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October’s increase in the German Ifo Business Climate Indicator (BCI) adds to a recent run of positive news about the economy. Germany looks set to easily outperform the euro-zone average this year and next. … German Ifo Survey …
25th October 2016
The rise in the euro-zone Composite PMI to a ten-month high suggests that GDP growth may have picked up at the start of Q4. Nevertheless, there is a concerning divergence in conditions between the euro-zone’s largest economies. … Euro-zone Flash PMIs …
24th October 2016
Last week, the European Commission (EC) published the draft Budgets for 2017 as submitted by eurozone governments. On the face of it at least, there is little for the EC to be concerned about. All countries except Germany project improvements in their …
21st October 2016
The Norges Bank is almost certain to leave monetary policy unchanged at its meeting on 27th October. Indeed, at its last meeting in September the Bank changed the wording in its policy statement from “the key policy rate may be reduced in the course of …
Inflation has undershot the Riksbank’s forecastssince it last met to set policy in September. Butwe expect inflation to rise again before long, andwith economic conditions strong there is lesspressure to respond to temporary setbacks inhitting the …
20th October 2016
President Draghi did not explicitly promise imminent policy action today. But he signalled that assetpurchases would not end abruptly. And as tapering has apparently still not been discussed, we expectthe ECB to announce a six-month extension to its asset …
September’s Swedish Labour Force Survey confirmed that the previous month’s poorresults were a one-off and highlights the tightness of the labour market. With firms’hiring intentions picking up in recent months, employment should continue to rise. … …
The recent increase in French unemployment seems unlikely to be reversed rapidly. And while a new government may be elected next year promising job-boosting reforms, its success will be limited by resistance from both the European Commission and the …
18th October 2016
The Nordic and Swiss economies’ reasonable economic performance, low public debt and stable political backdrop should help to maintain their safe haven status. But there will be some marked economic and policy divergences. Slow growth and low inflation in …
17th October 2016
Fears that domestic price pressures might prompt the Swiss National Bank to tighten monetary policy proved unfounded today as it left its interest rate target at 0.25%. The Bank’s tone was gloomier than expected and its low inflation forecast supports our …
16th October 2016
Recent official activity data for the euro-zone have been fairly encouraging. Coupled with the unofficial survey evidence, they suggest that the region’s GDP growth might have maintained its pace or even picked up slightly in Q3. But it will still have …
14th October 2016
The euro-zone’s goods trade surplus rose in August, but it probably fell over Q3 as a whole. Looking ahead, we think that the trade surplus will narrow further this year as global demand growth remains fairly soft. … Euro-zone Trade …
The ECB’s Governing Council is unlikely to unveil any policy changes at its forthcoming meeting on 20th October. But we expect it to prepare the ground for an extension of its Asset Purchase Programme (APP) to be announced at its following meeting in …
13th October 2016
The sharp rise in euro-zone industrial production in August suggests that the sectorprovided a positive, albeit small, boost to GDP growth in Q3. However, industry isunlikely to be able to prevent the economic recovery from slowing in 2017. … Euro-zone …
12th October 2016
October’s rise in the ZEW Indicator of Economic Sentiment is broadly encouraging, although the index still points to a slowdown in German GDP growth. … German ZEW Survey …
11th October 2016
The European economy appears to have weathered the initial impact of the UK’s vote to leave the European Union reasonably well. However, the vote could yet have important indirect effects by fuelling euroscepticism elsewhere in the region and hence …
We think that the rise in government bond yields and slight appreciation of the euro after last week’sreports that the ECB is considering tapering its asset purchases were overdone. After all, in order totaper its purchases, it would first need to extend …
7th October 2016
Sharp rises in industrial production in Germany, France and Spain suggest that industry might contribute positively to euro-zone GDP growth in Q3. … German, French & Spanish Industrial Production …
There have been further signs of fiscal slippage in the peripheral economies this month. Germany is also planning a tax cut, but this does not mark a dramatic change in its fiscal stance. It intends to keep running balanced budgets and will maintain the …
The uncertainty surrounding capital account liberalisation suggests that the Central Bank of Iceland will keep interest rates unchanged for a while longer. But with inflationary pressures set to build, we think that the Bank will raise rates next year. … …
5th October 2016
The uncertainty surrounding capital account liberalisation suggests that the Central Bank of Icelandwill keep interest rates unchanged for a while longer. But with inflationary pressures set to build, wethink that the Bank will raise rates next year. … …
August’s data suggest that euro-zone retail sales growth picked up in Q3, whileSeptember’s Composite PMI implies that growth in the wider economy slowedonly slightly. But headline inflation will soon accelerate, weighing on growth. … Euro-zone Retail …
Recent activity indicators have provided mixed messages about euro-zone growth. The Composite PMI fell to an 18-month low in September, whereas the EC’s Economic Sentiment Indicator (ESI) reached a nine-month high. (See Chart.) There are some signs that …
4th October 2016
The euro-zone’s two main activity surveys have given conflicting evidence about the state of the economy at the end of the third quarter, with the Composite PMI apparently pointing to slowing GDP growth but the EC’s Economic Sentiment Indicator (ESI) …
30th September 2016
Headline inflation in the euro-zone has started to pick up as the effects of previous falls in energy prices fade. But with a large amount of slack in the labour market, underlying price pressures will remain subdued, meaning that pressure on the ECB to …
The consequences of a third election in Spain would be worse than those of earlier votes. And with Catalonia renewing its push for independence, politics represent a clear risk to the economic outlook. … Spanish economy could suffer from political …
29th September 2016
September’s rise in German inflation to +0.5% suggests that euro-zone inflation rose to a 23-month high in the same month. But in Germany at least, the rise reflected energy effects while underlying price pressures remained subdued. … German Flash CPI …
While the EC Business and Consumer Survey revealed a rise in sentiment in September, it still suggests that growth remains moderate and inflation expectations are weak. … EC Business & Consumer Survey …
Today’s relatively positive news about Deutsche Bank adds to the evidence that it is not the next Lehman Brothers for the global financial system and that its troubles are unlikely to trigger a German recession. But recent developments have highlighted …
28th September 2016
August’s money and credit data suggest that the euro-zone economy has continued to grow at a decent pace in Q3. Nevertheless, the data suggest that inflation will remain well below the ECB’s target. … Euro-zone Monetary Indicators Monitor …
27th September 2016
The Government confirmed today that the constitutional reform referendum will take place on 4thDecember. We think that a rejection of the reforms is a major risk to the economic outlook. … Italy’s constitutional referendum poses economic …
26th September 2016
September’s rebound in the German Ifo Business Climate Indicator (BCI) offered hope that the economy remains in good health after the more negative signs from other surveys and hard data. … German Ifo Survey …
The Bank of Japan’s announcement that it will replace its target for the monetary base with a 0% target for 10-year government bond yields has prompted speculation about whether the ECB might follow suit. But we think that this is unlikely. … ECB unlikely …
23rd September 2016
September’s fall in the euro-zone Composite PMI to a 20-month low implies that the already sluggish pace of expansion in the currency union lost further momentum at the end of the quarter. … Euro-zone Flash PMIs …
The Norges Bank left its key policy rate on hold today and signalled that no change was likely in the remainder of the year. But we think that more monetary loosening will be needed in 2017. … Norges Bank to cut interest rates to zero next …
22nd September 2016
The minutes of the Riksbank’s latest meeting revealed that at least half of the Executive Board thought that there is little need for the Bank to extend asset purchases beyond December. Indeed, increasing inflationary pressure could see the Bank raising …
21st September 2016
Rising inflation may be less of a drag on the growth of euro-zone household spending than we had previously feared. But spending growth is still likely to slow, weakening a key support for overall economic growth in the region. … Low inflation won’t …
19th September 2016
Despite the improvement in financial market conditions, continued recovery of the Swiss economy and softening of the franc, the Swiss National Bank (SNB) re-emphasised today that it intends to maintain its very supportive policy stance for the foreseeable …
Even when the euro-zone economy seems to have performed fairly well, it has still been unable to generate any inflationary pressure. Indeed, despite the reasonably strong rate of employment growth in Q2, wage growth slowed to its weakest rate in almost …
16th September 2016
This Sunday’s election in Berlin is set to bring more evidence of the growing influence of the far-right AfD. While the party does not have enough support to govern Germany, its rise will encourage a tougher stance on immigration and reduce the chance of …
July’s euro-zone goods trade data suggest that net exports were a drag on GDP growth at the start of Q3. Looking ahead, we expect the trade surplus to narrow further this year as global demand growth remains fairly soft. … Euro-zone Trade (Jul.) & Final …
15th September 2016
The Swiss National Bank’s decision to leave policy on hold came as no surprise as easing Brexit fearsand the ECB’s inaction have led upward pressure on the franc to abate. But the SNB made clear that itwill renew its currency interventions if needed. With …
The Swiss National Bank’s decision to leave policy on hold came as no surprise as easing Brexit fears and the ECB’s inaction have led upward pressure on the franc to abate. But the SNB made clear that itwill renew its currency interventions if needed. …
The “Juncker plan” has done little to boost investment. Accordingly, an extension of the scheme, proposed by President Juncker this morning, is unlikely to raise the euro-zone’s growth prospects. … Extension of “Juncker plan” would not be a …
14th September 2016
Looking through the massive distortions in the Irish GDP data, today’s Q2 release suggests that the impressive recovery might have slowed. And survey evidence suggests that growth has slowed further since the UK’s vote to leave the EU. … Ireland GDP …
The weakness of euro-zone industry in July suggests that industrial production will struggle to expand at all over Q3 and doesn’t bode well for GDP growth this quarter. … Euro-zone Industrial Production …
As euro-zone inflation picks up over the coming months, short-term inflation expectations should rise.But long-term expectations are less responsive to movements in current inflation and are likely toremain very low. We think that the ECB will eventually …
13th September 2016
The fact that ZEW investor sentiment was unchanged in September despite the easing of fears about the effects of Brexit adds to signs that underlying growth in the German economy is set to slow. … German ZEW Survey (Sep.) & Euro-zone Employment …
