Top of main content
Macro Monthly: Soft landing looking possible

22 Sep 2023

Key takeaways

  • Global demand is slowing as tighter policy takes effect…
  • …with mixed inflation results across the world…
  • …as central banks mull over their next moves

Divergence is still the key theme in the global economic data – with services faring much better than manufacturing (although services may be starting to cool, too). In a similar vein, inflationary pressures are hanging around in Europe, but we have seen some much more encouraging data in the US, in Latin America and across Asia as central bankers in those regions mull over whether to stop tightening or (in some cases) have already started easing policy.

Growth in the US is expected to be strong in Q3

The much-anticipated US recession hasn’t come, at least yet, with the economy looking like it may have even accelerated in Q3 on the back of early data (Chart 1), following on from broadly decent readings through the second quarter. Recessions continue to be avoided in Europe, too, although the recent survey data there have taken a turn for the worse and the manufacturing side of the economy remains weak (Chart 2).

Source: Macrobond, Atlanta Fed
Source: S&P Global, Macrobond. Note: Aug 2023 services data is flash.
Consumer spending has been a bright spot in China

Keeping with the theme of softer data, the recovery in mainland China has slowed further (Chart 3), led by weakness in the property sector and the manufacturing and trade data. Consumer spending on services continues to recover quickly (Chart 4), but the weakness in the labour market may hold back any subsequent momentum. The broader weakness in global trade will be playing a role here, but there are some tentative signs of a turn in some leading indicators in this space.

Source: Macrobond
Source: Macrobond
Robust wage growth is stoking services inflation in Europe…

So much will come down to developments in the labour market, which in the rest of the world is holding up. Unemployment rates are yet to pick up meaningfully and jobs remain plentiful. Wage growth remains high in Europe, notably the UK, which may be contributing to some of the stickiness in services inflation.

…while US readings are heading towards target

In the US, nominal wage growth has settled just above 4%, but with dropping inflation, real wages are now rising – giving support to consumer demand. Despite this, recent inflation prints have been more promising, with underlying prices hardly rising and with rental inflation set to slow in the coming months (Chart 5), overall core CPI (Chart 6) and personal consumption expenditure inflation readings should head towards the Federal Reserve’s target.

Source: Macrobond
Source: Macrobond
Central banks still need to balance the inflation risks

But, importantly, not all the way there. Central banks are continuing to balance the risks. On one hand, inflation could become more entrenched, if tightening is stopped or reversed too early. On the other, the risks of overtightening are still there, with much of the global economy yet to show clear signs of higher rates biting.

So, while the data suggest that a soft landing is now looking possible, with inflation coming down and growth cooling, not collapsing, the risks of something harder are still there.

Source: Bloomberg, HSBC ⬆Positive surprise – actual is higher than consensus, ⬇Negative surprise – actual is lower than consensus, ➔ Actual is in line with consensus
Source: Refinitiv Eikon, HSBC
Log on to Internet Banking and check your investments performance
Take your financial health check and that will help you to understand your needs, make and achieve your financial plan

Related Insights

Most central banks hope they can finally take a breather… [16 Oct]
ASEAN exports remain under pressure amidst weak global demand, with few signs of... [9 Oct]
Recovery momentum continued to ease while services... [11 Sep]
As anticipated, the Fed kept the policy rates range unchanged at 5.25-5.5% at the Septembe... [26 Sep]

Disclosure appendix

Additional disclosures

1. This report is dated as at  15 September 2023.

2. All market data included in this report are dated as at close 14 September 2023, unless a different date and/or a specific time of day is indicated in the report.

3. HSBC has procedures in place to identify and manage any potential conflicts of interest that arise in connection with its Research business. HSBC's analysts and its other staff who are involved in the preparation and dissemination of Research operate and have a management reporting line independent of HSBC's Investment Banking business. Information Barrier procedures are in place between the Investment Banking, Principal Trading, and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner.

4. You are not permitted to use, for reference, any data in this document for the purpose of (i) determining the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments, (ii) determining the price at which a financial instrument may be bought or sold or traded or redeemed, or the value of a financial instrument, and/or (iii) measuring the performance of a financial instrument or of an investment fund.


This document is prepared by The Hongkong and Shanghai Banking Corporation Limited (‘HBAP’), 1 Queen’s Road Central, Hong Kong. HBAP is incorporated in Hong Kong and is part of the HSBC Group. This document is distributed by HSBC Bank Canada, HSBC Continental Europe, HBAP, HSBC Bank (Singapore) Limited, HSBC Bank (Taiwan) Limited, HSBC Bank Malaysia Berhad (198401015221 (127776-V))/HSBC Amanah Malaysia Berhad (200801006421 (807705-X)), The Hongkong and Shanghai Banking Corporation Limited, India (HSBC India), HSBC Bank Middle East Limited, HSBC UK Bank plc, HSBC Bank plc, Jersey Branch, and HSBC Bank plc, Guernsey Branch, HSBC Private Bank (Suisse) SA, HSBC Private Bank (Suisse) SA DIFC Branch, HSBC Private Bank Suisse SA, South Africa Representative Office, HSBC Financial Services (Lebanon) SAL, HSBC Private banking (Luxembourg) SA and The Hongkong and Shanghai Banking Corporation Limited (collectively, the “Distributors”) to their respective clients. This document is for general circulation and information purposes only. This document is not prepared with any particular customers or purposes in mind and does not take into account any investment objectives, financial situation or personal circumstances or needs of any particular customer. HBAP has prepared this document based on publicly available information at the time of preparation from sources it believes to be reliable but it has not independently verified such information. The contents of this document are subject to change without notice. HBAP and the Distributors are not responsible for any loss, damage or other consequences of any kind that you may incur or suffer as a result of, arising from or relating to your use of or reliance on this document. HBAP and the Distributors give no guarantee, representation or warranty as to the accuracy, timeliness or completeness of this document. This document is not investment advice or recommendation nor is it intended to sell investments or services or solicit purchases or subscriptions for them. You should not use or rely on this document in making any investment decision. HBAP and the Distributors are not responsible for such use or reliance by you. You should consult your professional advisor in your jurisdiction if you have any questions regarding the contents of this document. You should not reproduce or further distribute the contents of this document to any person or entity, whether in whole or in part, for any purpose. This document may not be distributed to any jurisdiction where its distribution is unlawful.

The following statement is only applicable to HSBC Bank (Taiwan) Limited with regard to how the publication is distributed to its customers: HSBC Bank (Taiwan) Limited (“the Bank”) shall fulfill the fiduciary duty act as a reasonable person once in exercising offering/conducting ordinary care in offering trust services/business. However, the Bank disclaims any guaranty on the management or operation performance of the trust business.

The following statement is only applicable to by HSBC Bank Australia with regard to how the publication is distributed to its customers: This document is distributed by HSBC Bank Australia Limited ABN 48 006 434 162, AFSL/ACL 232595 (HBAU). HBAP has a Sydney Branch ARBN 117 925 970 AFSL 301737.The statements contained in this document are general in nature and do not constitute investment research or a recommendation, or a statement of opinion (financial product advice) to buy or sell investments. This document has not taken into account your personal objectives, financial situation and needs. Because of that, before acting on the document you should consider its appropriateness to you, with regard to your objectives, financial situation, and needs.

Important Information about the Hongkong and Shanghai Banking Corporation Limited, India (“HSBC India”)

HSBC India is a branch of The Hongkong and Shanghai Banking Corporation Limited. HSBC India is a distributor of mutual funds and referrer of investment products from third party entities registered and regulated in India. HSBC India does not distribute investment products to those persons who are either the citizens or residents of United States of America (USA), Canada, Australia or New Zealand or any other jurisdiction where such distribution would be contrary to law or regulation.

Mainland China

In mainland China, this document is distributed by HSBC Bank (China) Company Limited (“HBCN”) and HSBC FinTech Services (Shanghai) Company Limited to its customers for general reference only. This document is not, and is not intended to be, for the purpose of providing securities and futures investment advisory services or financial information services, or promoting or selling any wealth management product. This document provides all content and information solely on an "as-is/as-available" basis. You SHOULD consult your own professional adviser if you have any questions regarding this document.

The material contained in this document is for general information purposes only and does not constitute investment research or advice or a recommendation to buy or sell investments. Some of the statements contained in this document may be considered forward looking statements which provide current expectations or forecasts of future events. Such forward looking statements are not guarantees of future performance or events and involve risks and uncertainties. Actual results may differ materially from those described in such forward-looking statements as a result of various factors. HSBC India does not undertake any obligation to update the forward-looking statements contained herein, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Investments are subject to market risk, read all investment related documents carefully.

© Copyright 2024. The Hongkong and Shanghai Banking Corporation Limited, ALL RIGHTS RESERVED.

No part of this document may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of The Hongkong and Shanghai Banking Corporation Limited.

Important information on sustainable investing

“Sustainable investments” include investment approaches or instruments which consider environmental, social, governance and/or other sustainability factors (collectively, “sustainability”) to varying degrees. Certain instruments we include within this category may be in the process of changing to deliver sustainability outcomes.

There is no guarantee that sustainable investments will produce returns similar to those which don’t consider these factors. Sustainable investments may diverge from traditional market benchmarks. In addition, there is no standard definition of, or measurement criteria for sustainable investments, or the impact of sustainable investments (“sustainability impact”). Sustainable investment and sustainability impact measurement criteria are (a) highly subjective and (b) may vary significantly across and within sectors.

HSBC may rely on measurement criteria devised and/or reported by third party providers or issuers. HSBC does not always conduct its own specific due diligence in relation to measurement criteria. There is no guarantee: (a) that the nature of the sustainability impact or measurement criteria of an investment will be aligned with any particular investor’s sustainability goals; or (b) that the stated level or target level of sustainability impact will be achieved.

Sustainable investing is an evolving area and new regulations may come into effect which may affect how an investment is categorised or labelled. An investment which is considered to fulfil sustainable criteria today may not meet those criteria at some point in the future.