Monthly Report: December 2025

United States

Mixed macro data from the US this month, with labour data painting a negative picture while inflation seems to be cooling further, and GDP growth remains solid. Overall, the macroeconomic environment appears supportive of further rate cuts. 

Looking at the labour data, non-farm payrolls for October came in negative (-105k), and payrolls grew by 64k in November, overall a miss of around 120k jobs vs. expectations.  The change in total non-farm payroll employment was also revised down by 22,000 in August and by 11,000 in September. The unemployment rate also ticked up to 4.6%, up from 4.4%. 

On the positive side, core and headline inflation came out at 2.6% and 2.7% year-on-year, respectively, beating the 3% forecast. This was the lowest inflation reading since March 2021. GDP grew by 4.3% quarter-on-quarter vs. the 3.2% forecast and 3.8% previous reading, fuelled mainly by consumer spending, which was recorded as the highest for the year. 

House prices have been retreating, reflecting the overall drop in inflation. The median price of existing homes has been declining since June, with another 1.2% month-on-month decline. Data on the median price of new home sales remains delayed, with the most recent reading from September. 

Mortgage rates continued to trend lower, with the 30-year yield down 8 bps and the 15-year fixed mortgage down 7 bps. The 30-year fixed-rate mortgage is at its lowest level since September 2024. 

Existing home sales in the United States rose by 0.5% month-on-month in November marking the third consecutive increase to the highest absolute level in nine months, however a slight miss compared to the forecast. 

The Case-Shiller 20-City Home Price Index rose by 1.3% year-on-year for October, marking the smallest increase since the summer of 2023. The index eased from a 1.4% hike in September; however, it was slightly above the 1.1% forecast. Geographically, the largest gains were in Chicago (5.8% annually), followed by New York (5%). 

United Kingdom 

The Bank of England cut rates by another 25 bps, reflecting the continued drop in inflation and a somewhat stable unemployment rate. 

On the data front, inflation fell to 3.2% year-on-year, below the 3.4% forecast and the 3.6% recorded previously. Both manufacturing and services PMIs beat expectations and are well in growth territory. Manufacturing rose to 51.2 from 50.2, and services rose to 52.1 from 51.3. 

On the negative side, GDP contracted 0.1% month-on-month, compared with the flat growth recorded the previous month. The unemployment rate was 5.1%, as forecast, a slight 0.1% increase from the last print. Retail sales also contracted by 0.1% month-on-month, below the 0.4% forecast, but up from the -0.9% recorded previously. This marked the 2nd consecutive month of decline, fuelled by a drop in supermarket sales and in online jewellers.  

The housing market remains stable; however, growth appears to be stalling, according to the Halifax House Price Index. Prices rose 0.7% year-on-year in November 2025, down from 1.9% in October and marking the slowest growth since March 2024; however, prices still reached new all-time highs. The Index was flat compared with a month earlier, indicating that the decline in growth primarily reflects stronger price growth a year earlier relative to weaker price growth now. 

The housing market remains stable, especially given recent changes to stamp duties and uncertainty about tax increases in the Budget. The main headwinds have been rising mortgage costs, which are now at their lowest level as a percentage of income in the last three years.   

The RICS UK Residential Market Survey improved to -16% from -19% in October, beating the forecasts for a steeper decline to -21%. Geographically, London has the worst reading (-44%), while Northern Ireland and Scotland show positive results. The long-term expectations (for 12 months onward) remain skewed to the upside, with an overall net balance of +24% indicating an expectation of house price appreciation. This is the highest level since June. 

China

The macroeconomic picture in China remains uncertain, with mixed data, while housing-related data remain very weak and not responsive to positive readings in inflation and manufacturing. 

On the negative side, China’s retail sales and industrial production continue to grow year-on-year; however, they are easing significantly from their latest prints and showing their weakest growth in over 18 months and 3 years, respectively. Retail sales rose 1.3% year-on-year, easing more than half the growth recorded last month, 2.9% and missing expectations for 3.3%. Industrial production grew 4.8% year-on-year in November 2025, slowing from a 4.9% increase in the previous month and missing market expectations of 5.4%. 

On the positive side, inflation rose to 0.7% year-on-year in November, matching the 0.6% expectation and outperforming the 0.2% recorded in October. This is the 2nd consecutive month in which inflation has risen, driven mainly by food and energy. China’s official NBS Manufacturing PMI rose to 50.1, beating both last month’s reading and the forecast of 49.2. This marks the first growth in factory activity since March and an increase in new orders that hasn’t happened since June. 

Housing-wise, China’s nationwide new home prices dropped 2.4% year-on-year in November, a steeper decline from the 2.2% decline recorded last month. This is the 29th consecutive month of year-on-year price declines, the largest since August. The main city outlier is Shanghai, where prices still rose by 5.1% year-on-year. Every month, nationwide prices were 0.4% lower, following a -0.5% from the previous month.

References

(n.d.). US Treasuries Yield Curve. US Treasuries Yield Curve. https://www.ustreasuryyieldcurve.com/

(n.d.). CME FedWatch Tool. CME Group. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

(n.d.).Trading Economics. Trading Economics. https://tradingeconomics.com/united-states/nahb-housing-market-index 

(n.d.).Goldman Sachs. Goldman Sachs. https://www.goldmansachs.com/ 

(n.d.).Bloomberg. Bloomberg. https://www.bloomberg.com 

(n.d.). FRED. Federal Reserve Economic Data. https://fred.stlouisfed.org/

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