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Output will weaken despite increase in April The uptick in industrial production in April was mostly driven by strong growth in Ireland, with many other major euro-zone economies recording a fall in output. We expect industry to struggle this year as …
14th June 2023
Inflation coming down but Riksbank to hike by 25bp Headline inflation fell back into single digit territory in May, but the underlying rate came down a bit less than anticipated. This suggests there are upside risks to our forecast that the Riksbank will …
Inflation surprise strengthens case for more Norges Bank tightening Following May’s stronger-than-expected inflation data, a rate hike by the Norges Bank later this month looks nailed on. A 25bp move still seems most likely, but the risks are skewed …
9th June 2023
Euro-zone in recession, outlook poor News that GDP contracted in Q1 after all means that the euro-zone has already fallen into a technical recession. Given that the impact of policy tightening is yet to fully feed through, we suspect that the economy will …
8th June 2023
Weak demand to weigh on industry The disappointingly small rebound in German industrial production in April suggests that the boost from lower energy prices and improved global supply conditions at the beginning of the year has run its course. And …
7th June 2023
Retail sales continue to struggle Household consumption seems to have been subdued at the start of the second quarter as retail sales were unchanged in April. And continued low levels of household confidence suggest that consumption will decline in the …
6th June 2023
Inflation closing in on 2% Another sharp fall in headline and core inflation in May brought Switzerland within touching distance of the 0-2% range the SNB equates with price stability. But with recent comments from Chairman Thomas Jordan sounding quite …
5th June 2023
Core inflation coming down, but won’t stop further ECB tightening May’s decline in euro-zone core inflation to a four-month low left it below the published consensus forecast and was driven in part by lower services inflation. While further gradual …
1st June 2023
Good news on inflation but core rate still high The fall in German headline inflation in May and signs that core price pressures eased echo the message from the inflation figures for France and Spain and supports the case for the ECB to limit further …
31st May 2023
Economy stagnating, price pressures still high The larger-than-expected fall in the EC Economic Sentiment Indicator in May is consistent with our view that the euro-zone will continue to stagnate in the second quarter. Meanwhile, firms’ selling price …
30th May 2023
Economic rebound likely to be short-lived The rebound in the Swiss economy in Q1 was due to robust domestic private sector demand, which more than offset a weakening in net trade. However, we expect the economy to slow over the remainder of the year as …
Opposing messages from Ifo and PMIs Contradictory messages from the Ifo – which was very weak in May – and the Composite PMI mean the performance of the German economy in Q2 is uncertain. But regardless of how well the economy held up this quarter, we …
24th May 2023
The euro-zone Composite PMI fell slightly in May but is still consistent at face value with the economy expanding at a rapid pace in Q2. The survey also suggests that price pressures and the labour market both remain very strong, supporting the case for …
23rd May 2023
Core goods inflation declining, services inflation sticky Data published today confirmed that both headline and core inflation were little changed in April and that while core goods inflation has begun to fall, services inflation reached an all-time high. …
17th May 2023
Labour market defying economic weakness The labour market has been remarkably strong so far this year and we think it will continue to hold up much better than the GDP data might suggest in the coming quarters. The second estimate of Q1 GDP confirmed that …
16th May 2023
Headline inflation falls sharply, but core rate unchanged Falling headline inflation in Switzerland will provide relief to consumers but does not change the picture for the SNB. Underlying price pressures remain near all-time highs, which will convince …
5th May 2023
Unemployment falls as the labour market remains tight The euro-zone unemployment rate fell slightly in March and looks set to stay low in the coming months amid evidence that hiring intentions have increased. Even if the labour market softens further …
3rd May 2023
Strong core inflation leaves ECB decision finely balanced The fact that core HICP inflation edged down in April will not resolve the debate between a 25bp and 50bp hike for the ECB this week – particularly as the core rate is still close to its all-time …
2nd May 2023
Economy expands marginally but domestic demand falling The very small increase in GDP in Q1 means a technical recession has been avoided by a whisker. However, the economy has essentially stalled as domestic demand has been hit hard by the energy shock …
28th April 2023
Business surveys signal resilience in activity The EC’s economic sentiment indicator for April remained consistent with the economy expanding at the beginning of Q2. It also suggests that price pressures (though easing) remain high and that labour …
27th April 2023
Sweden dodges recession for now News that the Swedish economy expanded slightly in Q1, and thereby narrowly avoided a recession, adds to the evidence that economic activity in Europe as a whole has held up well in Q1. That said, we still think Sweden is a …
A note of caution from the Ifo The Ifo Business Climate Index rose again in April but remained in contractionary territory. This is contrast to the PMIs which point to much stronger economic performance at the start of Q2. The small rise in the Ifo …
24th April 2023
Core inflation remains high Final inflation data confirmed that the drop in headline inflation in March was entirely due lower energy inflation. With the core rate not yet passed its peak, we think the ECB will raise rates to a peak of 4%. Data published …
19th April 2023
Core inflation dips below 9% The fall in Sweden’s measure of core inflation to 8.9% in March suggests that it may now be passed its peak. But it is still much higher than the Riksbank had anticipated at its February meeting and does not change our view …
14th April 2023
Rise in core inflation makes 25bp hike in May very likely March’s inflation data make it all but certain that the Norges Bank will press on with its planned 25bp rate hike at the next meeting in May. The increase in headline CPI inflation from 6.3% in …
11th April 2023
Industrial resilience won’t prevent recession The second consecutive big increase in German industrial production in February all but confirms that GDP returned to growth in Q1. The industrial resilience may continue in the coming months but we still …
6th April 2023
Surveys point to expansion in Q1 March’s PMIs suggest that the economy expanded in Q1. They also point to further gains in employment and strong price pressures. With the turmoil in the banking sector having stabilised, this makes us more confident in our …
5th April 2023
March’s sharp fall in headline inflation in Switzerland will provide some relief for the SNB as the decrease was spread across a wide range of goods. However, underlying price pressures remain strong by Swiss standards and we expect the SNB to hike …
3rd April 2023
Headline rate falling but strength of core inflation will keep ECB hawkish Policymakers at the ECB won’t read too much into the drop in headline inflation in March and will be more concerned that the core rate hit a new record high. So March’s consumer …
31st March 2023
Headline inflation tumbling, core peaking The big falls in headline inflation in Germany and Spain should provide some relief for struggling households in the coming months. And core inflation in Germany may now have passed its peak. However, with …
30th March 2023
Business surveys point to small expansion in Q1 The small decline in the EC’s economic sentiment indicator in March leaves it still pointing to an increase in GDP in Q1. Meanwhile, firms’ selling price expectations suggest that core inflation might be …
Resilience unlikely to last The fifth successive monthly increase in the Ifo Business Climate Index (BCI) in March suggests that Germany is still benefitting from falling energy prices and easing supply problems but has yet to feel the full effects of …
27th March 2023
Strong PMIs point to further ECB hikes The strong batch of euro-zone flash PMIs for March suggests that the economy expanded in Q1 and that both employment conditions and price pressures remained very strong. That adds to the reasons to think that, as …
24th March 2023
Core inflation and wage growth strong The strength of wage growth and core inflation will reinforce ECB policymakers’ conviction that, provided the region’s banks don’t come under further sustained pressure, their tightening cycle is not over. It came as …
17th March 2023
Resilience in January unlikely to last The rise in industrial production in January was entirely due to strong growth in Germany and Ireland, with all other major euro-zone economies recording a fall in output. We expect industry to struggle this year as …
15th March 2023
Soaring core inflation adds to pressure on the Riksbank Although it was partly due to higher food prices, the jump in the “core” measure of inflation in Sweden to 9.3% will reinforce policymakers’ determination to raise rates further. We expect another …
Lower inflation means Norges Bank can stick to 25bp hikes February’s decline in headline and core inflation takes some of the pressure off the Norges Bank and means that it is likely to hike by 25bp at the meeting in two weeks’ time. After surprising on …
10th March 2023
Euro-zone flirting with recession Revised figures show that the euro-zone economy flatlined in Q4 last year and that domestic demand dropped sharply. There have been some positive signs in the past couple of months, but policy tightening is likely to …
8th March 2023
Industrial rebound, but recession still coming The big rebound in German industrial output in January suggests that industry may continue to hold up well in the face of the energy crisis. However, with the renewed drop in retail sales pointing to …
Sales up in January but trend is still down January’s rise in euro-zone retail sales was not enough to offset December’s fall. And the low levels of household confidence suggest that consumption will decline in the coming months. The national-level data …
6th March 2023
Inflation likely to stay above 3% over the coming months. The CPI data for February suggest there is a long way to go before inflation returns to target especially as underlying prices pressures show no signs of abating, with the core inflation rate …
PMIs point to resilience, especially in services February’s final Composite PMIs suggests that economic activity in the euro-zone has been fairly resilient in February, with the indices for Spain and Italy, and for the services sector, particularly …
3rd March 2023
Strength of core inflation means ECB has a long way to go February’s increase in core inflation will reinforce ECB policymakers’ conviction that significant rate increases are needed. For some time we have been forecasting a 50bp hike at the meeting in …
2nd March 2023
Renewed rise in inflation will worry ECB The renewed rise in headline inflation in Germany, France and Spain in February suggests euro-zone inflation edged up this month, rather than falling as had been expected. With signs that underlying inflationary …
1st March 2023
Economy stagnates in Q4 Despite stagnating in Q4, the Swiss economy remained notably bigger than its pre-pandemic level and has outperformed its European peers. We are forecasting a contraction in Q1 2023 and for the economy to flatline over 2023, but …
28th February 2023
Recovery in business sentiment falters The stabilisation of the EC’s economic sentiment indicator in February contrasts with the significant increases in the PMIs and provides some support for our view that the economy will struggle this year. It also …
27th February 2023
Economy much weaker than thought in Q4 The downward revision to German Q4 GDP means the hit to activity at the end of last year was closer to our original expectation. It also suggests a technical recession in Germany during Q4 and Q1 is likely. Today’s …
24th February 2023
The surprise upward revision to euro-zone core inflation in January, to a new record high, will embolden the majority of ECB policymakers who want to press on with significant further rate hikes. The upward revision to January’s euro-zone headline …
23rd February 2023
German inflation mystery continues The final release of German HICP for January confirmed that the headline rate fell but, disappointingly, still didn’t reveal what happened to the core rate. That said, there was some evidence that underlying price …
22nd February 2023
Further improvement, but headwinds still strong The further rise in the Ifo in February confirms that the German economy may have been a bit more resilient than we had expected in Q1. But with the index still in recessionary territory and the drag from …
