Economic Outlook

Latest insights and analysis from Investec experts

 

One year to Brexit: what’s in store for you and your business?

David Davis and Michel Barnier on the Brexit transition agreement
By Philip Shaw, chief economist
UK, 29 March 2018
 
With only a year to the end of the UK’s membership of the European Union, our chief economist takes stock of where Brexit negotiations are, the outlook for sterling, and key opportunities and difficulties to look out for. 

Investment insights

Weekly Digest: Long-term thinking

By John Wyn-Evans
UK, 16 April 2018

Short-termism gone mad: the current period is characterised by a stream of tweets, sound-bites and poorly conceived policies.

Pound GBP currency update

Market Brief: The pound rise continues

By Shaun Garrett
UK, 16 April 2018


Last week the pound was one of the top performing G10 currencies.

CPI update in South Africa

Week Ahead: CPI expected to remain relatively flat in March, as food price inflation remains favourable

By Annabel Bishop
SA, 13 April 2018

The rand commenced the week on a negative footing, continuing to trade at levels over R12.00/USD, after piercing this resistance barrier last Friday (6 April).

 

UK Spring Statement 2018: what you need to know

Philip Hammond delivered the UK Spring Statement on 13 March 2018. Find out what the update means for you, and the areas of the UK economy to keep an eye on, according to our chief economist Phil Shaw.

UK Spring Statement 2018: what you need to know

Philip Hammond delivered the UK Spring Statement on 13 March 2018. Find out what the update means for you, and the areas of the UK economy to keep an eye on, according to our chief economist Phil Shaw.

 
rand outlook image

Rand outlook: Trade (and other) wars, Trump and the Fed funds hike trajectory

By Annabel Bishop
SA, 13 April 2018

While South Africa has seen its currency strengthen to R11.51/USD, R14.18/EUR and R16.09/GBP this year on market euphoria ensuing from the recent political transition

Read the full article
European Central Bank

Market Brief: Dovish ECB minutes push the Euro to year lows

By Shaun Garrett
UK, 13 April 2018


Yesterday the European Central Bank expressed a deep concern about the possibility of an all-out trade war with the US.

Snow

Market Brief: Hawkish FOMC halts USD losses... temporarily

By Shaun Garrett
UK, 12 April 2018

Figures from the ONS indicate that economic activity was hit in February amid the heavy snowfall seen towards the end of the month.

mining update image

Mining update: Mining production increased to 3.1%y/y in February

By Annabel Bishop
SA, 12 April 2018

Mining production lifted in February 2018, with growth rising to 3.1% y/y, after 2.9% y/y (revised upwards from 2.4% y/y) in January.

Read the full article
Bank of England

Market Brief: ECB's Nowotny signals first rate rise in EU since 2014

By Shaun Garrett
UK, 11 April 2018

Ian McCafferty, one of the two Bank of England members to vote for a rate rise last month, told Reuters yesterday that the MPC ‘...shouldn’t dally when it comes to tightening.

Read the full article
manfacturing update image

Manufacturing update: Manufacturing production weakened to 0.6% y/y in February 2018

By Annabel Bishop
SA, 10 April 2018

Manufacturing production fell to 0.6% y/y in February, compared to January’s growth of 2.3% (revised down from 2.5% y/y).

Read the full article
Trump and Xi Jinping

Market Brief: Xi pledges greater openness amid trade wars

By Shaun Garrett
UK, 10 April 2018

A major turnaround in the risk environment was witnessed in Asia overnight, after the much-awaited speech from the Chinese president Xi Jinping.

Stefan Lovfen

Market Brief: US jobs data disappoint

By Shaun Garrett
UK, 9 April 2018

Friday saw the release of headline jobs data in the States as the non-farm payrolls number was released.

Spotify lists on the NYSE

Weekly Digest: more bark than bite?

By John Wyn-Evans
UK, 9 April 2018

With the first quarter behind us, it’s a good time to review what we have learned so far this year.

macro economic outlook image

Q2.18 Macro-economic outlook 2018–2024: Global growth strengthens

By Annabel Bishop
SA, 9 April 2018

With strong global growth increasingly seen as a 2018 feature, as actual economic growth outpaces its potential

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week ahead image

Week Ahead: Manufacturing growth expected to be higher in February

By Annabel Bishop
SA, 6 April 2018

The rand lost some momentum during the course of the week, after averaging around R11.75/USD last week

Read the full article
electricity update image

Electricity update: Both electricity production and consumption moderated in February

By Annabel Bishop
SA, 5 April 2018

Electricity production growth moderated somewhat to 2.0% y/y in February after reaching 2.4% y/y in January.

Read the full article
Xi Jinping

Market Brief: Trade War continues!

By Sana Hanassi-Savari
UK, 6 April 2018

Last night, President Trump announced to consider imposing tariffs on an additional $100bn of Chinese products, in another unhelpful escalation of the trade war with China.

NYSE

Market Commentary: March 2018

By John Wyn-Evans
UK, 5 April 2018

The first quarter of 2018 can be succinctly described as one during which we witnessed the return of volatility to financial markets.

China shipping

Market Brief: China responds with tariffs, but is it a done deal?

By Sana Hanassi-Savari
UK, 5 April 2018

Wall Street overturned early losses of yesterday to close up, with the S&P 500 ending 1.2% higher.

Donald Trump

Market Brief: New day, new set of tariffs

By Sana Hanassi-Savari
UK, 4 April 2018

Last night, the US published a proposed list of tariffs which would hit $50bn worth of Chinese imports.

higher petrol and diesel

Week Ahead: Higher petrol and diesel prices for April

By Annabel Bishop
SA, 3 April 2018

After gaining some ground towards the beginning of last week, the rand depreciated slightly after the MPC rate cut announcement on Wednesday 28th.

Read the full article
SA vehicle sales update

SA Vehicle Sales update

By Annabel Bishop
SA, 3 April 2018

Domestic vehicle sales grew in March at a rate of 1.1% y/y, following a contraction of 4.0% y/y in February 2018
Read the full article

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uninstall facebook

Market Brief: Tit-for-tat tariff moves continue

By Sana Hanassi-Savari
UK, 3 April 2018

March was a rough month for global risk assets, with equity markets in particular suffering.

psce update image

PSCE update: Private credit extension growth lifts in February

By Annabel Bishop
SA, 29 March 2018

Private sector credit extension lifted to 5.7% y/y in February 2018, from 5.5% y/y in January, on the back of growth in both the corporate and household categories.

Read the full article
trade update feb 2018 image

Trade update: Trade rises to 0.4bn in February 2018 from a large deficit

By Annabel Bishop
SA, 29 March 2018

Following a larger than expected trade deficit in January, the trade account registered a small surplus in February of R0.4bn

Read the full article
PPI inflation hero image

PPI update: inflation falls sharply as rand strength lowers fuel prices, food price deflation occurs

By Annabel Bishop
SA, 29 March 2018

PPI inflation fell to 4.2% y/y in February from 5.1% y/y in January, on food price deflation, with grain mill products falling 17.2% y/y,

MPC Update image

MPC update: The SARB cuts interest rates by 25bp as risks to inflation outlook seen to be reduced

By Annabel Bishop
SA, 28 March 2018

The SARB has cut the repo rate by 25bp to 6.50% in an almost equally divided 4 –3 vote. This was in line with economists’ expectations.

christine-lagarde-listing image

Market Brief: trade wars calming?

By Lewis Thorn
UK, 27 March 2018

There are signs that the US-China trade war may well be losing some momentum as negotiators rush to try to find a compromise on reducing the US’s trade deficit with China.

Employement Update image

Employment update: Non-farm employment improves on a quarterly basis, adding 81 000 jobs in Q4.17

By Annabel Bishop
SA, 27 March 2018

According to the Quarterly Employment Statistics (QES) survey, formal non-farm employment increased by 81 000 jobs in Q4.17

MPC outlook image

MPC outlook: the tone is likely to have become more dovish now Moody’s has upgraded SA’s outlook to stable

By Annabel Bishop
SA, 26 March 2018

Moody’s recent country review of South Africa’s credit ratings saw a stabilisation at the last rung of subinvestment grade (Baa3 – see figures 3 and 4)

Xi Jinping

Weekly Digest: Trade wars - Mutually Assured Economic Destruction

By John Wyn-Evans
UK, 26 March 2018

After focusing on domestic matters last week, it’s back to the international stage this week as we look at the threat from protectionism.

Credit ratings image

Credit Ratings: SA retains its investment grade status from Moody’s

By Annabel Bishop
SA, 24 March 2018

While the change to a stable outlook signals a stabilisation of the rating - an improvement as the country was placed on review for downgrade last year on 24th November

Read the full article
Sunlands lists on the NYSE

Market Brief: Tariffs up the ante

By Lewis Thorn
UK, 26 March 2018

As markets continue to react negatively to the current rising tensions around trade tariffs, US businesses have appealed to the White House to provide clarity

Week ahead - PPI image

Week Ahead: February PPI is likely to moderate to 5.0% y/y

By Annabel Bishop
SA, 23 March 2018

as a result of a continuing decrease in food price inflation and further fuel price relief

Read the full article
Retail sales update

Retail sales update: Retail sales growth moderates to 3.1% y/y in January

By Annabel Bishop
SA, 22 March 2018

Retail sales growth moderated to 3.1% y/y in January 2018, after logging growth of 5.1% y/y in December and 7.9% in November

market brief: fed hike

Market Brief: FED hikes but USD falls

By James Dazeley
UK, 22 March 2018

As widely expected, the Fed opted to raise the Federal funds target rate range by 25bps to 1.50-1.75%. The tone of the statement is more positive in its tone looking forward.

sarb update image

SARB QB update: Current account deficit widens to -2.9% of GDP

By Annabel Bishop
SA, 20 March 2018

The current account deficit widened to R137bn in Q4.2017 from R99bn in Q3.2017. Expressed as a percentage of GDP, the deficit widened to -2.9%

Read the full article
cpi update

CPI update: inflation drops down to 4.0% y/y as expected

By Annabel Bishop
SA, 20 March 2018

CPI inflation came out at 4.0% y/y for February (January 4.4% y/y), below consensus of 4.2% y/y (Investec forecast 4.0% y/y)

Read the full article
business cycle image

Business cycle: First leading indicator of 2018 lifts slightly

By Annabel Bishop
SA, 20 March 2018

The January 2018 leading indicator reading came out at 106.1, well up on a year ago, but slightly higher than December’s 105.8.

Brexit talks

Market Brief: Brexit transition agreement reached

by James Dazeley
UK, 20 March 2018

The Pound rallied yesterday after the UK and EU agreed terms for a Brexit transition period.

Phillip Hammond

Weekly Digest: Tiggernomics

By John Wyn-Evans
UK, 20 March 2018

This week we return to more domestic matters, with a look back at last week’s Spring Statement, the new “not a budget” delivered by Chancellor Philip Hammond.

cpi outlook image

CPI outlook: tax increases to boost inflation

By Annabel Bishop
SA, 20 March 2018

South Africa has seen inflation moderate substantially over the past year, dropping by 2.6% y/y, and leading to some expectations of an interest rate cut this year.

Michel Barnier and David Davis

Market Brief: US economic data trumps White House concerns

By James Dazely
UK, 19 March 2018

Even amid political and international trade concerns, the USD ended last week strongly.

CPI week ahead

Week Ahead: February CPI is likely to moderate to 4.0% y/y

By Annabel Bishop
SA, 19 March 2018

The rand traded relatively flat against all the major currencies, towards the earlier part of last week, before losing ground against the greenback later on in the week.

Sarah Huckabee Sanders

Market Brief: Trump hunt may claim another victim

By Ian Wilson
UK, 16 March 2018

The political roundabout which is the Trump White House may be soon to claim another victim with talk that the President’s national security adviser may soon be replaced.

building update image

Building update: Plans passed and buildings completed fell in January 2018

By Annabel Bishop
SA, 15 March 2018

The real value of building plans passed decreased by 4.5% y/y in January 2018, after increasing 1.5% y/y in December

Theresa May

Market Brief: US retail sales fizzle

By Ian Wilson
UK, 15 March 2018

The ‘big’ news yesterday was the worse than expected retail sales figure from the US.

mining update image

Mining update: Mining production lifted by 2.4%y/y in January

By Annabel Bishop
SA, 15 March 2018

Mining production gained some momentum in January 2018, increasing by 2.4% y/y, on the back of a strong contribution from iron ore

Rex Tillerson

Market Brief: a safe Spring Statement

By Ian Wilson
UK, 14 March 2018

As nearly all of us would have seen, one way or another, UK Chancellor Philip Hammond delivered his first Spring Statement yesterday.

Manufacturing

Business confidence update: sharp rise mirrors the perceived substantial reduction in political uncertainty

By Annabel Bishop
SA, 14 March 2018

The RMB/BER business confidence index (BCI) rose to 45 in Q1.18 from 34 in Q4.17. The survey was taken between 29th January and 5th of March 2018

Read the full article
Manufacturing update

Manufacturing update: Manufacturing production lifted 2.5% y/y in January 2018

By Annabel Bishop
SA, 13 March 2018

Manufacturing production lifted in January to 2.5% y/y, following a 1.8% y/y (revised downwards from 2.0%y/y) rise in December. In line with the market consensus.

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Weekly Digest: letter from Italy

Weekly Digest: Letter from Italy

By John Wyn-Evans
UK, 12 March 2018

This week’s Digest comes to you from Italy, so it seems appropriate to pass some comment on the political situation here.

Winter homes in the UK

Market Brief: huge non-farms, quiet markets ahead?

By Ian Wilson
UK, 12 March 2018

Without a doubt, Friday’s big news was the much better than expected headline Non-farm payrolls figure.

Rand outlook

Week Ahead: January updates for mining and manufacturing production

By Annabel Bishop
SA, 9 March 2018

Rand movements during the week were influenced by the weakening dollar, which was driven by fears over President Trump’s protectionist trade policy stance.

mario draghi

Market Brief: ECB’s forward guidance in focus

By Emily Maguire
UK, 8 March 2018

The ECB’s Governing Council convenes today for its second meeting of the year. The main area of focus will be whether there are any changes to its “forward guidance”.

jerome powell

Market Commentary: March 2018

By John Wyn-Evans
UK, 7 March 2018

2018 began much as 2017 ended, with good gains for investors willing to accept a modicum of risk. Once again, however, there was little sense of euphoria.

Trump loses another key advisor

Market Brief: Trump loses another key advisor

By Emily Maguire
UK, 7 March 2018

After mounting speculation yesterday around Gary Cohn’s position in Donald Trump’s government, the US President’s top economic advisor resigned last night.

Read the article
italian elections

Market Brief: Italian uncertainty continues

By Emily Maguire
UK, 6 March 2018

Former Italian Prime Minister Matteo Renzi resigned as leader of the Democratic Party yesterday following Sunday’s general election.

gdp update image

GDP Update: Economic activity lifts above expectations

By Annabel Bishop
SA, 6 March 2018

GDP (measured by production) for Q4.17 grew on a quarter on quarter seasonally adjusted annualised (qqsaa) basis to 3.1%

Week ahead gdp group

Week Ahead: GDP growth likely to moderate in Q4.17

By Annabel Bishop
SA, 5 March 2018

The rand lost some of its momentum last week, along with other emerging market currencies, depreciating by 3.2%, evidencing recent volatility.

Trade wars

Weekly Digest: inflation returns (part 2) and trade wars

By John Wyn-Evans
UK, 5 March 2018

Because the threat of inflation (in the US) and its consequences has been the primary mover of markets recently, I am returning to the subject for a second week.

There May delivers Brexit speech

Market Brief: Italian election, Brexit vision and trade wars!

By Emily Maguire
UK, 5 March 2018

It’s worth beginning this week with a recap on Theresa May’s Brexit speech on Friday, as this was keenly anticipated throughout last week.

vehicle sales update image

Vehicle Sales update: New vehicle sales logged an annual decline in February

By Annabel Bishop
SA, 2 March 2018

Domestic vehicle sales growth contracted in February at a rate of 3.8% y/y, following a contraction of 9.2% y/y in January 2018

Read the full article
Theresa

Market Brief: ‘Steely’ Trump back in the headlines

By Sana Hanassi-Savari
UK, 2 March 2018

Yesterday was a busy day for data releases. Starting at home, there was a bit of a mixed bag - the UK Nationwide house price index came in weaker than expected printing -0.3% m.o.m. versus the +0.1% expected.

Electricity update image

Electricity update: electricity production and consumption lift modestly

By Annabel Bishop
SA, 1 March 2018

In January, the rate of electricity production increased by 2.4% y/y compared to the 1.5% y/y rise in December.

pmi update image

PMI update: The Manufacturing PMI climbed above 50 in February 2018

By Annabel Bishop
SA, 1 March 2018

Based on the latest PMI survey, manufacturing sector conditions improved in February 2018. Specifically, the PMI gauge climbed into expansionary territory

Market Brief image

Market Brief: Barnier turns Nastier!

By Kevin Musisi
UK, 1 March 2018

It was a difficult day for travellers in the UK yesterday, as the ‘beast from the East’ hit the UK with a freezing snap. It was also a difficult day for the pound, as the EU’s draft treaty did little to thaw the icy relations with the UK.

SA Gilts image

SA Gilts: Higher yields on rand weakness

By Annabel Bishop
SA, 1 March 2018

After reaching a low of 7.90% this year (a low last seen in the first half of 2015) on rand strength following a perceived substantial reduction in political risk

Read the full article
Trade update: January 2018 image

Trade update: January 2018

By Annabel Bishop
SA, 28 February 2018

Following a R15.3bn surplus in December 2017, the trade account registered a deficit of R27.7bn in January, far exceeding market expectations of a R1.7bn shortfall.

Read the full article
PSCE update: Growth in private sector credit extension image

PSCE update: Growth in private sector credit extension decelerated in January

By Annabel Bishop
SA, 28 February 2018

Growth in private sector credit extension moderated to 5.5% y/y in January 2018 from 6.7% y/y in December 2017, on account of a deceleration in the rate of both household and corporate credit growth.

Market Brief: Boris Johnson

Market Brief: Liam Fox wants a packet of crisps

By Kiran Russell
UK, 28 February 2018

Jerome Powell, the new Fed Chair did not disappoint markets yesterday. The USD strengthened on the back of his upbeat testimony to the House Financial Services Committee.

PPI update image

PPI update: PPI inflation moderated in January, primarily on the back of a decline in fuel price inflation

By Annabel Bishop
SA, 28 February 2018

PPI inflation for final manufactured goods fell slightly in January to a rate of 5.1% y/y, from 5.2% y/y in December 2017.

Jeremy Corbyn

Market Brief: yesterday was about Jeremy, today it's about Jerome

By Kiran Russell
UK, 27 February 2018

Jeremy Corbyn’s decision to back a customs union between the UK and the EU yesterday has set up a parliamentary showdown for Prime Minister Theresa May.

Rand outlook image

Rand outlook: the probability to the downside has reduced materially

By Annabel Bishop
SA, 26 February 2018

While the rand has recouped its losses from the effects of Nenegate end 2015/early 2016, it has yet to fully recoup the losses of the past near decade.

Week ahead image

Week Ahead: economic data reflect modestly improving rates of economic activity

By Annabel Bishop
SA, 26 February 2018

The appreciative bias in the rand was maintained throughout last week, with the currency presently at 11.55/USD compared to 11.67/USD last Monday.

Jerome Powell and Donald Trump

Weekly Digest: inflation returns

By John Wyn-Evans
UK, 26 February 2018

Last week I promised to write about inflation, at least as long as nothing came along to make a stronger claim. The last few days in financial markets have turned out to be relatively quiet, so I can stick with Plan A.

Jerome Powell is sworn in as Fed Reserve chair

Market Brief: a week of important speeches

By Kiran Russell
UK, 26 February 2018

It is believed that the Prime Minister oversaw proceedings at her Brexit Cabinet meeting at Chequers confidently, whilst getting agreement on a deal.

Theresa May and Mark Rutte

Market Brief: ‘Canada Plus Plus Plus’ model for the UK?

By Shaun Garrett
UK, 23 February 2018

Yesterday the UK released their second estimate Q4 GDP figures. They were revised down to +0.4% from +0.5%, whilst the broad consensus and our own economist forecast had been for it to be unchanged at 0.5%.

Theresa May and Mark Rutte

Budget: Fiscal adjustments and higher GDP growth to reduce fiscal deficit

By Annabel Bishop
SA, 22 February 2018

The 2018 Budget proposes that necessary fiscal measures, alongside higher GDP growth outcomes, will reduce the deficit and stabilise gross government debt over the medium term.

Market Brief image

Market Brief: Dollar firms overnight after Yellen's final minutes

By Shaun Garrett
UK, 22 February 2018

Last night the FOMC meeting minutes for January were released, highlighting the Fed view that the US economic expansion is expected to gain momentum.

Annabel Bishop

2018's Budget Snapshot

By Annabel Bishop
SA, 22 February 2018

Likely enough to avoid a Moody’s Q1.18 downgrade, following years of increasingly tight Budgets.

cpi update image

CPI Update: CPI inflation continued to subside at the start of 2018

By Annabel Bishop
SA, 21 February 2018

CPI inflation moderated to 4.4% y/y in January from 4.7% y/y in December, on account of a smaller contribution from the transport category

business cycle q 14 update

Market Brief: Sterling firms on Business Insider article

By Shaun Garrett
UK, 21 February 2018

Sterling firmed yesterday as a Business Insider (BI) article was released suggesting that the European Parliament is preparing a “detailed” 60-paragraph resolution which will call for more flexibility in future relationship talks with Britain.

business cycle q 14 update

Business cycle: Q4.17 leading indicator reaches highest level since 2013

By Annabel Bishop
SA, 20 February 2018

The Q4.17 leading indicator reading has come out at 105.2, well up on the rest of the year, and the sub 100 readings in 2016 and 2015.

david davis

Market Brief: UK does not intend to build 'Mad Max' economy

By Shaun Garrett
UK, 20 February 2018

Yesterday Eurozone finance ministers chose Spanish economy minister Luis de Guindos to succeed ECB Vice President, Vitor Constancio, in May.

nyse snapchat

Weekly Digest: taking stock

By John Wyn-Evans
UK, 19 February 2018

An investor lucky enough to be cut off from financial news so far this year might inspect their portfolio today and wonder what all the fuss has been about.

mark carney

Market Brief: UK retail sales disappoint

By Shaun Garrett
UK, 19 February 2018

Friday morning saw the release of UK retail sales. The January reading disappointed against expectations.

UK Autumn Budget 2017: how will it affect you?

 

Philip Hammond delivered the UK Budget statement on 22 November 2017. From property to capital gains, what do the reforms and policies announced mean for you and your business?

Read the full article

Philip Hammond delivered the UK Budget statement on 22 November 2017. From property to capital gains, what do the reforms and policies announced mean for you and your business?

Read the full article
 

Bank of England raises interest rate from 0.25 to 0.5%: what does it mean for you?

 

‘The key impact on investment portfolios is that when you raise interest rates you make other assets look a little bit less attractive’

Phil Shaw, Chief Economist, Investec

‘The key impact on investment portfolios is that when you raise interest rates you make other assets look a little bit less attractive’

Phil Shaw, Chief Economist, Investec

 
Governor of the Bank of England Mark Carney speaks during the quarterly Inflation Report press conference at The Bank of England on 3 November 2016 in London

First rate rise in a decade, but will Brexit battles put the brakes on second hike?

By Victoria Clarke
UK, 3 November 2017
Markets ponder timing of further rate rises after Governor Carney hints MPC would await further clarity on key elements of Brexit before enacting its next move.

Read the full article