage applications long ago ceased to be a reliable indicator of the level of new home sales, thanks to the fracturing of the mortgage market triggered by the financial crash. But the rates of change of mortgage demand and new home sales are correlated, as our first chart shows, and the current message clearly is positive.

10 January 2017 The Core Inventory Cycle is Turning, but Q4 Data Likely Won't Show it (Publication Centre)

For some time now we have argued that collapse in capital spending in the oil sector was the source of most of the softening of activity in the manufacturing and wholesaling sectors last year.

12 Aug 2019 Q2's GDP Drop is an Inventory-Driven Blip, Growth will Spring Back in Q3 (Publication Centre)

Q2's GDP figures create a terrible first impression, but a closer look suggests that the risk of a recession remains very low.

26 April 2019 Will an Inventory Unwind Stymie the Economy in Q2? (Publication Centre)

The economy's resilience in the first quarter of this year, in the midst of heightened Brexit uncertainty, can be attributed partly to a boost from no-deal Brexit precautionary stockpiling.

27 June 2019 Orders, Trade and Inventory Data Suggest Q2 Growth Headed for 21⁄4% (Publication Centre)

Yesterday's raft of data had no net impact on our forecast for second quarter GDP growth, which we still think will be about 21⁄4%.

23 July. 2015 Slow, but Steady, Recovery in French Manufacturing This Year (Publication Centre)

The manufacturing industry in France is recovering slowly, but surely. The headline INSEE index rose to 102 in July from 101 in June, close to a post-crisis high, pointing to steady improvement for manufacturers. Our first chart shows the main leading components of the survey, indicating a modest, but positive, trend in output. The increase in sentiment in July was driven by firming new orders--especially in the export sector--pushing the new orders-to-inventory ratio to an 18-month high.

21 Dec. 2015 Paris Attacks Unlikely to Dent Q4 French GDP Growth Severely (Publication Centre)

Manufacturing confidence in France remained resilient in the fourth quarter. The INSEE sentiment index rose to 103 in December from 102 in November, lifted by a jump in firms' own production expectations, and a small increase in the new orders-to-inventory ratio. We think production will increase in Q4, lifted by energy output, but the recent jump in the year-over-year rate is unlikely to be sustained, even if we factor in the marginal increase in new orders this month.

1 March 2017 The Soaring Trade Deficit is set to Constrain First Quarter Growth (Publication Centre)

Yesterday's wall of data told us a bit about where the economy likely is going, and a bit about how it started the first quarter. The January trade and inventory data were disappointing, but the February Chicago PMI and consumer confidence reports were positive.

1 Dec. 2015 The Real Net Trade Drag on U.K. Growth is Still to Come (Publication Centre)

It's tempting to conclude from the third quarter's GDP figures, which showed output rising 0.5% quarter-on-quarter, despite a record drag from net trade, that the U.K. economy is comfortably weathering sterling's appreciation. But a closer look at the data shows the net trade drag is the counterparty to some erratic inventory movements. The real net trade hit is still to come.

2 Feb. 2015 Slower Q4 Growth is a Distraction - Labor Data Matter Much More (Publication Centre)

Don't fret over the slowdown in growth in the fourth quarter. The quarterly GDP data are volatile even after several rounds of revisions, and the advance numbers are full of assumptions about missing trade, inventory and capex data, which often turn out to be wrong.

26 September. 2016 When Will Manufacturing Shake off the Summertime Blues (Publication Centre)

We're still no nearer to a definitive answer to the question of what went wrong in the manufacturing sector over the summer, when we expected to see things improving on the back of the rebound in activity in the mining sector, rising export orders and an end to the domestic inventory correction. Instead, the August surveys dropped, and September reports so far are, if anything, a bit worse.

27 February 2018 The Q4 Surge in the Trade Deficit is set for a Substantial Reversal (Publication Centre)

The closer we look at the startling surge in imports in the fourth quarter, the more convinced we become that it was due in large part to a burst of inventory replacement following the late summer hurricanes.

U.S. Datanote: U.S. New Home Sales, August (Publication Centre)

In one line: The trend in sales is rising, and inventory is falling.

EZ Datanote: Detailed GDP, Germany, Q1 (Publication Centre)

In one line: Colour us confused; is the inventory correction over already?

U.K. Datanote: U.K. Trade, May (Publication Centre)

In one line: The inventory-related slump in export demand nearly is over; industrial production will bounce back in the summer.

31 October. 2016 Q3 Growth Likely Wasn't 2.9%, Headwinds in Q4 (Publication Centre)

We are struggling to make sense of the third quarter GDP numbers. The reality is that the massive surge in soybean exports--which we estimate contributed 0.9 percentage points, gross, to GDP growth--mostly came from falling inventory, because the soybean harvest mostly takes place in Q4.

30 Sept. 2015 No Slowdown in Key Jobs Data, But Expect "Weak" ADP Today (Publication Centre)

Barely a day passes now without an email asking about "evidence" that the U.S. economy is slowing or even heading into recession. The usual factors cited are the elevated headline inventory-to-sales ratio, weak manufacturing activity, slowing earnings growth and the hit from weaker growth in China. We addressed these specific issues in the Monitor last week, on the 23rd--you can download it from our website--but the alternative approach to the end-of-the-world-is-nigh view is via the labor market.

Consistently Right

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