- Both the PMI output growth and output price balances surprised to the upside in January.
- The MPC will cut rates in February, but inflation pressure means only three rate cuts in total this year.
- Payroll falls pose a downside risk to growth, but the ONS likely will revise up the December drop.
Rob Wood (Chief UK Economist)UK
- In one line: Jobs market is loosening gradually, but strong wage growth is a block to quick MPC rate cuts.
Rob Wood (Chief UK Economist)UK
In one line: Poor, but details better than the headline.
Claus Vistesen (Chief Eurozone Economist)Eurozone
A robust end to the year for Thai exports, despite flattening DM demand
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
Japan's export growth rebounds m/m SA, thanks to improved shipments to the EU and US
Duncan WrigleyChina+
RISING UNEMPLOYMENT TO SPUR FURTHER FED EASING…
- …INFLATION WILL STILL FALL UNDER MOST TARIFF SCENARIOS
Samuel TombsUS
- In one line:Public sector borrowing exceeded the OBR’s latest forecasts in December.
Rob Wood (Chief UK Economist)UK
- Disinflation in Mexico is full on track, prompting Banxico to consider accelerated rate cuts ahead.
- Core inflation pressures linger beneath weak domestic demand and subdued commodity prices.
- Colombia’s economic recovery wavers amid political noise, violence and sluggish Q4 GDP performance.
Andrés Abadía (Chief LatAm Economist)Latin America
- Taiwan’s retail sales look like they are picking up, as growth rose to 2.9% year-over-year in December.
- This is not the whole story; paradoxically, inflation continues to bolster the headline figure.
- Three typhoons, stubborn inflation and high credit costs have led to sluggish increases in volumes.
Miguel Chanco (Chief EM Asia Economist)Emerging Asia
- Our baseline assumes a mild US tariff rate increase and therefore limited impact on EZ exports and GDP.
- If the US raises tariffs on all goods apart from EU goods, GDP could rise by twice as much this year.
- A big universal tariff increase instead could see a Eurozone recession and GDP falling by 1% or so.
Melanie Debono (Senior Eurozone Economist)Eurozone
- MPC members are giving formal speeches less frequently now than before Covid.
- There is evidence that they retreated even further from communicating when inflation surged in 2022.
- We think this has made their reaction function more difficult to understand and is impacting markets.
Rob Wood (Chief UK Economist)UK
- US - Core inflation still likely to be lower by year-end in most tariff scenarios
- EUROZONE - The outlook for EZ inflation in Q1; a hot headline, but a soft core?
- UK - Ignore the December inflation drop; it’s still heading above 3% in April
- CHINA+ - China’s stimulus policies worked in Q4, but recovery won’t be easy
- EM ASIA - BI shrugs off IDR slump and starts 2025 with shock cut; a good move
- LATAM - Will headwinds from a protectionist US hurt the Mexican economy?
Ian Shepherdson (Chief Economist, Chairman and Founder)Global
- Brazil — Fiscal reform, and Lula’s diplomatic efforts
- Mexico — Troubles due to Mr. Trump’s re-election
- Chile — General election approaching
Andrés Abadía (Chief LatAm Economist)Latin America
- Polls are little changed in Germany; a grand coalition between CDU/CSU and SPD still looks the best bet.
- The debt brake is ripe for change, but what is the best way to loosen Germany’s fiscal rules?
- AFD’s support is rising; is a two-party coalition with the CDU/CSU an outsized risk?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Monthly insolvencies have fallen back towards their pre-pandemic trend.
- The insolvency rate, which controls for the size of the economy, is almost at pre-pandemic levels.
- Even modest GDP growth will keep a lid on insolvency growth in 2025.
Elliott Laidman Doak (Senior UK Economist)UK
In one line: Falling back but still consistent with a supra-50 EZ composite PMI.
Melanie Debono (Senior Eurozone Economist)Eurozone
- In one line: Under strain, due to still-tight financial conditions.
Andrés Abadía (Chief LatAm Economist)Latin America
