MacroX State of Play Nov 2023: Advanced Economies


Key Takeaways:

  • Our nowcasts reveal a dramatic softening in November activity across developed markets
  • The strong Labor market –  a dependable floor on economic slowdown until now – continues to soften with both employer demand as well as labor bargaining power declining.
  • Activity looks particularly weak in the Eurozone – with inflation falling to more manageable levels the ECB could look to cut sooner rather than later

Country Latest Month Growth (Z-Scored) Monthly Growth Momentum PMI (Z-Scored) Lagged Official Growth – Q3 GDP (annualized) Inflation CB Stance Major Themes
United States 0.36 -0.37 -0.43 4.9% Core PCE on track to realize lower than Fed Sep Projections Neutral Growth decelerating in Q4, inflation trajectory is encouraging
Germany 0.02 -0.26 -0.77 -0.4% Headline/Core CPI at lowest levels in 2 years (both around 4%) Neutral Economy perilously close to recession
France 0.02 -0.30 -0.91 0.4% Headline/Core inflation around 4% – lowest levels in 15 months Neutral Growth slowed in Q3
Italy -0.29 -0.16 -0.27 0% CPI under 2% in Oct, core still around 4% Neutral Economy stagnating
Spain -0.43 -0.51 -0.20 1.2% Core inflation sticky around 6% Neutral Headline inflation has risen 4 months in a row
United Kingdom 0.07 -0.33 -0.38 0.4% Core inflation fell to 5.2% in Oct – lowest level in 18 months Neutral BoE has lowered growth forecasts for 2023
Australia -0.15 -0.08 -0.42 1.6% (Q2) Both headline/core inflation over 5% Neutral – BoA on hold after delivering hike in Nov Inflation not falling quickly enough for RBA
New Zealand 0.06 0.09 -0.85 3.6% (Q2) Both headline/core inflation over 5% Neutral Economy recovered in Q3 after technical recession


Activity continues to be robust in the US.  However, our November nowcast shows a softening of activity – in keeping with other Nowcasts such as GDPNow which all see a deceleration of economic growth in Q4 compared to Q3. Furthermore, this deceleration in the growth of activity is in keeping with what we’ve seen from our alternative data-based measures of the US Labor Market (see here).

We’ve already commented on the encouraging path of US inflation here and detailed how CPI rents catching up to actual rent dynamics may mean further disinflation over the next 6+ months. Furthermore, Core PCE for 2023 remains on track to print below the Fed’s September projection of 3.7%. The deceleration in economic activity and inflation has caused the market to price out any chance of the Fed hiking this year as we had foreseen.


Our nowcasts show a widespread deceleration in activity across the Eurozone in November. The fall in activity was particularly precipitous in Spain dragging the growth in activity to be well below trend. One of the key advantages of MacroX’s use of numerous alternative data sources is our ability to look at sectors in great detail. The fall in activity implied by our nowcasts in the Eurozone has been matched by a downtick in our measure of worker confidence – lending credence to our activity nowcasts. With Eurozone inflation rapidly falling and activity seemingly stalling, the ECB may soon be forced into action. The market has priced in the first 25bp cut from the ECB late Q2 2024 – if activity continues to fall at this precipitous pace, the ECB may be forced into action even sooner than that.

Fig 1: Worker confidence ticked lower in the Eurozone in November – albeit from high levels

Rest of the World

Unlike Australia and New Zealand, our nowcast of UK growth shows a deceleration in November in keeping with other advanced economies. UK inflation also continues to slowly fall with both CPI and Core CPI reaching their lowest levels in well over a year in October – encouraging news for the Bank of England. The UK Labor Market also continues to soften – for example, job postings continue to trend lower.

Fig 2: Labor Demand – as measured by job postings – continues to fall in the UK

The alternative measures of labor demand and supply have become particularly important in the UK given the well-documented issues with UK labor market data. As the FT reports here, the response rate for the survey used to generate the unemployment rate has fallen to 14% from closer to 40% in 2019!

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