Euro-zone Final PMIs (July) and Retail Sales (June)

The final PMIs show that the euro-zone’s recovery continued apace at the start of Q3. Price pressures are continuing to mount and point to an increase in inflation in the coming months, but we expect this to be temporary. Meanwhile, retail sales increased again in June, to nearly 5% above pre-pandemic levels.  
Andrew Kenningham Chief Europe Economist
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European Economics Weekly

Energy, semi-conductors and Italy’s Green Pass

The continued high level of energy prices strengthens our view that euro-zone inflation will keep rising in the coming months. But by lowering consumers’ purchasing power, it could actually reduce inflationary pressure in the medium term. Meanwhile, data released this week added to the evidence that supply problems are weighing on German car manufacturers, and things are unlikely to get better any time soon. Finally, Italy’s new Green Pass requirement for workers came into force today, sparking protests at a number of ports. But so far the disruption seems to have been limited.

15 October 2021

European Data Response

Euro-zone Industrial Production (Aug)

The large decline in euro-zone industrial production in August was largely due to supply shortages affecting production, particularly in the German auto sector. While demand is still strong, prolonged supply shortages and high input prices suggest manufacturing will continue to struggle in Q4.

13 October 2021

European Economics Update

“Underlying inflation” still weak

Core inflation in the euro-zone rose to 1.9% in September, its highest level in nearly 13 years, but other measures of underlying inflation are much lower. This supports our view that when the temporary forces pushing up inflation have faded, the core rate will settle well below the ECB’s target.

12 October 2021

More from Andrew Kenningham

European Economics Weekly

Reopening effects to persist in Q3

The surge in German inflation, to 3.8% on the national CPI measure in July, may have got some pulses racing in Frankfurt, but core euro-zone inflation remains very low and we continue to think that the ECB will struggle with excessively low inflation over the medium term. Next week we expect to learn that euro-zone retail sales rose again in June and the Composite PMIs for Spain and Italy increased in July.
 

30 July 2021

European Data Response

Euro-zone GDP and Employment (Q2)

After increasing more than expected in Q2, thanks to strong growth in the southern economies, euro-zone GDP should expand rapidly again in Q3 as core economies close in on their pandemic levels. China slowdown webinar: Join us on Thursday, 5th August for a special webinar assessing the impact of China’s economic slowdown on the global recovery. Neil Shearing will lead a discussion with economists from across our economics and markets services to assess whether investors should brace for fresh volatility with China poised for a structural deceleration. Register here for sessions at 0900 BST/1600 HKT or 1100 ET/1600 BST.  

30 July 2021

European Data Response

Germany Flash Inflation (July)

The increase in German inflation to nearly 4% on the CPI measure was partly due to last year’s VAT cut and partly due to rising energy and food inflation, all of which should prove short-lived. Inflation is likely to drop back sharply early next year and to settle below 2% over the medium term.

29 July 2021
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