Business surveys point to continued recovery

The business surveys for August published this week provided some reassurance that the euro-zone economy is continuing to grow at a decent pace. And the decline in the forward-looking components is not too worrying since the pace of growth was always likely to tail off as the economy got closer to "normal". Next week, we expect flash inflation data for August to show big rises in the headline and core rates, due to base effects related to the timing of summer sales last year.
Jessica Hinds Europe Economist
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European Economics Update

Omicron: implications for the euro-zone

It is still very early days in assessing the effects of the latest Covid variant, but we suspect that Omicron has the capacity to cause a new decline in economic activity in the coming months but that it will probably have a relatively small impact on inflation. Meanwhile, the variant means the ECB is even more likely to maintain some flexibility around its asset purchases beyond next March.

29 November 2021

European Data Response

Germany Flash Inflation (Nov.)

The increase in German inflation to 6% on the HICP measure was partly due to statistical quirks which should be reversed next month. But even the national CPI measure of inflation rose to 5.2%. However it is measured, inflation has now probably peaked and should fall back a long way next year.

29 November 2021

European Data Response

EC Survey (November)

Despite the slight deterioration on the month, November’s EC business and consumer survey showed that economic sentiment in the euro-zone was high before the recent news about the Omicron variant. It also confirmed that consumers’ and firms’ inflation expectations were extremely strong.

29 November 2021

More from Jessica Hinds

European Data Response

Euro-zone GDP & Employment (Q2)

The strong growth in the euro-zone GDP in Q2 is likely to be repeated in Q3 despite the spread of the Delta variant, and should bring the economy back towards its pre-virus size in the coming months. But the southern economies continue to lag, with travel restrictions still holding back their tourism sectors.

17 August 2021

European Economics Update

Weak wage growth trumps strong price pressures

The latest data show pipeline price pressures continuing to mount in the euro-zone, pointing on the face of it to much higher consumer price inflation. But while there is arguably scope for a small rise in core goods inflation, subdued wage growth will keep services, and therefore underlying, inflation low.

9 August 2021

European Economics Weekly

Industry holds back otherwise strong recovery

This week provided yet more good news on the euro-zone, with case numbers falling consistently in some countries, vaccine rollouts on track, and both the survey and official data suggesting that the economic recovery continues apace. But international tourism is still hampered by travel restrictions and industry remains a weak point, as supply constraints weigh on auto output in particular. Indeed, data out next week are likely to suggest that euro-zone industrial output contracted in Q2.

6 August 2021
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