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The second estimate of euro-zone GDP confirmed the message from national data that the economic recovery maintained its pace in Q3. However, we think that growth will slow over the coming quarters. … Euro-zone Flash GDP (Q3) & German ZEW …
15th November 2016
October’s rise in inflation was driven almost entirely by energy effects whileunderlying measures of inflation remain weak. As such, the Riksbank seems all butcertain to loosen monetary policy at its next meeting in December. … Swedish Consumer Prices …
Norway’s economic recovery slowed in Q3, while Finland’s picked up. But surveys suggest that growth in both countries might improve over the coming quarters. … Norwegian & Finnish GDP …
Despite September’s fall in euro-zone industrial production, industry probably made a positive contribution to GDP growth in Q3. However, industry is unlikely to prevent overall economic growth from slowing in 2017. … Euro-zone Industrial Production …
14th November 2016
Last week’s US election result raised the question of where the next political shock might be. The popularity of far-right candidates and forthcoming major elections make France and the Netherlands obvious candidates. But the biggest risk is in Italy, …
11th November 2016
In October, the Norges Bank’s favoured measure of inflation was unchanged at a joint 14-month low. We think that it will fall sharply next year, prompting the Bank to cut its key policy rate from 0.5% to zero. … Norwegian and Danish Consumer Prices …
10th November 2016
We think that the sharp appreciation of the króna over recent months will prompt the Central Bank of Iceland to cut its inflation forecasts next week. As a result, although the Bank has previously stated that it would act cautiously in monetary policy …
Today’s minutes showed broad support for an extension of the Riksbank’s government bond purchase programme. Combined with the uncertainty created by Donald Trump’s victory in the US, an extension of bond purchases by the Riksbank now seems all but …
9th November 2016
We suspect that the Nordic and Swiss economies will see limited effects from Mr Trump’s victory. Butit makes monetary policy divergence between Switzerland and Sweden next year slightly more likely. … Trump win could widen policy divergence next …
The limited immediate reaction in European financial markets to Donald Trump’s victory appears to support our view that the outcome will have few direct economic implications. If anything, though, the outcome heightens political risk in what was already a …
The importance of international trade to the Nordics and Switzerland, as well as the franc’s role as a safe haven, mean that the outcome of the US election is potentially important to the region. This Watch explores the implications in more detail. … What …
8th November 2016
September’s sharp drop in German industrial production partly reflected payback from a sharp rise last month, and production posted a solid gain in Q3 as a whole. Nonetheless, the data are disappointing compared to the more positive message from the …
As the European Commission (EC) undertakes its annual review of euro-zone member states’ budget submissions, yet more signs of fiscal slippage emerged in the South. Finances in Spain and Portugal continue to disappoint, while Italy faces a showdown with …
7th November 2016
The fading boost to consumers’ spending power from lower energy prices may bebehind September’s fall in euro-zone retail sales. As we have warned for sometime, consumer spending growth is set to weaken further as rising energy pricesdrive inflation higher …
October’s Swiss CPI data did little to ease fears that the economy may be experiencing a sustained bout of damaging deflation. This supports our view that additional monetary policy support will be needed and that the Swiss National Bank (SNB) looks set …
According to the Sentix investor survey, Italy is now the most likely country to leave the euro-zone in the next 12 months. While we think that Italy remaining in the currency union is still the more likely outcome, there is plenty of scope for investors’ …
4th November 2016
A Trump victory in next week’s US election could prompt an unwelcome appreciation of the euro exchange rate, but we suspect that this would be short-lived. What’s more, other effects on euro-zone growth would probably be minimal. Europe has bigger issues …
3rd November 2016
The most noteworthy market developments last month were prompted by expectations of further policy loosening from Sweden’s Riksbank, with the krona depreciating sharply last month as a result. Meanwhile, bond yields increased inmost countries while equity …
September’s euro-zone unemployment data suggest that, while the labour market is still strengthening, it is doing so at a slow pace. And forward-looking indicators suggest that the labour market recovery will soon slow. … Euro-zone Unemployment …
September’s sharp rise in Swedish industrial production suggests that August’s large fall was due to one-off effects. Looking ahead, the rise in the services PMI supports the message from earlier surveys that GDP growth is set to accelerate. … Swedish …
The euro-zone’s consumer sector appears to have had another poor quarter in Q3. Retail sales volumes were flat in August, while timelier national data point to a contraction in sales in September. Combined with data on car registrations, that suggests …
1st November 2016
October’s manufacturing PMIs generally painted a positive picture of economic growth.But the surveys’ price indices suggest that inflationary pressures vary across the region. … Manufacturing PMIs (Oct.) & Swiss Retail Sales …
The next Icelandic government may be an unconventional one, but improvements to Iceland’s public finances and external position since the crisis mean that there is little risk to economic growth. … Little risk to growth from Iceland’s …
31st October 2016
The preliminary flash estimate of euro-zone Q3 GDP supports the message from earlier country data that the pace of growth remains fairly slow. So it is no surprise that October’s inflation data show that underlying price pressures are still very weak. … …
Last week brought some good news about the euro-zone economy, with October’s composite PMI and EC ESI both pointing to an acceleration of growth. But both the hard data and survey indicators look much weaker for France than for Germany. And as the labour …
28th October 2016
October’s rise in German HICP inflation to +0.7% suggests that euro-zone inflation in the same month rose to its highest level since April 2014. But in Germany at least, the rise reflected energy effects while underlying price pressures remained subdued. …
October’s rise in the EC measure of economic sentiment supports the message from the PMI that euro-zone growth accelerated towards the end of the year, albeit with continued divergence across countries. … EC Business & Consumer Survey …
October’s rise in the Swiss KOF Economic Barometer suggests that GDP growth could accelerate in the near term. But with the full effects of the franc’s strength yet to be felt and deflation risks persisting, monetary policy may still be loosened further. …
Provisional Q3 GDP data from France and Spain support the message from the business surveys that euro-zone GDP continued to increase at a pretty slow pace. And there are clear signs that the French consumer recovery is weakening. … France, Spain & Austria …
Headline Icelandic inflation was stable in October and the core rate fell slightly. But with the economy continuing to strengthen, we think that underlying inflation will pick up in the coming months. … Iceland Consumer Prices …
27th October 2016
September’s euro-zone money and credit data continued the positive trend of recentmonths, consistent with a further steady expansion of the economy. Nevertheless,the data suggest that inflation will remain well below the ECB’s target. … Euro-zone Monetary …
It seems very likely that the Riksbank will extend its bond purchase programme after it stepped up its dovish rhetoric and suggested that it might even cut the repo rate further. But given our expectation for growth and inflation to surpass the Riksbank’s …
The Norges Bank left its key policy rate on hold today and reiterated that no change was likely in the near future. But we think that more monetary loosening will be needed in 2017. … Norges Bank leaves policy unchanged, but rate cuts to …
Even if Spain’s new minority Government gets support for its 2017 Budget, it will struggle to build the consensus needed to pass other measures. Accordingly, political uncertainty will continue to weigh on Spain’s chances of meeting its fiscal targets and …
26th October 2016
The latest setbacks in ratifying an EU-Canada trade deal have larger direct economic implications for Canada than for the EU. But the political deadlock bodes ill for future EU trade agreements which could have been more beneficial and suggests that the …
October’s increase in the German Ifo Business Climate Indicator (BCI) adds to a recent run of positive news about the economy. Germany looks set to easily outperform the euro-zone average this year and next. … German Ifo Survey …
25th October 2016
The rise in the euro-zone Composite PMI to a ten-month high suggests that GDP growth may have picked up at the start of Q4. Nevertheless, there is a concerning divergence in conditions between the euro-zone’s largest economies. … Euro-zone Flash PMIs …
24th October 2016
Last week, the European Commission (EC) published the draft Budgets for 2017 as submitted by eurozone governments. On the face of it at least, there is little for the EC to be concerned about. All countries except Germany project improvements in their …
21st October 2016
The Norges Bank is almost certain to leave monetary policy unchanged at its meeting on 27th October. Indeed, at its last meeting in September the Bank changed the wording in its policy statement from “the key policy rate may be reduced in the course of …
Inflation has undershot the Riksbank’s forecastssince it last met to set policy in September. Butwe expect inflation to rise again before long, andwith economic conditions strong there is lesspressure to respond to temporary setbacks inhitting the …
20th October 2016
President Draghi did not explicitly promise imminent policy action today. But he signalled that assetpurchases would not end abruptly. And as tapering has apparently still not been discussed, we expectthe ECB to announce a six-month extension to its asset …
September’s Swedish Labour Force Survey confirmed that the previous month’s poorresults were a one-off and highlights the tightness of the labour market. With firms’hiring intentions picking up in recent months, employment should continue to rise. … …
The recent increase in French unemployment seems unlikely to be reversed rapidly. And while a new government may be elected next year promising job-boosting reforms, its success will be limited by resistance from both the European Commission and the …
18th October 2016
The Nordic and Swiss economies’ reasonable economic performance, low public debt and stable political backdrop should help to maintain their safe haven status. But there will be some marked economic and policy divergences. Slow growth and low inflation in …
17th October 2016
Fears that domestic price pressures might prompt the Swiss National Bank to tighten monetary policy proved unfounded today as it left its interest rate target at 0.25%. The Bank’s tone was gloomier than expected and its low inflation forecast supports our …
16th October 2016
Recent official activity data for the euro-zone have been fairly encouraging. Coupled with the unofficial survey evidence, they suggest that the region’s GDP growth might have maintained its pace or even picked up slightly in Q3. But it will still have …
14th October 2016
The euro-zone’s goods trade surplus rose in August, but it probably fell over Q3 as a whole. Looking ahead, we think that the trade surplus will narrow further this year as global demand growth remains fairly soft. … Euro-zone Trade …
The ECB’s Governing Council is unlikely to unveil any policy changes at its forthcoming meeting on 20th October. But we expect it to prepare the ground for an extension of its Asset Purchase Programme (APP) to be announced at its following meeting in …
13th October 2016
The sharp rise in euro-zone industrial production in August suggests that the sectorprovided a positive, albeit small, boost to GDP growth in Q3. However, industry isunlikely to be able to prevent the economic recovery from slowing in 2017. … Euro-zone …
12th October 2016
October’s rise in the ZEW Indicator of Economic Sentiment is broadly encouraging, although the index still points to a slowdown in German GDP growth. … German ZEW Survey …
11th October 2016
