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As official negotiations about Britain’s exit from the European Union began this week, the remaining member states appeared to be in a robust position. The euro-zone economy, in particular, is still growing at a healthy pace and outperforming the UK. And …
23rd June 2017
Although the euro-zone Composite PMI fell in June, it still suggests that the economic recovery continued at a healthy pace in Q2. But the small falls in the survey’s forward-looking components suggest that growth might slow slightly in the second half of …
Portugal’s economy has outperformed Italy’s in recent years as easing austerity, progress with labour reforms and improvements in competitiveness have all borne fruit. We expect this to continue. … Will Portugal continue to outperform …
22nd June 2017
The Norges Bank revised up its forecast for interest rates this year, so a cut now looks unlikely. But while the Bank expects to raise its policy rate in 2019, we think that it will be unchanged until 2020. … Norway rate cut off the table, but a long way …
While we think that President Macron’s labour reform plans will be broadly successful, his target for France’s unemployment rate to fall to 7% by 2022 still seems overly ambitious. With his planned cuts to public spending partly dependent on lower …
21st June 2017
The Swedish Economic Tendency Indicator points to strong and broad-based growth, consistent with an acceleration in wage growth and a pick-up in underlying inflation. … Swedish Economic Tendency Survey …
Structural factors have pushed the German household saving rate higher in recent years. So we doubt that a fall in the saving rate will see consumer spending growth gain much pace in the months ahead. … Little scope for German spending boost from lower …
20th June 2017
Swedish employment growth seems set to slow but the unemployment rate should nevertheless drift lower this year after being unchanged in May. And with over one third of firms suffering from a shortage of labour, we expect wage growth to pick up. … Swedish …
The results of the French parliamentary elections revealing that Emmanuel Macron’s La République En Marche has achieved a huge majority bode well for the French economy and for EU relations. But he will still face significant public resistance to his …
19th June 2017
The latest national accounts data showed that quarterly GDP growth in most of the Nordic and Swiss economies picked up in Q1, led by Finland. The Finnish economy expanded by 1.2% q/q, followed by Denmark and mainland Norway with quarterly GDP growth of …
16th June 2017
The latest labour market data paint a positive picture of employment conditions in the euro-zone. Indeed, in Q1 the level of euro-zone employment finally surpassed its pre-crisis peak. What’s more, growth picked up – both quarterly and annual growth were …
The deal at yesterday’s Eurogroup meeting should see Greece receive the next tranche of its bailout soon, allowing it to meet July’s debt repayments with a little time and cash to spare. Debt relief has been put off again, but it must be addressed before …
The Norges Bank is likely to leave interest rates unchanged at its meeting in June, but we think that it will revise its rate forecast down. After all, while economic growth has strengthened since the Bank last produced forecasts, consumer price inflation …
15th June 2017
The euro-zone’s goods trade surplus narrowed a touch in April, but the outlook for exports is encouraging. We think that net trade will provide a small boost to GDP growth in 2017. … Euro-zone Trade …
The Swiss National Bank’s decision to leave interest rates on hold and pledge continued currency intervention if needed reflected the fact that inflation is still very low. With price pressures likely to remain subdued, we think that the SNB won’t start …
The UK election is unlikely to have major adverse near-term effects on the euro-zone as damage to UK demand from political uncertainty may be offset by looser fiscal policy. A softer Brexit could ultimately benefit the rest of the EU, but a big shift in …
14th June 2017
There is little sign that the Central Bank of Iceland (CBI) expects to reduce interest rates further after today’s cut, but we think there is scope for a further appreciation of the króna to weigh on imported goods and services prices. As such, we suspect …
Euro-zone industry began Q2 on a positive note with a healthy rise in production in April and surveys point to an acceleration to come. Meanwhile, the region’s labour market recovery continued, with annual employment growth picking up in Q1. … Euro-zone …
The collapse of Finland’s government will not throw the country’s economic reforms off track. We still expect the economy to grow by about 2% this year. And while the renewed political instability in the euro-zone might seem worrying, it will probably …
13th June 2017
June’s fall in the German ZEW investor sentiment index was a slight disappointment. But investors still expect economic conditions to improve over the next six months and the more reliable business surveys suggest that growth will gain pace. … German ZEW …
Underlying inflation was stronger than expected in May and domestic inflation should rise further from its 63-month high. As this will help to offset any disinflationary impact from a stronger krona due to tighter monetary policy, the Riksbank will become …
On the face of it, the Five Star Movement’s poor showing in recent local elections bodes well for pro-euro parties and Italy’s economy. However, the chance of an early election has fallen, so political uncertainty will linger. And it is far too soon to …
12th June 2017
Results of the first round of French parliamentary elections suggesting that Emmanuel Macron’s La République En Marche will achieve a huge majority bode well for the French economy and for EU relations. But he will still face significant public resistance …
April’s sharp fall in French industrial production was disappointing in the wake of yesterday’s poor trade data and dims hopes for a strong pick-up in GDP growth in Q2. But German data continue to be positive, with a decent rise in exports in April. … …
9th June 2017
The ECB revised its inflation forecast down this week, but we doubt that this has meaningfully changed the outlook for monetary policy. After all, the change was small, and largely reflected tweaks to the assumptions about oil prices and the euro exchange …
Norwegian inflation resumed its decline in May, and we think that the fall has further to run. So we still forecast one interest rate cut by the Norges Bank later this year. … Norwegian Consumer Prices …
The Swiss National Bank will once again stress after its meeting on 15th June that it remains prepared to act to prevent any significant renewed appreciation of the Swiss franc. Granted, the recent depreciation of the currency against the euro, as …
8th June 2017
Ahead of next week’s meeting, today’s soft GDP data are unlikely to concern the Central Bank of Iceland too much. The fact that last month’s interest rate cut has done little to stem the króna’s strength will receive more attention. While we expect …
The ECB removed its reference to possible interest rate cuts today, judging that the threat of deflation has passed. But it is still far from convinced that inflation is on a sustained path towards its target, supporting our view that interest rate hikes …
The euro-zone economy grew in Q1 at a faster pace than previously indicated, despite a slowdown in consumer spending. And with activity surveys pointing to a pick-up in GDP growth in Q2, the euro-zone economy is set for a strong 2017. … Euro-zone GDP …
April’s rise in German production is an encouraging sign that the industrial upturn is back on track, and surveys point to a sharp acceleration to come. … German Industrial Production & French Trade …
Banco Popular’s difficulties jar with improving conditions elsewhere in Spain’s banking sector, so its forced sale does not appear to signal further trouble ahead and will not hold back the economic recovery. But elsewhere, and in Italy in particular, …
7th June 2017
Net trade probably contributed little to euro-zone GDP growth in Q1, but the outlook for exports is encouraging. The monthly goods export and import values data show a decline in the goods trade surplus from €65.3bn in Q4 to €57.3bn in Q1. Admittedly, …
Nordic and Swiss equities have generally performed very well this year, but prospects differ significantly between countries. We expect Norwegian equities to outperform over the next 18 months as oil prices rise, but Swedish equities to struggle next year …
As April’s surprise drop in Swedish industrial production was probably due to temporary factors, we expect output to rebound in May. And while the hard data have been weaker than the surveys suggested, there are still signs that domestic demand is growing …
The weak outlook for real disposable income growth in Spain, combined with the fact that the savings rate is already low, suggests that household spending growth is unlikely to rebound following Q1’s slowdown. That said, spending growth will remain …
6th June 2017
Retail sales made a subdued start to Q2, but May’s rise in consumer confidence to a 10-year high suggests that growth should pick. … Euro-zone Retail Sales …
Emmanuel Macron’s party, La République En Marche, looks set to win a parliamentary majority in elections that kick off this Sunday, diminishing fears of political paralysis. But the path to reform will be far from smooth given the likely opposition of …
We think that the ECB will taper its asset purchases to zero in the first six months of 2018 and begin raising interest rates in 2019. The euro-zone economy as a whole should continue to perform well regardless, but there is a risk of more damaging …
5th June 2017
May’s final Composite PMI points to a pick-up in euro-zone GDP growth in Q2. And this strength is broad based. While growth has remained strongest in Germany and Spain, recoveries in France and Italy seem to be gaining pace. … Euro-zone Final PMIs …
Although the euro-zone’s consumer sector currently appears to be in good shape, the combination of higher inflation compared to last year and continued weak wage growth points to annual household spending growth slowing this year. But other sectors of the …
2nd June 2017
At its meeting on 8th June, the ECB is likely to change its forward guidance, dropping the references to lower interest rates and expanding QE. But Mr Draghi will want to avoid stoking expectations of imminent policy tightening. So he is likely to repeat …
1st June 2017
The recent pick-up in growth in Finland has been broad-based, and Government reforms have improved the medium-term outlook. We expect GDP growth to beat the consensus forecast this year. … What’s behind the turnaround in …
The PMIs in Switzerland, Sweden and Norway weakened again in May, but still point to faster manufacturing growth. But the Danish PMI rebounded after April’s plunge. … Manufacturing PMIs …
The upward revision to Italy’s GDP in Q1 is not as encouraging as it first appears. And with the chance of an early election rising, Italy’s already-weak economy looks vulnerable to the rise of euro-sceptic parties. … Italian GDP Breakdown …
Switzerland’s economic recovery gained pace in Q1 and business surveys suggest that this momentum will continue. But with inflation set to remain very subdued, we think that the SNB will keep policy very loose in the coming years. … Swiss & Finnish GDP …
The latest fiscal data revealed mixed performances by the euro-zone’s peripheral economies, with the largest countries faring best. There was also good news for Portugal, which is no longer deemed to be in breach of EC budget rules. But the prospect of …
31st May 2017
The Nordic and Swiss currencies all appreciated against the US dollar in May, but performances against the euro were mixed. Following global trends, government bond yields generally declined. While sovereign yield curves in some countries flattened, the …
April’s euro-zone money and credit data point to steady economic growth. But they remain consistent with core inflation below the ECB’s near-2% target. … Euro-zone Monetary Indicators Monitor …
May’s decline in euro-zone inflation to a five-month low does not change our view that the ECB will alter its forward guidance next week. … Euro-zone Flash CPI (May) & Unemployment …
