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The euro-zone’s youth unemployment rate remains worryingly high. To address this issue, this week’s Eurogroup meeting focused on plans to raise educational attainment, which is a very good place to start. But in the absence of bolder measures to address …
9th November 2017
The monthly data suggest that consumer spending was behind the slowdown in quarterly euro-zone GDP growth in Q3. But September’s rise in retail sales provided a strong starting point for Q4. And the improving labour market should support spending. Indeed, …
8th November 2017
Recent declines in Norwegian house prices have caused some concern, but we think that the worst fears are overblown. After all, prices are falling for the “right” reasons. And we do not expect a wave of mortgage defaults that would trouble the banks or …
Although retail sales rose in September, the increase was not sufficient for the sector to match Q2’s performance in Q3. This suggests that total household spending was behind the slowdown in quarterly GDP growth in Q3. But with consumer confidence strong …
7th November 2017
The drop in German industrial production in September did not reverse August’s sharp rise. The sector performed well in Q3 as a whole and surveys point to an acceleration to come. … German Industrial Production …
Data released by the ECB today imply that a significant volume of its German Bunds will mature next year, which the Bank will re-invest in German assets. But we don’t think that re-investments will benefit Bunds more than other countries’ government …
6th November 2017
The final estimate of October’s euro-zone Composite PMI confirmed that the economy made a strong start to Q4. But there are still only tentative signs that inflationary pressures are building. … Euro-zone Final PMIs (Oct.) & Producer Prices …
October’s weak Swiss inflation data support our view that SNB interest rate hikes are a very distant prospect. Elsewhere, Swedish production data suggest that quarterly GDP growth slowed in Q3. … Swiss CPI (Oct.) & Swedish Production Index. …
The ECB’s decision last week to extend its bond-buying well into 2018 means that it will probably need to change the composition of its purchases. After all, it has already had to reduce its purchases of bonds in some countries as it is approaching its …
3rd November 2017
Recent fiscal data suggest that most of the euro-zone’s peripheral countries are continuing to improve their budgetary positions. But Italy is an exception and has come under fire for a lack of fiscal effort. … Euro-zone Fiscal Monitor …
2nd November 2017
The ECB seems set to raise interest rates even later than we had previously assumed and we are now pencilling in the first hike for September 2019. Accordingly, we have made small downward revisions to our Bund yield forecasts and now see the euro …
1st November 2017
At least four parties will be required to form a majority government following Iceland’s election, so coalition negotiations are set to take a number of months. As the left-wing parties performed worse than expected, the most likely outcome appears to be …
October’s Swiss, Swedish and Norwegian manufacturing PMIs are consistent with strong growth in industrial output. But only in Sweden do we expect this to put sustained upward pressure on inflation. … Manufacturing PMIs …
The euro-zone economy posted a stronger-than-expected 0.6% quarterly expansion in Q3, but October’s CPI data will have reinforced the ECB’s judgement that its inflation goal is not yet in sight. … Euro-zone Preliminary Flash GDP (Q3) & CPI …
31st October 2017
The French economic recovery continued at a healthy pace in Q3, marking a good start to Emmanuel Macron’s presidential term. Although inflation edged up in October, it remains fairly subdued, which will support real incomes and keep the economic recovery …
In October, a combination of rising bond yields in the US and lower bond yields at home pushed Nordic and Swiss currencies down against the dollar. Weaker exchange rates, as well as decent economic growth and strong monetary policy support, gave equities …
30th October 2017
October’s falls in German and Spanish consumer price inflation support the ECB’s view that its eurozone inflation goal is not yet in sight. While the strength of the economy should boost underlying inflation a little next year, the Bank seems very …
October’s rise in the EC’s measure of euro-zone economic sentiment suggests that political uncertainty has had little effect on the economy. While the available hard data imply that euro-zone GDP growth slowed a little in Q3, we think that it will pick up …
The ECB’s decision to reduce its monthly asset purchases from January largely reflected growing optimism that euro-zone inflation will rise towards the target of below, but close to, 2%. Indeed, the latest surveys suggest that underlying price pressures …
27th October 2017
The central Government in Madrid will now attempt to take direct administrative control of Catalonia following the region’s declaration of independence. We suspect that Madrid will achieve its aim of forcing a regional election in Catalonia. In the …
While the Swedish Economic Tendency Indicator edged down in October, the sharp rise in the consumer confidence index means that the survey now paints a more balanced picture of the economy. And with consumers’ inflation expectations reaching a five-year …
While the ECB’s announcement that its asset purchase programme will now run until September 2018 and at a slower pace from January was largely in line with consensus forecast, its decision to keep the programme open-ended struck a dovish note and pushed …
26th October 2017
Euro-zone money and lending growth remained strong in September and point to a continued healthy pace of growth. But they remain consistent with only limited inflationary pressure, suggesting that the ECB will tread carefully in normalising its monetary …
While both the Riksbank and the Norges Bank kept policy unchanged today, the outlooks for monetary policy in the two countries are very different. We think that policy in Sweden will be tightened early next year, sooner than the Riksbank’s guidance …
Economic prospects for the Nordic and Swiss economies are fairly bright. Although Switzerland had a disappointing start to the year in terms of GDP growth, the surveys are universally positive about the coming quarters, suggesting that the recent weakness …
25th October 2017
October’s rise in German Ifo business sentiment to a new record high underscores the positive outlook for the euro-zone’s largest economy, supporting our above-consensus view on German GDP growth. … German Ifo …
Politics are in focus yet again, with the German and Austrian elections revealing reduced support for mainstream parties and the push for Catalan independence creating much uncertainty. But business and consumer confidence have been encouragingly …
24th October 2017
Despite declining in October, the euro-zone Composite PMI suggests that the economic recovery continued at a healthy pace at the start of Q4. But growth is being driven mainly by the core economies. And with the survey indicating that inflationary …
Madrid’s plan to impose direct rule in Catalonia is likely to be met by protests, which would cause shortterm disruption. The risk of a more serious economic deterioration is growing, but as things stand this is unlikely. In Italy, Lombardy and Veneto …
20th October 2017
The ECB has now laid some very firm groundwork to announce after its meeting on 26th October that it will taper its asset purchases from January. Unlike most forecasters, we expect the Bank to set out a full roadmap to taper down to zero by next …
19th October 2017
The Riksbank is unlikely to shift its policy stance until it sees firmer signals of the outlook for policy in the euro-zone. So despite above-target inflation in Sweden, we do not expect the Riksbank to announce any changes to its policies or forward …
The recent slowdown in the housing market suggests that there is scope for monetary policy to be looser over the coming years than the Norges Bank currently anticipates. That said, we don’t expect any changes in policy, or the Bank’s forward guidance, at …
October’s rise in German ZEW investor sentiment suggests that neither the stronger euro nor ECB QE tapering are expected to have significant adverse implications for the German economy. … German ZEW Survey …
17th October 2017
The widening of the euro-zone’s trade surplus in August adds to the evidence that the region’s economy performed well in Q3. And the outlook for exports is bright. … Euro-zone Trade …
16th October 2017
The inflation data for September suggest that underlying price pressures remained subdued in most of the Nordic and Swiss countries, apart from Sweden. … Inflation pressures weak apart from in …
13th October 2017
The Austrian general election taking place this Sunday is likely to result in a far-right, populist party entering government. While this probably won’t have significant domestic economic ramifications, at the European level it is likely to result in …
August’s sharp rise in euro-zone industrial production suggests that the sector had a strong Q3, contributing to the continued healthy economic recovery. … Euro-zone Industrial Production …
12th October 2017
Inflation remained above the Riksbank’s target in September and, with the economy performing strongly, domestic price pressures will continue to build. We therefore expect the Riksbank to start signalling soon that interest rates will rise in the first …
While Catalonia’s president avoided inflaming tensions with Madrid further in his speech yesterday, as long as the situation drags on there is likely to be some hit to business sentiment. Ultimately, though, we suspect that the economic effects will be …
11th October 2017
The unexpected softness of French industrial production in August suggests that industry weighed on France’s GDP growth in the third quarter and contrasted with the robust Italian data. Meanwhile, there was no sign that the strong euro was hurting German …
10th October 2017
While Norwegian inflation picked up in September, domestic price pressures remain subdued and inflation is unlikely to meet the Norges Bank’s target any time soon. We therefore think that interest rate hikes in Norway are a very long way off. … Norwegian …
August’s surge in German industrial production was in line with the positive message from business surveys and puts the economy on course for a strong Q3. … German Industrial …
9th October 2017
The Catalan Government could achieve independence without Spain’s consent if a critical mass of people and firms were on board. This would be negative for the rest of Spain. Spain’s government’s debt-to-GDP ratio would jump and the budget deficit would …
6th October 2017
The latest indicators have given mixed signals about the euro-zone economy in Q3. Somewhat ironically, the “hard” data available so far have been rather soft. Industrial production rose by just 0.1% on the month in July. And retail sales fell in both July …
5th October 2017
The Swiss National Bank will surely welcome the likely announcement later this month by the European Central Bank that it will wind up its asset purchase programme next year. This will probably help the Swiss franc depreciate a bit further, supporting the …
The rise in Swiss headline inflation in September will be welcomed by the Swiss National Bank, but subdued price pressures mean we expect the SNB to keep rates on hold until 2020. Elsewhere, Swedish August production data appear to suggest that the …
Despite the increased likelihood of looser fiscal policy next year following the collapse of the government last month, the Central Bank of Iceland (CBI) today opted to cut interest rates. We suspect that the CBI has now reached the end of its loosening …
4th October 2017
August’s euro-zone retail sales data suggest that consumer spending growth slowed in Q3. But September’s Composite PMI implies that overall GDP growth remained fairly strong. … Euro-zone Retail Sales (Aug.) & Final PMIs …
After Catalonia’s vote, it seems unlikely that other Spanish regions will soon push for independence. But in Italy, later this month two regions are set to hold referendums aimed at achieving greater autonomy. And in Belgium, the largest party in the …
3rd October 2017
August’s labour market data won’t deter the ECB from announcing later this month that it will taper its asset purchases next year. But the only gradual recovery in the labour market suggests that the Bank will wait a long time before tightening policy …
2nd October 2017
