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Despite August’s small fall, German Ifo business sentiment remains buoyant and points to strong growth ahead. … German Ifo (Aug.) & GDP Breakdown …
25th August 2017
Norway’s mainland economy recorded another strong expansion in Q2 and forward-looking indicators suggest that the recovery will continue to gain pace. But with inflation set to fall further, we doubt that this will alter the stance of monetary policy. … …
24th August 2017
The second release of Spanish GDP confirmed that quarterly growth edged up in Q2 due to stronger net trade. While we expect growth to slow in the coming quarters, Spain is still set to be one of the euro-zone’s top performers. … Spanish GDP Breakdown …
While the Central Bank of Iceland (CBI) left rates unchanged today, our expectation that the króna will appreciate in the coming months means we expect one more rate cut this year, in November. … Central Bank of Iceland nearing the end of its loosening …
23rd August 2017
August’s small rise in the euro-zone Composite PMI suggests that economic growth maintained its pace in Q3. With the recovery healthy, we think that the ECB will proceed with tapering its asset purchases from January. … Euro-zone Flash PMIs …
In recent months Swedish inflation has been artificially boosted by a new method for calculating package holiday prices. While the Riksbank will look through this particular effect, it is nevertheless clear that underlying inflation has risen and that …
22nd August 2017
August’s fall in German investor sentiment probably reflects the euro’s continued rise and recent falls in equity prices. But we do not think that it is a sign of an economic slowdown to come. … German ZEW Survey …
After 100 days in office, French President Emmanuel Macron has already begun to reform the labour market. But a decline in his approval rating and a darker fiscal outlook will make it difficult for him to tackle the more controversial reforms that lie …
21st August 2017
The euro-zone’s economic growth is unusually synchronised across the region. Economies in the core continue to do well, while previously-struggling countries like Italy and Portugal are growing again. This makes it less likely that a crisis will erupt in …
18th August 2017
The decline in Swiss unemployment in Q2 shows that improving economic conditions are continuing to feed through to the labour market. While we expect unemployment to fall further, we doubt that this will translate into stronger wage growth any time soon. …
17th August 2017
With Angela Merkel’s party far ahead in the polls and pledging to pay off debt and cut taxes rather than increase investment, it looks set to be more of the same in Germany after September’s election. But the vote could act as a catalyst for renewed …
16th August 2017
At its last meeting in June, when it cut interest rates for the second time this year, the Central Bank of Iceland (CBI) left the door open to further rate cuts. But given that the króna has slumped since then, it now seems more likely that the CBI will …
The second estimate of euro-zone Q2 GDP confirmed that the recovery gathered pace. And with surveys suggesting that the economy continued to expand at a healthy rate at the start of Q3, the outlook remains bright. … Euro-zone, Italy & Netherlands GDP (Q2, …
July’s jump in Swedish inflation is partly due to a methodological change in the way that package holiday prices are tracked. Yet even excluding this effect, underlying inflation has picked up and looks set to rise further. … Swedish Consumer Prices …
15th August 2017
The German economy put in a strong performance in the first half of the year. While growth in Q2 was slightly slower than expected, meaning that euro-zone GDP growth might be revised down, surveys suggest that the economy should continue to do well. … …
Italy’s banking sector has seen signs of improvement this year. But it is a long way from full health, so the country’s lenders are unlikely to contribute significantly to the economic recovery any time soon. … Are Italy’s banks ready to support the …
14th August 2017
Despite June’s decline in euro-zone industrial production, the sector’s contribution to GDP growth probably picked up in Q2. And surveys suggest that industry put in a decent performance at the start of Q3. … Euro-zone Industrial Production …
The Swiss franc has had a rocky ride over the past month. In late July, it depreciated sharply to SFr1.15 to the euro, its lowest level since January 2015 when the Swiss National Bank abandoned its exchange rate ceiling. The decline followed SNB Chairman …
11th August 2017
Ten years ago this week marked the start of the global financial crisis and a challenging time for the euro-zone economy. In many respects, the euro-zone finally appears to be out of the woods. Growth has picked up strongly in recent quarters, …
The Swedish industrial and services sectors have been performing well of late and the outlook is positive. With the Swedish economy firing on all cylinders, it won’t be long until the Riksbank changes course and tightens monetary policy. … Swedish …
10th August 2017
Although French industrial production fell sharply in June, the sector fared better in Q2 than it did in Q1. And the continued strength of the surveys suggests that June’s decline does not mark the start of a more sustained slowdown. … French Industrial …
Inflation in Norway continued on its downward trend in July, and it is likely to fall a little further over the rest of the year. We think that it will remain well below target over the next few years, so interest rate hikes are a very long way off. … …
Although German and French exporters struggled in June, the outlook for trade in both countries remains fairly bright amid strong growth in global demand and, despite its recent appreciation, the still low level of the euro exchange rate. … German & …
8th August 2017
The latest Eurobarometer survey suggested that Italy is one of the most eurosceptic members of the single currency. While there are reasons why an Italian exit from the euro over the next few years is unlikely, we think that the risk of an exit will hit …
7th August 2017
The Swiss National Bank (SNB) will be disappointed that July’s small rise in core inflation was driven by imported rather than domestically-produced products. As inflation expectations are consistent with core inflation remaining close to zero, the Bank …
Despite the decline in German industrial production in June, the sector performed well in Q2 as a whole. So we still think that the German economy gathered pace in the second quarter. And surveys point to continued strong growth to come. … German …
In the first half of this year, GDP in the euro-zone expanded at a faster pace than that in either the US or the UK. But while we remain very positive on the outlook for the euro-zone economy, the region’s low rate of potential growth means that we doubt …
4th August 2017
The euro has risen sharply over the past month and in early August reached its highest level against the US dollar since early 2015. Strikingly, the rise has occurred against a backdrop of broadly unchanged expectations for interest rates between the US …
3rd August 2017
June’s rise in euro-zone retail sales capped a strong quarter and suggests that household spending growth picked up in Q2. Although July’s final euro-zone Composite PMI implies that broader economic growth may have softened a touch at the start of Q3, it …
The Swiss franc was the worst performing major currency last month. While the franc’s depreciation has been stronger than we had anticipated, we still see it depreciating a little further against the euro over the next couple of years as very subdued …
The euro-zone’s efforts to put its public finances in order continued in Q1, with the region’s budget deficit shrinking to its lowest level since mid-2007. And timelier central government fiscal data suggest that most of the peripheral countries continued …
1st August 2017
Euro-zone GDP in the first half of the year was a little weaker than expected. But the Q2 outturn may yet be revised up, and with surveys pointing to continued fairly strong growth at the start of Q3, we remain optimistic about the economic outlook. … …
July’s Swedish and Norwegian manufacturing PMIs point to a continued pick-up in industrial output growth in both countries. But the Swedish survey’s price index implies some downside risks to inflation in the near term. … Swedish & Norwegian Manufacturing …
After last week’s political scandal, Sweden’s Government needs to boost its popularity. So the Government seems likely to row back from planned tax hikes ahead of next year’s general election. … Swedish political scandal lowers chance of tax …
31st July 2017
While June’s unemployment data painted a positive picture of the euro-zone labour market, July’s CPI release confirmed that this strength is putting only modest upward pressure on underlying inflation. … Euro-zone Unemployment (Jun.) & Flash CPI …
This week, the euro reached its highest level against the US dollar since before QE began. It would probably take a much larger appreciation to knock the economic recovery completely off course. But a further rise would weigh on inflation, and could …
28th July 2017
July’s unchanged reading for HICP inflation in Germany suggests that euro-zone inflation probably remained at 1.3% in July. German core inflation is set to creep higher over the rest of the year, but it will remain below the ECB’s near-2% target. … German …
July’s EC survey points to a sharp acceleration in euro-zone GDP growth. But we doubt that the economy will perform quite as well as the survey suggests. And with inflation expectations low, tighter monetary policy is a long way off. … EC Business & …
Sweden’s exceptionally strong GDP growth was driven entirely by domestic demand and highlights the need for monetary policy normalisation. Meanwhile, July’s rise in the Swiss KOF points to a pick-up in GDP growth there, but weak inflationary pressure …
After fairly big rises in yields in June, July was a quieter month for Nordic & Swiss government bonds. There was more action in the currency market, with the Norwegian krone and Swedish krona rising against both the US dollar and euro while the Swiss …
27th July 2017
June’s euro-zone money and credit data point to downside risks to growth. But firms and consumers have scope to fund extra spending without borrowing, and with confidence high, we remain optimistic about the economic outlook. … Euro-zone Monetary …
Both the Swedish Economic Tendency Survey and labour market indicators point to increasing wage and price pressures. This supports our view that the Riksbank and markets are underestimating how soon monetary policy will need to be tightened. … Swedish …
July’s increase in German Ifo business sentiment to a new record high suggests that neither the euro’s rise nor hints of QE tapering have taken the steam out of the economic upturn so far. … German Ifo & French INSEE Business Confidence …
25th July 2017
July’s fall in the euro-zone Composite PMI leaves it still consistent with fairly strong growth. While the survey’s price indices also edged down, this seems unlikely to deter the ECB from tapering its asset purchases next year. … Euro-zone Flash PMIs …
24th July 2017
At this week’s ECB press conference, President Mario Draghi highlighted the continued improvement in the euro-zone’s economic performance. He reiterated that the region looks set for a period of solid, broad-based growth. We agree. In fact, our forecasts …
21st July 2017
Economic prospects are fairly bright in the Nordic and Swiss countries. Switzerland is benefitting from faster growth in the euro-zone, Swedish firms are optimistic about their prospects, and Norway is recovering from its oil-related slowdown. As Swedish …
The renewed rise in the euro since yesterday’s ECB press conference may increase speculation that the Bank will have to change tack. But we doubt that it will be too worried about the currency at current levels. A further appreciation might force it to …
Today’s ECB press conference made us more confident that tapering will come next year. An announcement of the policy now seems most likely to come in October, rather than at the next meeting in September as we had previously assumed. But we still think …
20th July 2017
July’s rise in headline inflation was driven entirely by higher house prices and far overstates the extent of price pressures in Iceland. With underlying inflation set to stay below zero, we expect the central bank to loosen policy further. … Iceland …
The European economies are still in good shape, with the euro-zone benefitting from reduced political uncertainty and high levels of business and consumer confidence. We think that this strong performance will continue. While consumer spending growth …
19th July 2017
