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The fading boost to consumers’ spending power from lower energy prices may bebehind September’s fall in euro-zone retail sales. As we have warned for sometime, consumer spending growth is set to weaken further as rising energy pricesdrive inflation higher …
7th November 2016
October’s Swiss CPI data did little to ease fears that the economy may be experiencing a sustained bout of damaging deflation. This supports our view that additional monetary policy support will be needed and that the Swiss National Bank (SNB) looks set …
Bond and equity dividend yields fell in Q3 meaning that, although property yields ticked down again, relative property valuations tended to improve over the quarter. … Property yields still have room for …
4th November 2016
According to the Sentix investor survey, Italy is now the most likely country to leave the euro-zone in the next 12 months. While we think that Italy remaining in the currency union is still the more likely outcome, there is plenty of scope for investors’ …
A Trump victory in next week’s US election could prompt an unwelcome appreciation of the euro exchange rate, but we suspect that this would be short-lived. What’s more, other effects on euro-zone growth would probably be minimal. Europe has bigger issues …
3rd November 2016
The most noteworthy market developments last month were prompted by expectations of further policy loosening from Sweden’s Riksbank, with the krona depreciating sharply last month as a result. Meanwhile, bond yields increased inmost countries while equity …
September’s euro-zone unemployment data suggest that, while the labour market is still strengthening, it is doing so at a slow pace. And forward-looking indicators suggest that the labour market recovery will soon slow. … Euro-zone Unemployment …
September’s sharp rise in Swedish industrial production suggests that August’s large fall was due to one-off effects. Looking ahead, the rise in the services PMI supports the message from earlier surveys that GDP growth is set to accelerate. … Swedish …
Prime retail rents in Lisbon have risen by more than one-third in the last six years, supported by policy reform, a rise in tourist numbers and an economic recovery. But, with slower economic growth ahead, we expect the recent rapid pace of rental growth …
The euro-zone’s consumer sector appears to have had another poor quarter in Q3. Retail sales volumes were flat in August, while timelier national data point to a contraction in sales in September. Combined with data on car registrations, that suggests …
1st November 2016
October’s manufacturing PMIs generally painted a positive picture of economic growth.But the surveys’ price indices suggest that inflationary pressures vary across the region. … Manufacturing PMIs (Oct.) & Swiss Retail Sales …
The next Icelandic government may be an unconventional one, but improvements to Iceland’s public finances and external position since the crisis mean that there is little risk to economic growth. … Little risk to growth from Iceland’s …
31st October 2016
The preliminary flash estimate of euro-zone Q3 GDP supports the message from earlier country data that the pace of growth remains fairly slow. So it is no surprise that October’s inflation data show that underlying price pressures are still very weak. … …
Last week brought some good news about the euro-zone economy, with October’s composite PMI and EC ESI both pointing to an acceleration of growth. But both the hard data and survey indicators look much weaker for France than for Germany. And as the labour …
28th October 2016
October’s rise in German HICP inflation to +0.7% suggests that euro-zone inflation in the same month rose to its highest level since April 2014. But in Germany at least, the rise reflected energy effects while underlying price pressures remained subdued. …
Prime office rents in the German capital, Berlin, have surged this year. With a positive economic environment and limited development pipeline, the rise in rental values has further to run. … Rally in Berlin office rents not over …
October’s rise in the EC measure of economic sentiment supports the message from the PMI that euro-zone growth accelerated towards the end of the year, albeit with continued divergence across countries. … EC Business & Consumer Survey …
October’s rise in the Swiss KOF Economic Barometer suggests that GDP growth could accelerate in the near term. But with the full effects of the franc’s strength yet to be felt and deflation risks persisting, monetary policy may still be loosened further. …
Provisional Q3 GDP data from France and Spain support the message from the business surveys that euro-zone GDP continued to increase at a pretty slow pace. And there are clear signs that the French consumer recovery is weakening. … France, Spain & Austria …
The potential collapse of Canada’s Comprehensive Economic Trade Agreement (CETA) with the European Union would not be a big economic blow, since estimates suggested that even the long-term boost to Canadian GDP would have been a trivial 0.2% to 0.3%. But …
27th October 2016
Headline Icelandic inflation was stable in October and the core rate fell slightly. But with the economy continuing to strengthen, we think that underlying inflation will pick up in the coming months. … Iceland Consumer Prices …
September’s euro-zone money and credit data continued the positive trend of recentmonths, consistent with a further steady expansion of the economy. Nevertheless,the data suggest that inflation will remain well below the ECB’s target. … Euro-zone Monetary …
It seems very likely that the Riksbank will extend its bond purchase programme after it stepped up its dovish rhetoric and suggested that it might even cut the repo rate further. But given our expectation for growth and inflation to surpass the Riksbank’s …
The Norges Bank left its key policy rate on hold today and reiterated that no change was likely in the near future. But we think that more monetary loosening will be needed in 2017. … Norges Bank leaves policy unchanged, but rate cuts to …
Even if Spain’s new minority Government gets support for its 2017 Budget, it will struggle to build the consensus needed to pass other measures. Accordingly, political uncertainty will continue to weigh on Spain’s chances of meeting its fiscal targets and …
26th October 2016
The latest setbacks in ratifying an EU-Canada trade deal have larger direct economic implications for Canada than for the EU. But the political deadlock bodes ill for future EU trade agreements which could have been more beneficial and suggests that the …
Notwithstanding one or two more positive signs, world trade remains in the doldrums. And the fact that the EU-Canada trade agreement may be scuppered by a regional Belgian government does not bode well for the future. … World trade still weak as Belgium …
25th October 2016
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 …
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
Although sterling has fallen a long way since the vote for Brexit, the IMF’s latest forecasts for the UK’s current account balance suggest that there is no fundamental reason for it to bounce back sharply. … Is sterling now “fair” …
21st October 2016
The prevailing view is that European property yields have essentially reached their trough. But we disagree and have pencilled in falls of 40bps from here. Nevertheless, it is prudent to ask what could derail our bullish forecasts. … What might derail our …
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 …
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 first European investment data for Q3 show that volumes were down sharply compared to the same quarter a year ago. But that was driven by subdued activity in the UK which, being one of the most traded commercial property markets in the region, had a …
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
A sharp decline in prime Madrid office yields has fully closed the spread over Milan for just the third time since 1991. With a stronger economic outlook, we think investors will continue to favour Madrid, pushing the city’s yield premium to Milan further …
With central banks running out of firepower, public finances in a better state than they have been for a long time and sovereign bond yields exceptionally low, it is not surprising that some governments have recently scaled back their austerity plans and …
12th 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 …
The Norwegian consumer sector has been resilient in the face of the most recent economic slowdown. Additionally, retail sales in Oslo have outperformed the national average and will support strong retailer demand in the coming years. This will see prime …
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 …
Uncertainty ahead of the UK’s vote to leave the EU is likely to explain, at least in part, the easing of office take-up in Dublin in H1. But with an expected slowdown in job creation likely to dampen take-up volumes in the years ahead, we expect prime …
7th October 2016
