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The recent softening of the Economic Tendency Survey suggests that the Swedish economy lost some momentum at the start of 2018. But the survey still implies that growth will remain strong. … Sweden Econ. Tendency Survey (Feb.) & Trade …
27th February 2018
The Dutch housing market is set to perform well this year and next. And as there is a strong link between house prices and consumer spending, this should give the already strong-economy a further boost. … Rising Dutch house prices to support economic …
26th February 2018
The minutes of the ECB’s January meeting indicated just how cautiously the Bank wants to communicate and carry out its monetary policy normalisation. The ECB looks set to revisit its forward guidance at the next meeting in March, but it only seems likely …
23rd February 2018
In light of weak inflation data earlier this week and the dovishness of today’s Riksbank minutes, we expect the Bank to signal at April’s meeting that it will raise interest rates later than its current guidance implies. However, we still think that …
The peripheral euro-zone countries have improved their competitiveness and eliminated their big current account deficits. But we think that they will struggle to maintain this improvement. And at the same time, Germany’s large surplus is as much of a …
22nd February 2018
February’s fall in Ifo business sentiment matches the message from other surveys that German GDP growth is nearing its peak. Nevertheless, the outlook remains bright. … German Ifo Survey …
Icelandic growth is set to hold up well with tourism booming despite the strength of the króna and with the financial imbalances that caused the previous crisis largely resolved. But inflation is a threat. If unions secure large wage gains in negotiations …
21st 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 …
Despite falling in February, the euro-zone Composite PMI remained at a high level and consistent with continued healthy GDP growth in early 2018. This might encourage the ECB to signal before long that it will end its asset purchase programme this year. … …
February’s small fall in German investor sentiment was unsurprising against a backdrop of falling equity prices and a strong euro. The fact that the majority of investors expect economic conditions to improve regardless is testament to the positive …
20th February 2018
January’s drop in Swedish inflation was entirely due to changes in the weights used to calculate the price index. While inflation looks set to be lower in 2018 than we previously anticipated, the Riksbank still needs to raise interest rates this year to …
Data released this week confirmed that the euro-zone economy finished 2017 on a strong footing. But the composition of growth shifted markedly in the second half of last year, with net trade making a large positive contribution to GDP while domestic …
16th February 2018
Greece has made further encouraging progress towards exiting its bailout recently. But the latest rise in bond yields highlights its vulnerability to changes in financial market sentiment and suggests that the country will be forced to rely on some form …
15th February 2018
Although the franc has strengthened in recent weeks, the big picture is that the currency is over 5% weaker than this time a year ago. Currency valuation measures paint a mixed picture but our view is that the franc is still a little stronger than fair …
While the euro-zone’s nominal goods trade surplus was little changed in Q4, overall net trade seems to have boosted GDP growth. We expect trade to contribute positively to growth again this year. … Euro-zone Trade …
An acceleration in industrial production growth was not enough to prevent a slight slowdown in euro-zone GDP growth in Q4. Nevertheless, the economic outlook is bright. … Euro-zone Flash GDP (Q4) & Industrial Prod. …
14th February 2018
Given that the Riksbank called time on its net asset purchases just one meeting ago, it was always unlikely that the Bank would make any major policy changes today. In order to test the water ahead of repo rate rises later this year, in April we expect …
Q4 GDP data showed that Italy’s economy performed fairly well last year but that it is still lagging behindthe rest of the euro-zone. Despite the recent strength of the surveys, we doubt that this will change anytime soon. Meanwhile, both the Dutch and …
Q4’s 0.6% rise in German GDP marked a decent finish to 2017 and growth looks set to accelerate again this year. But with inflation and wage growth still subdued in the euro-zone’s largest and arguably strongest economy, ECB interest rate hikes still seem …
The official data suggest that the Nordic & Swiss economies recorded fairly mixed performances at the end of last year. So far, only Norway has published national accounts data for Q4. This release revealed a healthy quarterly growth rate for the mainland …
13th February 2018
Ireland’s national accounts are notoriously unreliable as indicators of domestic economic activity, but alternative indicators suggest that the economy is performing well. Looking ahead, while growth prospects over the next few years are bright, there are …
The outlook for Austria is bright. Policies announced by the new Government should help to support consumer spending and investment. And while we expect export growth to weaken next year, Austria should remain one of the star performers of the region. … …
12th February 2018
Following January’s decline, there is little chance that Swiss inflation will rise much in the next few months. And later in the year, inflation is likely to drop back as exchange rate effects unwind. … Swiss and Danish Consumer Prices …
With three weeks to go before Italy’s election, the latest surveys suggest that the economy is performing very well. But the official data paint a less rosy picture. On balance, we think that GDP will rise by 1.5% this year and next, which would be a …
9th February 2018
Norway’s mainland GDP recorded another strong expansion in Q4, rounding off a pretty good year for the economy. However, inflation slowed sharply in January, highlighting that price pressures remain subdued. As a result, we think that the Norges Bank will …
While US interest rate expectations for this year have risen into line with our own, this has not undermined the euro as we had anticipated. Instead, markets have focused on the strength of the euro-zone economy and perhaps the possibility that the US …
8th February 2018
While equity markets in the euro-zone have recently declined alongside those in the US, activity surveys continue to paint a very healthy picture of the economy. Indeed, the euro-zone Composite PMI increased to a 12-year high in January and, although it …
With the Riksbank on track to raise interest rates this year, it is likely to test the water soon by dropping its pledge to loosen policy further if necessary. But as inflation expectations in Sweden have softened in recent months, we suspect that the …
The franc’s downward trend went into reverse last month and turbulence in global financial markets has since threatened to push it up further. In the event of a sustained rout in equity markets, the safe haven currency would probably appreciate. But as …
7th February 2018
As the recent rise in inflation has been due to temporary exchange rate effects, it was little surprise that the Central Bank of Iceland left policy unchanged today. But with further rises in inflation set to put upward pressure on inflation expectations …
December’s fall in German industrial production came as no surprise after a surge in November and it is very unlikely to mark the start of a downward trend. We still see German GDP rising by about 2.7% this year and 2% next. … German Industrial Production …
Despite falling in December, Swedish private production growth accelerated over Q4. With the economy’s strong performance causing inflationary pressures to build, the Riksbank remains on track to raise interest rates this year. … Swedish Private …
6th February 2018
Recent accusations that Germany has “cooked the books” to downplay its current account surplus are wide of the mark. But the surplus is clearly very large and seems unlikely to narrow in the next couple of years. So the country will remain under …
5th February 2018
December’s fall in euro-zone retail sales followed a sharp rise in November and the high level of consumer confidence suggests that sales growth should soon pick up. Meanwhile, the final PMI for January comfirmed that the region made a great start to …
German Bund yields continued to rise this week, with the 10-year yield hitting a 29-month high. Higher yields are unlikely to have much of a direct effect on the German economy, but by boosting the euro they may have significant indirect effects. Indeed, …
2nd February 2018
Following developments in other developed economies this year, Nordic and Swiss currencies have appreciated while equity prices and bond yields have risen. Norway’s currency has outperformed, largely thanks to the rise in oil prices. But we doubt that …
1st February 2018
The strength of France’s economic recovery and improving conditions in the labour market suggest that core inflation will soon start to rise from its current depressed levels. But recent reforms will keep a lid on wage growth which, along with the rise in …
Inflation pressures seem to be rising faster than we had expected. As a result, we now see the Central Bank of Iceland raising interest rates this year. … Central Bank of Iceland to raise rates later this …
January’s Swiss, Swedish and Norwegian manufacturing PMIs generally point to strong growth. But only in Sweden do we expect this to feed through to significant and sustained inflation pressure. … Manufacturing PMIs …
January’s fall in euro-zone inflation largely reflected energy effects, so won’t be a major concern to the ECB. But December’s labour market data emphasise that there is still slack in the labour market, so underlying inflationary pressure is likely to …
31st January 2018
Recent pay demands by German trade unions may look like a sign that the economy’s strength is causing a surge in inflationary pressure. But the demands are very unlikely to be met in full. We expect a moderate rise in wage growth to lend support to …
30th January 2018
January’s fall in German inflation partly reflected energy effects, and the rate is likely to rise again in the months ahead. But with core inflation still subdued in Germany and significantly weaker elsewhere in the euro-zone, the ECB is unlikely to be …
Euro-zone GDP growth continued at a healthy pace in Q4 and, while the EC’s Economic Sentiment Indicator declined in January, it continues to point to a pick-up in growth to come. … Euro-zone GDP (Q4, prelim. flash) & EC Survey …
Despite January’s sharp fall in the Swiss KOF Economic Barometer, the indicator is still broadly consistent with annual GDP growth picking up to around 2%. With exporters benefiting from a weaker franc, the outlook for growth is bright. But with inflation …
The French economy’s healthy expansion in Q4 rounded off a strong year, while surveys point to an acceleration in growth ahead. Meanwhile, tensions in Catalonia had little impact on Spanish growth. … French & Spanish GDP …
Investors appear to be calm ahead of Italy’s forthcoming election, and we think that they are right not to panic. That said, the next government is likely to be more lax with fiscal policy, so we think that Italian bond spreads will rise after the …
29th January 2018
While ECB President Mario Draghi sounded positive on the outlook for inflation at this week’s press conference, he did so with a justified degree of caution. After all, there is still economic slack in some member states that will keep a lid on wage …
26th January 2018
Euro-zone lending growth remained healthy in December, and with interest rates likely to rise only very slowly as the ECB normalises policy, bank lending looks set to continue supporting economic growth. … Euro-zone Monetary Indicators Monitor …
The ECB did not alter its forward guidance today, stressing that it will exercise patience and persistence when normalising policy and voicing concern about the strong euro. The currency’s further rise is puzzling against this backdrop, but only …
25th January 2018
January’s rise in German Ifo business sentiment is another sign that the economy is going great guns, but with the euro so strong the ECB seems unlikely to give a firm end date for its asset purchases today. … German Ifo Survey …
