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General government figures for 2016 revealed that most euro-zone countries’ fiscal positions improved last year, although some countries still fell short of their targets. Meanwhile, timelier central government data showed that Greece had a weak start to …
2nd May 2017
Today’s agreement means that EU officials can now turn their attention to the question of debt relief for Greece. One way or another, a deal is likely to be done to allow Greece to meet repayments due in July. But we remain sceptical that Greece will be …
March’s small fall in the level of euro-zone unemployment came as something of a disappointment and suggests that, despite the growing strength of the economy, wage growth will remain subdued and keep a lid on inflation. … Euro-zone Unemployment (Mar.), …
The PMIs weakened in April, but still point to faster manufacturing growth. And the Swedish survey suggests that inflation there will rise, supporting our view that the Riksbank erred in extending its asset purchases. … Manufacturing PMIs …
Following Mr Macron’s victory in the first round of the French presidential election, Nordic and Swiss currencies depreciated and government bond yields rose. And dovish comments from policymakers at the ECB and Riksbank added more downward pressure to …
28th April 2017
We think that the French economy is in better shape than data released this week suggest. On balance, its underlying health should boost support for the centrist presidential candidate Emmanuel Macron in next Sunday’s second round run-off. … Will France’s …
This week’s Bank Lending Survey brought more good news for the ECB. Lending conditions have continued to improve, and growth in the demand for credit points to a continued decent recovery in investment. Banks also reported that ECB policies had provided a …
April’s rise in euro-zone HICP inflation put it back in line with the ECB’s target, but the rise reflected the timing of Easter and we doubt that it will lead the Bank to alter its view that underlying inflation is not on a sustained upward path. … …
March’s euro-zone money and credit data point to steady economic growth. But they remain consistent with subdued core inflation. … Euro-zone Monetary Indicators Monitor …
April’s fall in the Swiss KOF Economic Barometer leaves it still pointing to a pick-up in annual GDP growth to around 2%. But with inflation extremely low and given signs that the strong franc is affecting exports, we expect the SNB to keep policy very …
Provisional Q1 GDP data for France, Spain and Austria suggest that euro-zone economic growth accelerated at the start of 2017. And the slower growth in France in Q1 should prove temporary. … France, Spain & Austria GDP (Q1, 1st …
The Norges Bank is almost certain to leave monetary policy unchanged at its meeting next week. After all, the Bank will not be updating its forecasts, and there has been little to change policymakers’ minds about the economic outlook. So for now at least, …
27th April 2017
Given the shift in Mr Draghi’s language at today’s press conference, we think that in June the ECB will remove the reference to “lower” interest rates from its forward guidance. While this would end the loosening bias, any policy tightening is still a …
April’s increases in harmonised CPI inflation in Germany and Spain suggest that the euro-zone rate rose back to the ECB’s target of close to 2%. But the increase partly reflected the timing of Easter and underlying inflation pressures remain subdued. … …
The EC Economic Sentiment Indicator suggests that euro-zone growth accelerated further at the start of Q2. But with consumers’ inflation expectations falling back, we do not expect the ECB to signal any major changes to its policy plans later today. … EC …
Only the Riksbank Governor’s casting vote secured today’s unexpected QE extension. While we have pushed back our expectation for the first repo rate rise in Sweden, we still think that the Riksbank will have to raise rates sooner and faster than it …
Even if centrist Emmanuel Macron wins the second round of the presidential election, his En Marche! party almost certainly won’t secure a majority in the National Assembly following June’s legislative elections. As a result, he will need to compromise and …
The sharp jump in the Swedish Economic Tendency Indicator is consistent with our view that in tomorrow’s monetary policy announcement the Riksbank will signal an end to its asset purchases programme. And with stronger growth consistent with rising …
26th April 2017
April’s further rise in the German Ifo contrasted with the fall in the PMI in the same month, but both surveys point to very strong growth in the euro-zone’s largest economy. … German Ifo Survey …
24th April 2017
The opinion polls were right for once and a strong showing for centrist liberal reformer Emmanuel Macron in the first round of the French election has raised hopes of growth-boosting labour market reforms and EU cooperation. But the risk of a Le Pen …
Prospects appear to have improved for all of the Nordic and Swiss economies, with surveys pointing to annual GDP growth of up to 3% in Switzerland and 5% in Sweden. Inflation has been subdued on the whole, but several factors point to a marked divergence …
21st April 2017
After a tumultuous and ultimately nail-biting campaign, French voters head to the polls on Sunday to begin the process of electing their President. The opinion polls suggest that this first-round vote will go down to the wire with the second round within …
April’s rise in the euro-zone composite PMI added to evidence that the economy is faring very well, pointing to strong GDP growth of up to 0.7% per quarter. … Euro-zone Flash PMIs …
The ECB is likely to stick to the script this month, with a weak outlook for underlying inflation justifying its plan to buy assets until at least the end of the year. The Bank will probably drop the possibility of future interest rate cuts from its …
20th April 2017
As next week’s monetary policy meeting is the last before asset purchases are set to end in June, the Riksbank will probably signal whether they will be extended. While CPIF inflation, which excludes the direct effect of interest rate changes, …
Assuming that Marine Le Pen loses in the second round of the French presidential election, her most radical eurosceptic and protectionist policies will gain little traction at home over the next five years. But if her loss is a narrow one, she may have …
The euro-zone has continued to perform very well and we now expect growth to be stronger than the consensus forecast this year and next. Inflation has been lower than we had assumed, meaning that household spending growth should not slow too sharply. …
19th April 2017
The euro-zone goods trade surplus rose in February but probably narrowed in Q1 as a whole. With higher energy prices explaining much of that narrowing, trade volumes may still have boosted GDP in Q1. What’s more, we expect net trade to make a strong …
Activity surveys suggest that economic growth in the largest Nordic and Swiss economies is set to pick up. In Switzerland, the KOF Business Barometer points to annual GDP growth rising from Q4’s 0.6% to around 2.5%. In Sweden, the NIER Economic Tendency …
13th April 2017
The strength of economic survey indicators in Q1 has not yet been reflected in either the retail sales or industrial production data. But construction appears to have boomed and car registrations, which help to gauge non-retail consumer spending trends, …
France’s presidential election puts the country, and arguably the entire European Union, at a historic crossroads. The more likely path is one of liberal reforms that could boost growth and strengthen European cooperation. But a lurch towards …
While conventional metrics give some support to the Swiss National Bank’s view that the franc is “significantly overvalued”, the evidence from the economy implies that it is not. What’s more, we think the currency is more likely to rise in the near term …
March’s fall in inflation was partly due to temporary effects and inflation should rise in April. As there is now an increasing risk that inflation will overshoot the Riksbank’s target, later this month we expect the Bank to signal that its asset …
12th April 2017
11th April 2017
February’s small fall in euro-zone industrial production suggests that the sector had a weak Q1, but the slowdown should have been offset by stronger growth in other sectors. What’s more, the industrial surveys point to a sharp acceleration to come. … …
March’s small rise in the Norges Bank’s preferred measure of inflation was probably just a blip. Indeed, we think that inflation will fall to about 1.0% later this year, prompting the central bank to cut its key policy rate from 0.50% to 0.25%. … …
10th April 2017
Greek government revenues fell sharply at the start of the year. While there has been a provisional deal on new reforms, the next bailout payment is still some way off. With uncertainty weighing on the economy, there is little chance of Greece meeting its …
7th April 2017
Last week’s communications from the ECB confirmed our judgement that it is in no hurry to begin the process of policy normalisation despite the health of the economy. Indeed, the Bank still intends to stick to its plan to keep loosening policy by buying …
February’s sharp rise in German industrial production and wider trade surplus help to reconcile the recent gap between the hard data and surveys, and imply that GDP rose sharply in Q1. But the French data suggest that the economy barely expanded. … German …
March’s Swiss inflation data do little to alter the picture of extremely subdued price pressures. With the core rate barely positive and inflation expectations very low, we expect the Swiss National Bank to maintain supportive policies including FX …
6th April 2017
Central banks in Switzerland, Sweden and Norway have all voiced concerns about overheating in their housing markets. In Switzerland, macro-prudential policies have already served to cool house price inflation and there is scope to do more. This should …
5th April 2017
Survey data for March added to the evidence that euro-zone growth gained pace in the first quarter. Meanwhile, headline consumer price inflation fell in March and appears to have passed its peak, suggesting that the drag from higher inflation on real …
The latest raft of positive Swedish data supports our view that the Riksbank’s extremely accommodative monetary policy is no longer justified – we expect the Bank to stop purchasing assets in June and to raise interest rates by the end of this year. … …
February’s retail sales data suggest that consumer spending growth slowed in Q1. That said, high consumer confidence and firms’ strong employment intentions suggest that household spending growth won’t slow sharply this year. … Euro-zone Retail Sales …
4th April 2017
February’s fall in euro-zone unemployment and the rise in the manufacturing PMI in March supported other evidence that the economy is performing well. But February’s producer prices data confirmed that underlying inflation pressures are subdued. … …
3rd April 2017
March’s PMIs point to faster manufacturing growth in Switzerland, Sweden and Norway. They also imply that price pressures are building in Sweden, which we think will force the Riksbank to tighten policy before the end of the year. … Manufacturing PMIs …
Market movements across the Nordic and Swiss economies were fairly limited in March. The main exceptions were in the currency market, with both the Norwegian krone and Icelandic króna recording sharp declines against the euro and US dollar. Despite our …
31st March 2017
Last week brought more evidence that the euro-zone economy has continued to perform very well and we have decided to upgrade our forecasts for the region significantly. Indeed, inflation has been more subdued than we had assumed. In turn, this should mean …
March’s sharp slowdown in euro-zone inflation was partly driven by temporary factors that will reverse in April, but the big picture is that inflation is now on a downward trend. So we expect the ECB to continue purchasing assets and leave interest rates …
Today’s expenditure data gave mixed messages on the health of the euro-zone’s consumer sector. While higher inflation does not appear to have hit German consumer spending in Q1, spending growth may have slowed in France and Spain. … Ger. & Spa. Retail …
