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March’s improvements in German industrial production and the trade balance support our view that while Q1 was a pretty poor quarter, this will not mark the start of a sustained economic slowdown. … German Industrial Production & Trade …
8th May 2018
We think that temporary factors – including industrial action, cold weather and an outbreak of the flu – explain about 0.2 percentage points of the slowdown in quarterly euro-zone GDP growth from 0.7% in Q4 to 0.4% in Q1. So without those effects, growth …
4th May 2018
NB. Please download the attached pdf for the full publication with charts. Dire predictions for US shopping centre closures appear relatively well-founded. However, for a variety of reasons – including more defensive lease terms, lower stock per capita …
3rd May 2018
April’s manufacturing PMIs provide some reassurance that the Swiss and Norwegian economies bounced back after making slow starts to the year. Sweden’s PMI was quite weak, but other survey indicators remain pretty strong and manufacturers should also …
2nd May 2018
The upward revision to our 2018 oil price forecast means that the contribution from energy to headline inflation will be a bit bigger than we had previously assumed. But this effect is likely to be small and core inflation is set to remain fairly subdued …
27th April 2018
April’s unchanged reading in the EC’s measure of euro-zone economic sentiment provides further reassurance that the weakness of activity in Q1 does not mark the start of a sharp slowdown. … EC Business & Consumer Survey …
The first estimates of French, Spanish and Austrian GDP in Q1 suggest that quarterly growth in the euro-zone as a whole slowed from Q4’s 0.7% to around 0.4%. Meanwhile, there were no signs of rising core price pressures in April’s French and Spanish …
The ECB opted to leave its policy and guidance unchanged today, expressing caution about the softer tone of economic data. But it argued that growth was merely moderating from a strong pace and expressed confidence in the inflation outlook. We suspect …
26th April 2018
April’s PMI surveys suggest that the apparent sharp slowdown in Q1 was not the beginning of a major downturn, although growth is unlikely to return to the rates seen last year. Overall, the data support our view that the ECB will make no major changes to …
23rd April 2018
With the economic data weakening, but some members of the Governing Council keen to bring asset purchases to an end, President Draghi is unlikely to give much away next week. We suspect that the ECB will remain fairly confident in the outlook for growth …
19th April 2018
While the latest data suggest that the European economies made a weak start to the year, we do not see this as the start of a serious slowdown. The euro-zone in particular has more spare capacity than official estimates suggest and we think that stronger …
18th April 2018
A quick internet search suggests that blockchain technology could have far-reaching changes for a multitude of industries, including commercial property. But even if the technology doesn’t live up to its hype, it could still help to improve the efficiency …
The euro has been buffeted recently by concerns about protectionism, which have caused it to strengthen, and softer economic data, which have caused it to weaken. While the risks of an all-out trade war have risen, we still think that negotiations will …
13th April 2018
After widening in February, the euro-zone’s nominal goods trade surplus is on track to be little changed in Q1. Looking ahead, the surveys suggest that the contribution from net trade to economic growth has peaked but will remain positive. … Euro-zone …
February’s fall in euro-zone industrial production confirms that the sector made a soft start to 2018. But as this partly reflected temporary factors in Germany and the industrial surveys remain strong, we do not expect it to mark the start of a sharp …
12th April 2018
Despite Spain’s recent strong run of form and the prospect of higher wage growth, we suspect that core inflation will remain subdued at close to 1% this year and next. With inflation set to remain in check even as wage growth picks up, the prospects for …
10th April 2018
National data suggest that the euro-zone’s industrial sector fared poorly in February, despite whopping rises in energy production as a result of the unseasonably cold weather across much of the region. The weakness in manufacturing was disappointing and …
The most recent official euro-zone data have been weak and the latest business surveys are consistent in their message that the economic expansion has lost momentum. A sanguine view of this is that firms are simply facing short-term capacity constraints …
6th April 2018
February’s sharp fall in industrial production confirms that the German economy made a soft start to the year. But the business surveys suggest that this should prove to be temporary. … German Industrial Production & French Trade …
Euro-zone money and lending growth slowed in February, adding to the evidence from the official data and business surveys that economic growth has peaked. Growth in “narrow” money – which is the sum of currency in circulation and overnight deposits – fell …
5th April 2018
Occupier demand in Milan is likely to stay healthy again this year, supporting further rental growth. But with completions expected to rise and rents close to previous highs, we don’t expect to see a repeat of last year’s 8% jump in rents. … Completions …
February’s euro-zone retail sales data suggest that consumer spending made a slow start to 2018. And March’s Composite PMI implies that overall GDP growth has peaked. But we remain fairly optimistic about the economic outlook. … Euro-zone Retail Sales …
February’s fall in euro-zone unemployment to its lowest level since late 2008 is good news for the ECB. But with core inflation remained weak in March, so the Bank will continue to stress its patient and persistent approach to monetary policy …
4th April 2018
Positive fiscal data have been something of a rarity in France in recent years, so President Emmanuel Macron will have welcomed the news earlier this week that the French budget deficit for 2017 was smaller than the Government had forecast. This largely …
29th March 2018
In March, equity prices and bond yields in the Nordics and Switzerland were pushed down by concerns about US trade policy, while exchange rate movements were more mixed. Looking ahead, we expect yields to rise while equities continue to struggle. … Trump …
The further fall in the EC’s measure of economic sentiment in March echoes the message from the other surveys that euro-zone GDP growth may be at its peak. And with consumers’ inflation expectations declining again, the ECB will tread very carefully in …
27th March 2018
February’s euro-zone money and lending data add to the evidence from the activity surveys that economic growth has topped out. But with interest rates likely to rise only slowly as the ECB normalises policy, bank lending looks set to continue supporting …
A key hurdle in securing a relatively smooth UK exit from the EU has been passed. The Brexit transition deal preserves the current economic relationship between the UK and the EU for 21 months after the UK technically leaves the bloc in March 2019. …
23rd March 2018
March’s PMI and Ifo surveys point to a softening of euro-zone growth, which we had expected after such a strong run and which has not caused us to change our upbeat GDP forecasts. But it certainly supports the ECB’s cautious approach to policy …
22nd March 2018
The weakness of euro-zone productivity growth since the global financial crisis can in part be attributed to cyclical factors. As these factors reverse, there is scope for economic growth to remain strong without a corresponding sharp rise in inflation. …
21st March 2018
Property yield falls will be limited in Scandinavia this year as the region’s markets are looking increasingly late-cycle. The prospects are somewhat brighter in Emerging Europe, where yields can continue to fall this year in all sectors and, indeed, into …
20th March 2018
The upswing in euro-zone economic growth will underpin occupier demand. However, rising development will act as a headwind for rental growth. Indeed, in the office, retail and industrial sectors, we think rental growth has now peaked. … Rental growth has …
The euro-zone’s nominal goods trade surplus narrowed in January, and since then survey indicators of export orders have weakened slightly. Nevertheless, we think that the euro-zone’s trade surplus will remain fairly wide, suggesting that tension between …
19th March 2018
This week has featured a raft of speeches from the ECB’s Governing Council on the outlook for monetary policy, displaying a range of views among its members. Several would clearly prefer to end asset purchases in September, while others favour a much more …
16th March 2018
Today’s euro-zone labour costs data support our view that the ECB will act very patiently in normalising its monetary policy stance. Indeed, higher interest rates remain a long way off. … Euro-zone Labour Costs …
Labour shortages are a growing problem in parts of the euro-zone and are likely to persist due to mismatches of skills and barriers to relocation. But given the degree of labour market slack in the likes of Italy and Spain, and the decline in workers’ …
14th March 2018
January’s fall in euro-zone industrial production marked a weak start to 2018, but much of the decline was due to temporary weather effects. The business surveys suggest that once this volatility washes out, the sector will continue to perform well. … …
In addition to reducing the monthly pace of its asset purchases from €60bn to €30bn, in January the ECB also changed the composition of its purchases. Corporate sector debt now accounts for a larger share of the total, as we expected. This should help to …
9th March 2018
Large declines in energy output as a result unseasonably-warm temperatures explain much of the weakness in industrial production across the euro-zone in January. Meanwhile, the business surveys remain strong. So euro-zone industry is likely to fare better …
The ECB’s decision to remove the loosening bias from its monetary policy statement today was arguably the first step along a path of policy normalisation. But note that its balance sheet will continue to expand with new asset purchases until at least …
8th March 2018
The first breakdown of euro-zone Q4 GDP showed that consumer spending growth slowed to just 0.2%, the weakest rate since Q1 2014. Encouragingly though, this appears to have been due to temporary factors. Indeed, unseasonably-warm weather throughout much …
7th March 2018
The third estimate of euro-zone GDP in Q4 showed that the 0.6% expansion was driven mainly by net exports. Timelier evidence suggests that growth is no longer accelerating, but we still expect the economy to continue growing at a fairly strong pace this …
The direct macroeconomic effects of President Trump’s proposed tariffs on EU exports would be very small. However, if this signals the beginning of a bigger shift towards US protectionism, followed by sustained EU retaliation, the economic implications …
5th March 2018
The recent softness of euro-zone retail sales is probably due to temporary factors and surveys bode well for the outlook. Meanwhile, the Greek economy finished last year on a weak note. … EZ Retail Sales (Jan.), PMIs (Feb.) & Greek GDP …
The lengthy political uncertainty that seems likely to follow Italy’s election is unlikely on its own to do much economic damage. But we suspect that the prospect of looser fiscal policy, higher debt, and the possibility that the Five Star Movement once …
While all of the Nordic currencies and the Swiss franc depreciated against the dollar in February, weak Swedish inflation data and dovish comments from the Riksbank meant that the drop in the krona was by far the largest. Meanwhile, many countries’ …
1st March 2018
February’s Swiss, Swedish and Norwegian manufacturing PMIs point to continued strong growth. But this only seems to be causing underlying inflationary pressure to build in Sweden. … Manufacturing PMIs …
Central banks in the major advanced economies are now moving in the same direction, but they are doing so at very different speeds. The Fed is tightening policy in earnest, with six rate hikes likely by mid-2019, and we expect the Bank of England to raise …
27th February 2018
Luis de Guindos, who is set to replace Vítor Constâncio as the ECB’s Vice President this June, may well be less dovish than his predecessor. What’s more, his appointment makes it more likely that arch-hawk Jens Weidmann will succeed Mario Draghi as …
21st February 2018
Given that the UK Government has disagreements with the EU over the scope of the transition deal, and no new solutions to avoiding a hard border on the island of Ireland have been proposed, there is a risk that next week’s negotiations, which focus only …
16th February 2018
