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24 Feb 2020 The PMIs are Lost in Translation, Here is What You Need to Know (Publication Centre)

Friday's PMIs were supposed to provide the first reliable piece of evidence of the coronavirus on euro area businesses, but they didn't. Instead, they left economists dazed, confused and scrambling for a suitable narrative.

30 Oct 2019 Will the Pension Reform Bring Back the Yellow Vests in France (Publication Centre)

French consumer confidence and consumption have been among the main bright spots in the euro area economy so far this year.

20 Jan 2020 The ECB Won't Flinch Over the Q4 Jump in EZ Core Inflation (Publication Centre)

Friday's detailed euro area CPI report for December confirmed that inflation pushed higher at the end of last year. Headline inflation increased to 1.3% year-over- year, from 1.0% in November, lifted primarily by higher energy inflation, rising by 3.4pp, to +0.2%. Inflation in food, alcohol and tobacco also rose, albeit marginally, to 2.1%, from 2.0% in November.

23 Oct 2019 Mr. Macron is Blowing the Budget in France, it's Working, for now (Publication Centre)

The prospect of fiscal stimulus in the euro area-- ostensibly to "help" the ECB reach its inflation target-- remains a hot topic for investors and economists.

13 Feb 2020 A Double-Dip Recession on the Menu for Italy's in Q1 (Publication Centre)

The fact that Italy's economy is in poor shape will not surprise anyone following the euro area, but the advance Q4 GDP headline was astonishingly poor all the same.

12 Nov 2019 How About an EZ Asset that's Impervious to Overvaluation? (Publication Centre)

Financial assets of all stripes are, by most metrics, expensive as we head into year-end, but for some markets, valuations matter less than in others. The market for non-financial corporate bonds in the euro area is a case in point.

20 Nov 2019 EZ Construction has Stalled, but Expect a Rebound in H1 2020 (Publication Centre)

Yesterday's headline economic data in the euro area were solid across the board, though the details were mixed.

18 Mar 2020 What is the Cost of Covering EZ Workers' Covid-19 Income Loss (Publication Centre)

Wage growth in the euro area slowed slightly last year, consistent with the rapid deceleration in economic growth since the end of 2017, though it remained robust overall.

3 Dec 2019 A Look at the Bright Side in the EZ Manufacturing PMIs (Publication Centre)

Yesterday's final manufacturing PMIs confirmed that the headline index in the euro area rebounded further last month.

3 Jan 2020 More Soft EZ Manufacturing Data, but Markets Don't Care Anymore (Publication Centre)

The first economic report of 2020 confirmed the main story in the euro area last year; namely a recession in manufacturing.

30 Jan 2020 Don't Panic Over the Slump in EZ M3 Growth, M1 Still Looks Firm (Publication Centre)

Yesterday's economic reports in the euro area were mixed.

5 Dec 2019 Growth in EZ Services Activity is Slowing, but Not Crashing (Publication Centre)

Yesterday's data showed that the euro area PMIs were a bit stronger than initially estimated in November.

5 Mar 2020 How far Will EZ Services Fall, and Will it Cause a Recession (Publication Centre)

It will take a while for the economic data in the euro area fully to reflect the Covid-19 shock, but the incoming numbers paint an increasingly clear picture of an improving economy going into the outbreak.

27 Sept 2019 Are the Balance of Risks Shifting for the Better in the EZ Economy (Publication Centre)

Money supply data are sending an increasingly contrarian, and bullish, signal for the euro area economy.

16 Dec 2019 Will the Government in France Stand Fast on its Pension Reform? (Publication Centre)

Friday's sole economic report showed that wage growth in France remained robust mid-way through the year. The non-seasonally adjusted private wage index, ex-agriculture and public sector workers, published by the Labour Ministry, rose by 0.3% quarter-on-quarter in Q3.

14 Oct 2019 If German CPI Data won't Guide Bunds, Maybe Fiscal Policy will (Publication Centre)

Friday's data added further colour to the September CPI data for the Eurozone.

16 Jan 2020 Early Evidence Points to a further Dip in EZ GDP Growth in Q4 (Publication Centre)

Judging by the solid advance data in the major economies, yesterday's EZ industrial production report should have hit desks with a bang, but it was a whimper in the end.

15 Aug 2019 Germany's Economy is in Trouble, but the EZ as a Whole is Stable (Publication Centre)

Yesterday's data showed that growth in the EZ slowed in the second quarter.

14 Nov 2019 EZ Industrial Production Fell in Q3, and Likely Will Slide Again in Q4 (Publication Centre)

Manufacturing in the EZ was held above water by Ireland at the end of Q3.

15 Nov 2019 More Evidence Emerges of Stabilisation in the EZ Economy (Publication Centre)

Yesterday's second Q3 GDP estimate confirmed that the EZ economy expanded by 0.2% quarter-on- quarter in Q3, the same pace as in Q2, leaving the year-over-year rate unchanged at 1.2%.

15 Oct 2019 Breakthrough or False Dawns in Brexit and the Trade Wars? (Publication Centre)

Few Eurozone investors are going blindly to accept the rosy premise of last week's relief rally in equities that both a Brexit and a U.S-China trade deal are now, suddenly, and miraculously, within touching distance. But they're allowed to hope, nonetheless.

17 Jan 2020 EZ Car Sales Soared in Q4, but the Output Data Still Look Awful (Publication Centre)

A strong finish to the fourth quarter spared the EZ auto sector the embarrassment of posting an outright fall in domestic sales through 2019 as a whole.

18 Nov 2019 What Rate Cuts? Markets Now Look for Unchanged ECB Policy (Publication Centre)

he ECB governing council gathered last week under the leadership of Ms. Lagarde for the first time to lay a battle plan for the course ahead.

18 Oct 2019 The New Brexit Deal is a Classic EU Fudge, Will it Sink or Swim (Publication Centre)

Our first impression of the proposed Brexit deal between the EU and the U.K. is that it is sufficiently opaque for both sides to claim that they have stuck to their guns, even if in reality, they have both made concessions.

19 Dec 2019 Another Poor Quarter Ahead for Construction in the Eurozone (Publication Centre)

The Eurozone economy all but stalled at the start of Q4.

18 Feb 2020 Is the ECB About to Include House Prices in its Inflation Analysis? (Publication Centre)

The idea that the ECB will use its forthcoming strategic policy review to include a measure of real estate prices in its inflation target has been consistently brought up by readers in recent meetings.

18 Dec 2019 Modest Growth Ahead in 2020 for Domestic Eurozone Car Sales (Publication Centre)

Data yesterday added further evidence of a slow recovery in Eurozone auto sales.

17 Dec 2019 The EZ PMIs Point to Another Subpar Quarter for the EZ in Q4 (Publication Centre)

We're sticking to our call that the Eurozone PMIs have bottomed, though we concede that the picture so far is more one of stabilisation than an outright rebound.

17 Feb 2020 Growth Forecasts in the EZ are about to come down (Publication Centre)

Friday' second Q4 GDP estimate revealed that the EZ economy barely grew at the end of 2019. The report confirmed that GDP rose by 0.1% quarter-on-quarter in Q4, slowing from a 0.3% rise in Q3, but the headline only narrowly avoided downward revision to zero, at just 0.058%

17 Oct 2019 Early Signs of Stabilisation in the Eurozone Auto Sales Data (Publication Centre)

The beleaguered EZ car sector finally enjoyed some relief at the end of Q3, though base effects were the major driver of yesterday's strong headline.

16 Oct 2019 Core Inflation in France is Rising, but the Devil is in the Detail (Publication Centre)

Yesterday's final inflation data in France for September were misleadingly soft.

13 Dec 2019 Ms. Lagarde Passes her First Test, but it won't get any Easier (Publication Centre)

The ECB and Ms. Lagarde played it safe yesterday.

10 Mar 2020 It's Getting Sporty, a Brief Look at the Chaos in EZ Financial Markets (Publication Centre)

In this Monitor we'll let the data be, and try to make some sense of the recent market volatility from a Eurozone perspective, with an eye to the implications for the economy and policymakers' actions.

11 Dec 2019 French Manufacturing is Headed for a Soft Q4, Despite a Solid Start (Publication Centre)

Manufacturing in France remained on the front foot at the start of Q4.

11 Feb 2020 The Coronavirus will test the Policy Put's Effect on EZ Equities (Publication Centre)

Yesterday's Sentix investor sentiment survey provided the first glimpse of conditions on the ground in the EZ economy in the wake of the coronavirus scare.

10 Jan 2020 The Outlook for German Q4 GDP is Poor, but also Murkier than Usual (Publication Centre)

Yesterday's industrial production report in Germany was much better than implied by the poor new orders data--see here--released earlier this week.

10 Feb 2020 The Noose Tightens on Eurozone Optimists, Will the ECB Cut Rates? (Publication Centre)

Friday's industrial production data in the core EZ economies, for December, were startlingly poor. In Germany, industrial production plunged by 3.5% month-to-month, comfortably reversing the revised 1.2% rise in November.

1 Nov 2019 Where's the Fire, The EZ Economy is Weak, but also Stabilising (Publication Centre)

The more headline hard data we see in the Eurozone, the more we are getting the impression that 2019 is the year of stabilisation, rather than a precursor to recession.

10 April 2019 The ECB will Double-Down Today on its Recent Dovish Shift (Publication Centre)

The ECB will rest on its laurels today.

10 Dec 2019 Net Exports in Germany Were Off to a Flying Start in Q4 (Publication Centre)

The early Q4 hard data in Germany recovered a bit of ground yesterday.

11 Nov 2019 German Net Exports fell in Q3, but less than in Q2, No recession then (Publication Centre)

Friday's data force us to walk back our recession call for Germany. The seasonally adjusted trade surplus rose in September, to €19.2B from €18.7B in August, lifted by a 1.5% month-to-month jump in exports, and the previous months' numbers were revised up significantly.

11 September 2018 EZ Investors are Still Depressed, Probably Excessively So (Publication Centre)

EZ investors remain depressed. The headline Sentix confidence index fell to 12.0 in September, from 14.7 in August, and the expectations gauge slid by three points to -8.8.

13 Jan 2020 Your Monthly Reminder that the French Economy is Doing Fine (Publication Centre)

The French manufacturing data delivered another upside surprise last week, following the solid numbers in Germany; see here. French industrial production rose slightly in November, by 0.3% month-to-month, extending the gains from an upwardly-revised 0.5% rise in October.

13 Nov 2019 Will Politicians in Spain Face up to Reality This Time Around? (Publication Centre)

The political situation in Spain remains an odd example of how complete gridlock can be a source of relative stability.

14 Feb 2020 Eurozone Q4 GDP Growth will be Revised Down Today, to Zero (Publication Centre)

We've already raised a red flag for today's second Q4 GDP estimate in the Eurozone, but for good measure, we repeat the argument here.

19 Feb 2020 Investor Sentiment Data Signal a Hit to the PMIs, or Do They (Publication Centre)

Yesterday's German ZEW investor sentiment survey provided the first clear evidence of the coronavirus in the EZ survey data.

12 Mar 2020 The ECB will Deliver, a Rate Cut, More QE and TLTROs are Coming (Publication Centre)

The Fed paved the way with a 50bp emergency rate cut on March 3, with more to come.

12 April 2019 The CPI Easter Effect Confirmed Now Brace for a Jump in April (Publication Centre)

Yesterday's detailed CPI data in Germany and France broadly confirmed the message from the advance data in the Eurozone as a whole.

12 Dec 2019 Spare a Moment for Ms. Lagarde, as We Await the Final U.K. Polls (Publication Centre)

The U.K. general election is the main event in today's European calendar, but the first official ECB meeting and press conference under the leadership of Ms. Lagarde also deserves attention.

12 Feb 2020 What on Earth Happened in the Spanish Economy in Q4 (Publication Centre)

On a headline level, the Spanish economy conformed to its image as the star performer in the EZ in Q4.

14 Jan 2020 A Recap of the Main Story in the EZ before the First Q1 Data (Publication Centre)

The EZ calendar has been extremely busy in the first few weeks of the year, making it virtually impossible to see the forest for the trees.

16 Mar 2020 Is EZ Fiscal Policy Finally Stepping Up? And if So, What will it Do? (Publication Centre)

EZ investors are still trying to come to grips with last week's terrifying price action, culminating in the 12.5% crash in equities on Thursday

3 Mar 2020 Covid-19 is Both a Supply and Demand Shock to the EZ Economy (Publication Centre)

Yesterday's final manufacturing PMIs confirmed that all remained calm in the EZ industrial sector through February.

3 Feb 2020 The Eurozone Economy all but Stalled at the End of 2019 (Publication Centre)

Friday's advance Q4 growth numbers in the EZ were a bit of a dumpster fire.

30 Mar 2020 Covid-19 is a Battering Ram to EZ Economic Policymaking  (Publication Centre)

The coronavirus outbreak, by definition, will fade eventually, but we suspect the measures to combat it will be more long-lasting. In terms of sheer scale, EZ governments and the ECB are throwing the kitchen sink at the virus, but that's only half the story.

31 Mar 2020 The ECB Faces a Key Question, Yield Curve Control or Not (Publication Centre)

As we showed in yesterday's Monitor--see here--EZ governments and the ECB have thrown caution to the wind in their efforts to limit the pain from the Covid-19 crisis.

4 Dec 2019 EURUSD is Poised to Move, The Case for a Rise is Strengthening (Publication Centre)

Implied volatility on the euro is now so low that we're compelled to write about it, mainly because we think the macroeconomic data are hinting where the euro goes next.

29 Oct 2019 Can we Rely on M1 as a Leading Indicator in the Eurozone (Publication Centre)

Yesterday's EZ money supply data confirmed that liquidity conditions in the private sector improved in Q3, despite the dip in the headline.

29 Nov 2019 EZ Leading Indicators are Still Mixed, We put our Faith in M1 (Publication Centre)

Leading economic indicators in the Eurozone continue to send contradictory signals. Most of the headline surveys indicate that a further slowdown, and perhaps even recession, are imminent, while the money supply data suggest that GDP growth is about to re-accelerate.

27 Nov 2019 The German Consumer is Doing Fine, but Risks Loom in Q4 (Publication Centre)

Yesterday's sole economic report in the EZ showed that consumer sentiment in Germany improved mid-way through the fourth quarter.

28 Nov 2019 Spare a Thank You for the Strong and Stable French Consumer (Publication Centre)

French consumers remained in great spirits midway through the fourth quarter. The headline INSEE consumer confidence index jumped to a 28-month high in November, from 104 in October, extending its v-shaped recovery from last year's plunge on the back of the yellow vest protests.

28 Oct 2019 Germany is in Recession, When Will the Recovery Begin? (Publication Centre)

Survey data in Germany showed few signs of picking up from their depressed level at the start of Q4.

29 Jan 2020 We Hear You Mme President, but We Still Think You're on Autopilot (Publication Centre)

Our ECB-story since Ms. Lagarde took the helm as president has been that the central bank will do as little as possible through 2020, at least in terms of shifting its major policy tools.

4 Feb 2020 Focus on the (Publication Centre)

The near-term performance for EZ manufacturing will be a tug-of-war between positive technical factors, and a still-poor fundamental outlook.

19 Mar 2020 The Initial Hit from Covid-19 is Disinflationary, then What? (Publication Centre)

A lot of ink has been spilled over the relative significance of the supply and demand effects of Covid-19, but the short-term story is clear.

7 Jan 2020 The Eurozone Services Sector is Still Holding its Own (Publication Centre)

Yesterday's economic reports in the Eurozone were solid across the board.

7 Nov 2019 A Rare Batch of Good News in the Eurozone Economy (Publication Centre)

Yesterday's economic reports in the Eurozone were mostly positive.

8 Jan 2020 Will EZ Inflation be Higher, and Stickier, than Markets Expect (Publication Centre)

The ink has hardly dried on economists' and the ECB's inflation projections for 2020, but we suspect that some forecasters are already considering ripping up the script.

9 Dec 2019 Germany's Economy is Still Either in, or Very Close to, Recession (Publication Centre)

The hard data in Germany took a turn for the worse at the start of Q4. The outlook for consumers' spending was dented by the October plunge in retail sales--see here-- and on Friday, the misery spilled over into manufacturing.

6 Mar 2020 Are Migration and Climate Change Challenges Uniting the EU (Publication Centre)

In today's Monitor, we'll let the economy be, and focus instead on what are fast becoming the two defining political issues for the EU and its new Commission, namely migration and climate change.

6 Jan 2020 Risks are Tilted to the Upside for this Week's EZ Inflation Data (Publication Centre)

Friday's early EZ CPI data for December were red hot. Headline HICP inflation in Germany jumped to 1.5%, from 1.3% in November, while the headline rate in France increased by 0.4pp, to 1.6%.

4 Nov 2019 Are Markets Eyeing a Bottom in EZ GDP Growth? (Publication Centre)

We have spent the past few weeks shifting our story on the EZ economy from one focused on slowing growth and downside risks to a more balanced outlook. It seems that markets are starting to agree with us.

5 Nov 2019 No Relief for Manufacturing in the Eurozone at the Start of Q4 (Publication Centre)

Yesterday's final manufacturing PMIs for October were grim, but they told investors nothing they don't already know.

6 Dec 2019 EZ Households Stood Tall in Q3, Is the Trend in Consumption Rising (Publication Centre)

Yesterday's detailed Q3 growth data in the Eurozone offered no surprises in terms of the headline.

6 Feb 2020 Suddenly, the Composite PMI in the EZ Rose Slightly in January (Publication Centre)

Yesterday's final PMI data in the Eurozone were better than we expected.

27 Mar 2020 How to Track the Incoming Crunch in the Eurozone Economy (Publication Centre)

The EZ economy's liquidity gears were well-oiled coming into the crisis.

4 Mar 2020 The Policy Put is Alive and Well, the ECB will Follow the Fed (Publication Centre)

Markets were left somewhat disappointed yesterday by the G7 statement that central banks and finance ministers stand ready "to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks."

20 Feb 2020 EZ Construction Output Hit a Wall in Q4, but Capex did a Bit Better (Publication Centre)

Production in the EZ construction sector slumped at the end of Q4. Data yesterday showed that output slid by 3.1% month-to-month in December, comfortably reversing the 0.7% increase in November.

2 Mar 2020 ECB easing is on the way, the only question is how much (Publication Centre)

We'll cover Friday's barrage of EZ economic data later in this Monitor, but first things first. We regret to inform readers that the ECB is behind the curve. Last week, Ms. Lagarde downplayed the idea that the central bank will respond to the shock from the Covid-19 outbreak.

21 Feb 2020 Buckle Up, Today's Eurozone PMIs Will Move Markets, We Think (Publication Centre)

Today's advance EZ PMIs will be watched more closely than usual.

21 Nov 2019 EZ Equities are Teasing Investors to Disregard Fundamentals (Publication Centre)

The year so far in EZ equities has been just as odd as in the global market as a whole.

21 Oct 2019 Are Portfolio Flows Turning in Favour of Eurozone Equities (Publication Centre)

The Eurozone's external surplus recovered a bit of ground mid-way through the third quarter.

19 Nov 2019 Italian GDP Growth is Rebounding, but at a Painfully Slow Pace (Publication Centre)

Italy's economy is still bumping along the bottom, after emerging from recession in the middle of last year.

27 Feb 2020 Survey Data in France were Stable and Solid Midway through Q1 (Publication Centre)

The Covid-19 scare can be split into two stages, the initial outbreak in China, concentrated in Wuhan, and the now-worrying signs that clusters are forming in other parts of the world, primarily in South Korea, the Middle East and Italy.

2 Jan 2020 Bad Omens for Q4 Consumers' Spending Growth in the EZ (Publication Centre)

Data on EZ consumption were soft while we were enjoying our Christmas break. The advance EC consumer confidence index slipped to a three-year low of -8.1 in December, from -7.2 in November, breaking its recent tight range.

20 Dec 2019 French Business Sentiment Shows no Hit from Strikes in December (Publication Centre)

The INSEE business sentiment data in France continue to tell a story of a robust economy.

2 Dec 2019 EZ Core Inflation is Rising, but It Probably Overshot in November (Publication Centre)

The key detail in Friday's barrage of economic data was the above-consensus increase in EZ inflation.

2 Apr 2020 EZ Manufacturing is Under Siege, But Help is Coming, we Hope (Publication Centre)

Within the space of two months, investors have gone from wondering whether the slowdown in manufacturing would spill-over into the rest of the EZ economy, to the realisation that the crunch in services is now driving the overall story on the economy.

22 Jan 2020 The Outlook for the Q1 PMI Data Suddenly Looks Great (Publication Centre)

Investor sentiment data still indicate that EZ PMIs are set for a significant rebound at start of the year.

20 December 2018 Pick a Multiple for EZ Equities Next Year, and Hope for the Best (Publication Centre)

This year has been sobering for Eurozone equity investors.

25 Feb 2020 EZ Markets are Now Seriously Worried about Coronavirus (Publication Centre)

Yesterday was a watershed moment for investors.

25 Nov 2019 The PMI Data Still Signal Weaker Growth ahead in the EZ (Publication Centre)

The PMIs in the Eurozone are still warning that the economy is in much worse shape than implied by remarkably stable GDP growth so far this year.

26 Nov 2019 The IFO in Germany Still Tells a Story of Imminent Recession (Publication Centre)

The November IFO report suggests that the headline indices are on track for a tepid recovery in Q4 as a whole, but the central message is still one of downside risks to growth

22 Nov 2019 Soft Manufacturing in France, but Robust Services and Construction (Publication Centre)

Yesterday's barrage of survey data in France suggests that business sentiment in the industrial sector remained soft mid-way through Q4, but the numbers are more uncertain than usual this month.

24 Oct 2019 A Standing Ovation for Mr. Draghi Today as he Departs the ECB (Publication Centre)

Today's ECB meeting will mainly be a victory lap for Mr. Draghi--it is the president's last meeting before Ms. Lagarde takes over--rather than the scene of any major new policy decisions.

25 Oct 2019 A Dignified Farewell by Mr. Draghi, All Eyes Now on Ms. Lagarde (Publication Centre)

The ECB made no changes to policy yesterday, leaving its key refinancing and deposit rates unchanged, at 0.00% and -0.5%, and confirmed that it will restart QE in November at €20B per month.

24 January 2019 Mr. Draghi Won't Help Already Dovishly-Inclined Markets Today (Publication Centre)

The ECB will deliver a carbon copy of its December meeting today, at least in terms of the main headlines.

23 Jan 2020 The ECB Will Stick to its Guns Today, Negative Rates Work (Publication Centre)

Barring a meteor strike, the ECB will leave its main refinancing and deposit rates unchanged today, at 0.00% and -0.5% respectively.

22 Oct 2019 Two Idiosyncratic Factors are Adding to the EZ Economy's Woes (Publication Centre)

The slowdown in the EZ economy is well publicised.

24 Feb 2020 Covid-19 Takes out Hope of Japan's Q1 Recovery, PMIs Show (Publication Centre)

Japan's January PMIs sent a clear signal that the virus impact is not to be underestimated. The manufacturing PMI fell to 47.6 in February, from 48.8 in January, contrasting sharply with the rising headlines of last week's batch of European PMIs.

24 Jan 2020 Ms. Lagarde Treads Water as the ECB Formally Unveils its Review (Publication Centre)

The ECB conformed to expectations today, at least on a headline level.

13 Feb. 2015 Cyclical outlook is improving in the euro area (Publication Centre)

GDP data today will probably show that the Eurozone economy accelerated to 0.3% quarter-on-quarter in Q4, up from 0.2% a quarter earlier. Industrial production came in disappointingly at 0.0% month-to-month in December, but this is not enough to change our forecast in the light of solid data on household spending.

5 April 2017 EZ Retail Sales Snap Back, but Q1 Outlook Still looks Poor (Publication Centre)

Data yesterday showed that consumers in the euro area increased their spending in February, following recent weakness. Retail sales rose 0.7% month-to-month in February, reversing the cumulative 0.4% decline since November. The year-over-year rate was pushed higher to 1.8% from an upwardly revised 1.5% in January.

5 July 2019 Will Higher Savings Hold Back EZ Consumption Again this Year? (Publication Centre)

Yesterday's EZ consumers' spending data were mixed. Retail sales in the euro area fell by 0.3% month-to-month in May, extending the slide from a revised 0.1% dip in April.

5 January 2018 Don't Forget the Upbeat Story in Eurozone Services (Publication Centre)

Yesterday's final PMI data added to the evidence that the EZ economy was firing on all cylinders at the end of last year. The composite PMI in the euro area rose to an 11-year high of 58.5 in December, from 57.5 in November, in line with the initial estimate.

5 December 2017 The ECB Wants a Steeper Curve in 2018. Will Markets Oblige? (Publication Centre)

This week's detailed Q3 GDP data will confirm that the euro area economy is going from strength to strength.

4 January 2019 Bank Equities can do Well in 2019, even as Credit Growth Slows (Publication Centre)

Money supply growth in the euro area eased further towards the end of Q4.

4 April 2018 More soft economic data in the Eurozone (Publication Centre)

Economic data in the Eurozone continue to come in soft. Yesterday's final manufacturing PMIs confirmed that the euro area index slipped to an eight-month low of 56.6 in March, from 58.6 in February.

31 January 2017 Focus on Strong EZ Q4 GDP Data On a Busy Day in the Eurozone (Publication Centre)

Today will be an incredibly busy day for EZ investors with no fewer than eight major economic reports. Overall, we think the data will tell a story of a stable business cycle upturn and rising inflation. Markets will focus on advance Q4 GDP data in France and in the euro area as a whole. Our mo dels, and survey data, indicate that the EZ economy strengthened at the end of 2016, and we expect the headline data to beat the consensus.

4 April 2019 More Evidence of a Relatively Resilient Domestic EZ Economy (Publication Centre)

Yesterday's economic reports added to the evidence the euro area economy as a whole is showing signs of resilience in the face of still-terrible conditions in manufacturing.

4 December 2018 Eurozone Markets Want to Believe in the U.S.-China Trade Truce (Publication Centre)

The 90-day truce in the trade wars between the U.S. and China, brokered on Saturday at the G20 meeting in Argentina, is a big deal for financial markets in the euro area, at least in the near term.

4 July 2017 Why Hasn't EZ Industrial Output Responded to the PMIs? (Publication Centre)

Yesterday's PMI data confirmed that the EZ manufacturing sector is in rude health. The manufacturing PMI in the euro area rose to a cyclical high of 57.4 in June, from 57.0 in May, slightly above the first estimate. New orders and output growth are robust, pushing work backlogs higher and helping to sustain employment growth.

4 May. 2016 Eurozone Manufacturing Firms' Selling Prices Continue to Fall (Publication Centre)

Eurozone manufacturing selling prices remain under pressure from deflationary headwinds. The PPI index, ex-construction, in the euro area fell 4.2% year-over-year in March, matching February's drop. Weakness in oil prices continues to drive the headline.

7 March 2017 Can Italy's Economy Overcome Weak Real Wage Growth in 2017? (Publication Centre)

The Italian economy slowed at the end 2017, and it continues to underperform other major EZ economies. Real GDP rose 0.2% quarter-on-quarter in Q4, a bit slower than the 0.3% gain in Q3, pushing full-year growth up to a modest 1.0%. This compares poorly, though, with growth of 1.6% in the euro area as a whole.

8 June. 2016 EZ Domestic Demand Rose Solidly in Q1, but Will Slow in Q2 (Publication Centre)

The third estimate of euro area growth in the first quarter provides clear evidence that measuring GDP is not an exact science. Real GDP rose 0.6% quarter-on-quarter in Q1, accelerating from 0.4% in Q4. This latest estimate is higher than the previous estimate, 0.5%, but in line with the first calculation. Eurostat and all the large Eurozone economies now provide early estimates of GDP, before data for the full quarter is available.

7 November. 2016 EZ Growth is Stable, but Inflation is Rising (Publication Centre)

The two major EZ economic reports released while we were away conformed to the consensus. Advance data suggest that real GDP in the euro area rose 0.3% quarter-on-quarter in Q3, the same pace as in Q2, and the year-over-year rate was similarly unchanged at 1.6%.

9 Dec. 2015 Services will Push up Core Inflation in the EZ Next Year (Publication Centre)

Core inflation--a long lagging indicator in the euro area-- will rise next year, in response to surging consumers' spending. Our first chart shows that services inflation likely will be a key theme in this story. Even allowing for a structural drag on inflation due to high unemployment outside Germany, cyclical risks to services inflation are tilted firmly to the upside.

9 Feb. 2015 The German economy is improving: Q4 GDP will beat consensus (Publication Centre)

German industrial production data were presented by Bloomberg News as signs that the recovery is "gathering momentum", but it is slightly premature to make that call. Narrow money growth is currently sending a strong signal of higher GDP growth this year in the euro area, but the message from the manufacturing sector is still one of stabilisation rather than acceleration.

9 Sept. 2015 Cyclical Recovery in the Eurozone Goes from Strength to Strength (Publication Centre)

Final Q2 GDP data yesterday indicate the euro area economy was stronger than initially estimated in the first half of the year. Real GDP rose 0.4% quarter-on-quarter in Q2, slightly higher than the initial estimate of 0.3, following an upwardly revised 0.5% increase in Q1. Upward revisions to GDP in Italy were the key driver of the more upbeat growth picture. The revisions mean that annualised Eurozone growth is now estimated at 1.8% in the first six months of the year, up from the previous 1.4%, consistent with the bullish message from real M1 growth and the composite PMI.

9 Mar. 2015 A Strong Consumer is Helping to Lift GDP Growth in the Eurozone (Publication Centre)

The second estimate of Eurozone GDP confirmed that the economy grew 0.3% quarter-on-quarter in the final three months of last year, up slightly from 0.2% in the third quarter. Gross fixed capital formation and household consumption both rose 0.4%, but the improving trend in euro area GDP growth is almost exclusively driven by consumer spending.

7 Dec. 2015 German Factory Orders are Slowing, Despite October's Jump (Publication Centre)

Manufacturing activity in Germany rebounded at the start of the fourth quarter, following a miserable Q3. New orders jumped 1.8% month-to-month in October, lifted by increases in consumer and capital goods orders, both domestic and export. But the year-over-year rate fell to -1.4%, from a revised -0.7% in September, due to unfavorable base effects, and the three-month trend remained below zero. Our first chart shows that non-Eurozone export orders are the key drag, with export orders to other euro area economies doing significantly better.

6 September. 2016 German Services PMI Taints an Otherwise Strong Day for EZ Data (Publication Centre)

Yesterday's EZ PMI data surprised to the downside. The composite PMI in the euro area dipped to 52.9 in August, from 53.2 in July, below the initial estimate 53.3. The headline was marred by weakness in the German services PMI, which crashed to a 40-month low of 51.7, from 54.4 in July.

6 December 2018 The PMIs are No Fun EZ Growth is Slowing, and Italy is in Recession (Publication Centre)

Yesterday's final PMI data in the euro area for November broadly confirmed the initial estimates.

5 Nov. 2015 A Rebound in German New Orders? But the Trend is Subdued (Publication Centre)

Factory orders in Germany probably jumped in September, following a string of losses in the beginning of Q3. We think new orders rose 1.0% month-to-month, pushing the year-over-year rate slightly lower, to 1.8% from 2.0% in August. A rebound in non- Eurozone export orders likely will be the key driver of the monthly gain, following a 14.8% cumulative plunge in the previous two months. The rise will be concentrated in capital and consumer goods, and should be enough to offset a fall in export orders within the euro area. Our forecast is consistent with new orders falling 2.0% quarter-on-quarter in Q3, partly reversing the 3.0% surge in the second quarter, and raising downside risks for production in Q4.

6 February 2017 EZ Households are in Good Shape, But Spending Will Slow in 2017 (Publication Centre)

Consumers' spending in the euro area weakened at the end of Q4, but we think households will continue to boost GDP growth in the first quarter. Data on Friday showed that retail sales fell 0.3% month-to-month in December, pushing the year-over-year rate down to 1.1%, from a revised 2.8% in November.

6 February 2019 Will the Eurozone Consumer Step up to the Plate in 2019 (Publication Centre)

Taken at face value, the retail sales data in the euro area suggest that consumers' spending hit a brick wall at the end of 2018.

6 May 2019 Core CPI Inflation is Headed for 1.2-to-1.3% at the End of the Year (Publication Centre)

Friday's CPI data in the euro area confirmed our expectation that inflation jumped last month.

6 Jan. 2015 Weak German CPI = December Deflation in The Eurozone (Publication Centre)

Advance inflation data from Germany and Spain indicate that the Eurozone slipped into deflation last month, piling maximum pressure on Mr. Draghi later this month. Inflation in the euro area's largest economy fell to 0.2% year-over-year in December from 0.6% in November, driven by a 6.6% plunge in the energy component.

5 May. 2016 Growth in Eurozone Consumers' Spending is Slowing (Publication Centre)

Evidence of slowing growth in Eurozone consumers' spending continues to mount. Retail sales in the euro area fell 0.5% month-to-month in March, pushing the year-over-rate down to 2.1% from a revised 2.7% in February. The headline likely was depressed by the early Easter. March had one trading day less than February, which was not picked up the seasonals.

3 May. 2016 Will GDP Growth in the Eurozone Accelerate This Year? (Publication Centre)

Last week's advance EZ GDP data for the first quarter suggest the economy shrugged off the volatility in financial markets. Eurostat's first estimate indicates that real GDP in the euro area rose 0.6% quarter-on-quarter in Q1, up from 0.3% in Q4, and above the consensus, 0.4%.

16 October 2018 Will Fiscal Stimulus Boost Eurozone GDP growth in 2019 (Publication Centre)

The sovereign debt crisis in the euro area was a macroeconomic horror story

16 Oct. 2015 Bund Yields are Too Low, but no Serious Increase Until Next Year (Publication Centre)

Bond markets in the euro area have been a calm sea recently relative to the turmoil in equities, credit and commodities. Following the initial surge in yields at the end of second quarter, 10-year benchmark rates have meandered in a tight range, recently settling towards the lower end, at 0.5%. Our outlook for the economy and inflation tells us this is to o low, even allowing for the impact of QE.

17 August 2017 Strong and Broad-based Growth in the Eurozone (Publication Centre)

The cyclical upturn in the euro area's economy is going from strength to strength. Yesterday's second Q2 GDP estimate confirmed growth at 0.6% quarter- on-quarter, marginally stronger than the 0.5% rise in the first quarter.

17 Feb. 2015 The Eurozone's trade surplus is surging, and more upside ahead (Publication Centre)

Yesterday's trade data showed that the Eurozone's external balance continues to improve markedly. The seasonally adjusted trade surplus in the euro area rose to €23.3B in December, a new all-time high, from a revised €21.6B in November.

17 January 2017 Will Brexit and Mr. Trump Dent EZ Exports to the U.S. and the U.K? (Publication Centre)

Net exports in the euro area likely rebounded in Q4. The headline EZ trade surplus rose to €22.7B in November from €19.7B in October. Exports jumped 3.3% month-to-month, primarily as a result of strong data in Germany and France, offsetting a 1.8% rise in imports. Over Q4 as a whole, we are confident that net exports gave a slight boost to eurozone GDP growth, adding 0.1 percentage points to quarter-on-quarter growth.

17 February 2017 EZ consumers' demand for new cars will slow in 2017 (Publication Centre)

EZ households' demand for new cars was off to a strong start in 2017. Car registrations in the euro area jumped 10.9% year-over-year in January, accelerating from a 2.1% rise in December. We have to discount the headline level of sales by about a fifth to account for dealers' own registrations. Even with this provision, though, the January report was solid. Growth rebounded in France and Germany, and a 27.1% surge in Dutch car registrations also lifted the headline. We think car registrations will rise about 1.5% quarter-onquarter in Q1, rebounding from a weak Q4. But this does not change the story of downside risks to private spending.

16 May. 2016 Eurozone GDP Growth is Not Accelerating, Despite Strong Q1 (Publication Centre)

The second round of EZ GDP data on Friday confirmed the resilience of cyclical upturn. Real GDP in the euro area rose 0.5% quarter-on-quarter in Q1, up from 0.3% in Q4, and the fastest pace since the first quarter of last year. But the headline was slightly lower than the initial estimate, 0.6%, and consistent with our forecast before Friday's data.

16 June. 2015 EZ External Demand on Track for Healthy Rebound in Q2 (Publication Centre)

Net exports should come roaring back as a driver of Eurozone GDP growth in the second quarter. The euro area trade surplus leapt to €24.3B in April, a new all-time high, up from a revised €19.9B in March. A 1.7% month-to-month fall in imports--mean-reversion from a 3.9% increase in March--was a big contributor to the higher surplus.

16 December 2016 The Eurozone Manufacturing Sector is Picking up Momentum (Publication Centre)

Yesterday's euro area PMI data continue to tell a story of a firm business cycle upturn. The composite PMI was unchanged at 53.9 in December; an increase in the manufacturing index offset a decline in the services PMI.

15 September 2017 Growth in EZ Car Sales Rose in August, but the Trend Has Slowed (Publication Centre)

Momentum in new EZ car sales improved slightly in the middle of Q3. New registrations in the euro area rose 6.8% year-over-year in August, accelerating marginally from a 5.3% increase in July.

16 Feb. 2015 Solid GDP data, but investment needs to pick up to sustain the momentum (Publication Centre)

Normal service was resumed in the euro area with Friday's GDP reports pointing to solid growth in Germany amid weakness in Italy and France. Real GDP in the Eurozone grew 0.3% quarter-on-quarter in the final three months of last year, up from 0.2% in Q3.

16 February 2017 Should investors rebalance toward EZ equities? (Publication Centre)

Increasingly, we are hearing equity strategists argue that investors should rebalance their portfolios toward EZ equities. On the surface, this looks like sound advice. Commodity prices have exited their depression, factory gate inflation pressures are rising, and global manufacturing output is picking up. These factors tell a bullish story for margins and earnings at large cap industrial and materials equities in the euro area.

16 January 2018 The Eurozone's Trade Surplus Will Fall in the First Half of 2018 (Publication Centre)

The euro area's external surplus remained resilient toward the end of 2017, in the face of a stronger currency. The seasonally adjusted trade surplus rose to €22.5B in November, from €19.0B in October, lifted primarily by a jump in German exports.

17 July 2017 Eurozone Consumers' Demand for New Cars is Slowing (Publication Centre)

Consumers' demand for cars slowed in the Eurozone at the end of the second quarter. New car registrations in the euro area rose 3.0% year-over-year in June, slowing dramatically from a 10.3% rise in May.

17 July 2018 Will Price Changes Spare the Blushes of EZ Net Trade in 2018 (Publication Centre)

The euro area's trade surplus slipped further mid- way through the second quarter; falling to a 15-month low of €16.9B in May, from a downwardly-revised €18.0B in April, and extending its descent from last year's peak of nearly €24.0B.

18 Mar. 2016 Are Markets and the ECB Behind the Curve on Inflation Risks? (Publication Centre)

Barring a disaster, the four-year cyclical upturn in the euro area will continue in the coming quarters. Inflation is a lagging indicator and therefore should rise, and investors should be adjusting their mindset to higher interest rates. But the reality today looks very different. Final inflation data confirmed that the Eurozone inflation slipped to -0.2% year-over-year in February, from 0.2% in January.

18 July. 2016 EZ Car Registrations Continue to Grow Briskly, But Will Slow Soon (Publication Centre)

Growth in new EZ car registrations slowed last month, but the data continue to tell a story of strong consumer demand for new cars. New registrations in the euro area rose 6.9% y/y in June, down from a 16.9% jump in May, mainly due to slowing growth in France. New registrations in the euro area's second largest economy rose a mere 0.8% year-over-year, after a 22% surge in May.

18 Nov. 2015 Weak Manufacturing Won't Push the EZ Economy into Recession (Publication Centre)

Historical evidence suggests that we should be worried about the relative weakness in the Eurozone's manufacturing sector. Industrial production ex-construction has historically been a key indicator of the business cycle, despite accounting for a comparatively modest 19% of total value-added in the euro area. In all three previous major downturns, underperformance in the manufacturing sector sounded the alarm six-to-nine months in advance that the economy was about to slip into recession.

18 November. 2016 New Car Sales Growth is Slowing in the Eurozone (Publication Centre)

Growth in EZ car sales slowed further at the beginning of Q4. New registrations in the euro area fell 1.2% year-over-year in October, down from a 7.2% increase in September.

30 Jan. 2015 Leading indicators are sending a clear signal of higher GDP growth ahead (Publication Centre)

Money supply data in the euro area are sending an increasingly upbeat signal on the economy. The increase in narrow money growth is the key variable here, now pointing to a noticeable acceleration in GDP growth later this year. Allowing for the usual lags between upturns in M1 and the economy, we should start to see this in the second and third quarter.

19 December 2017 Eurozone Core Inflation Remains Comfortably Low for Bond Markets (Publication Centre)

Yesterday's final CPI report confirmed that inflation in the euro area increased slightly last month. The headline rate rose to 1.5%, from 1.4% in October, lifted by a 1.7 percentage point increase in energy inflation to 4.9%.

18 January 2017 Will Slower Growth in EZ Car Sales Hit Total Consumption this Year? (Publication Centre)

Demand for new cars in the Eurozone has climbed a long way since the last recession, but growth is slowing. Overall, new car registrations in the EZ rose a solid 15.2% in 2016 as a whole. But momen tum slowed in the second half, and sales likely will remain comparatively muted this year. In December, registrations in the euro area rose 2.1% year-over-year in December, down from 5.8% in November. The headline was depressed by plunging growth in some of the smaller countries, offsetting better numbers in the major four economies.

18 Feb. 2015 Brinkmanship is being taken to the extreme in Greece, but a deal is close. (Publication Centre)

We remain confident that a deal with Greece will be made, and that the country will stay in the euro area. But the need for both parties to avoid losing face domestically is still complicating the negotiations. Most importantly, Greece is no longer pledging an unconditional exit from the bailout program.

18 Apr. 2016 EZ Demand for New Cars Slowed in Q1, and will Slow A gain in Q2 (Publication Centre)

Growth in Eurozone car sales slowed slightly at the end of the first quarter. New car registrations in the euro area rose 5.8% year-over-year in March, down from a 14.4% increase in February. But the 12-month average level of new registrations jumped to new cyclical highs of 440,000 and 252,000 in the core and periphery respectively.

17 Mar 2020 A Week on the Wild Side in EZ Equities, and It isn't Over Yet (Publication Centre)

The split between the reality reflected in the economic data and market pricing has never been wider in the euro area

18 April 2017 The Weather is Playing Tricks with EZ Industrial Production Data (Publication Centre)

As warned--see our Monitor April 7--economic data in the Eurozone disappointed while we were away. Industrial production, ex-construction, in the euro area slipped 0.3% month-to-month in February, and the January month-to-month gain was revised down by 0.6 percentage point to +0.3%.

18 Dec. 2014 Outright Deflation is Now a Real Risk for the Eurozone in Q1 (Publication Centre)

Inflation in the euro area remains under pressure, with both the core and the energy components contributing to the downward trend evident in our first chart. Headline inflation fell to 0.3% year-over-year in November, from 0.4% in October, and we expect a further decline this month.

18 December 2017 The Large Decline in the EZ Trade Surplus is a Sign of More to Come (Publication Centre)

The euro area's external surplus dipped at the start of Q4.

15 November 2017 Full-Year GDP Growth in the EZ Will be Close to 2.5% in 2017 (Publication Centre)

Yesterday's second batch of Q3 GDP data in the euro area provided further evidence of a strong and stable cyclical upturn in the economy.

15 February 2017 The EZ Economy is Resilient, but Fell Short of Expectations in Q4 (Publication Centre)

The Eurozone economy was resilient at the end of last year, but yesterday's reports indicated that growth was less buoyant than markets expected. Real GDP in the euro area rose 0.4% quarter-on-quarter in Q4, the same pace as in Q3, but slightly less than the initial estimate 0.5%.

1 September 2017 EZ Energy Inflation will Fall Soon, but the Core Rate will Edge Higher (Publication Centre)

Yesterday's aggregate economic data for the euro area showed that inflation rose slightly in August. The headline rate rose to a four-month high of 1.5% in August from 1.3% in July. The rate was lifted mainly by energy inflation, rising to 4.6% from 2.2% in July, but we think the rebound will be short-lived.

1 Oct. 2015 Deflation Will Likely Bully the ECB to Expand QE this Month (Publication Centre)

Economic survey data have been upbeat recently, but key Eurozone data releases yesterday suggest the ECB will be under pressure to increase monetary policy stimulus further this month. The advance inflation estimate showed that the euro area slipped back into deflation in September, as inflation fell to -0.1% year-over- year, from +0.1% in August. The fall was mainly due to a 8.9% collapse in energy prices, though, and we are very confident the relapse is temporary.

10 December 2018 EZ Consumption Slowed Sharply in Q3, is a Q4 Rebound Coming? (Publication Centre)

Friday was a busy day in the Eurozone. The final and detailed GDP report confirmed that growth in the euro area slowed to 0.2% quarter-on-quarter in Q3, from 0.4% in Q2, with the year-over-year rate slipping by 0.6 percentage points to 1.6%, just 0.1pp below the first estimate.

10 July 2018 Should we be Excited About the Rebound in EZ Investor Sentiment (Publication Centre)

It has been mostly doom and gloom for euro area investors in equities and credit this year.

11 January 2019 How to Read the Recent Collapse in the EZ Economic Data (Publication Centre)

Economic data in the euro area are still slipping and sliding.

10 Sept. 2015 Wage Cuts Pay off as Periphery Leads EZ Employment Higher (Publication Centre)

Workers in the euro area remain scarred by the zone's repeated crises, but the strengthening cyclical recovery is slowly starting to spread to the labour market. The unemployment rate fell to a three-year low of 10.9% in July, and employment has edged higher after hitting a low in the middle of 2013. Germany's outperformance is a key story, with employment increasing uninterruptedly since 2009, and the unemployment rate declining to an all-time low of 6.4%. Among the other major economies, the unemployment rate in Spain and Italy remains higher than in France. But employment in Spain has outperformed in the cyclical recovery since 2013.

1 March 2019 Did Core Inflation in the Eurozone Fall Slightly in February (Publication Centre)

Yesterday's advance CPI data for the major EZ economies suggest that today's report for the euro area as a whole will undershoot the consensus slightly.

1 June. 2016 Mounting Evidence of a Peak in the EZ Business Cycle This Year (Publication Centre)

Money supply data in the euro area disappointed yesterday. Growth in M3 fell to 4.6% year-over-year in April, from 5.0% in March, due to an accelerated fall in the pace of narrow money growth. M1 rose 9.7% year-over-year, down from 10.1% in March. It was hit by lower growth in both overnight deposits and currency in circulation.

1 August. 2016 EZ GDP Growth Slowed in Q2, and Likely Will be Revised Down (Publication Centre)

Friday's data deluge suggests that EZ economic growth slowed less than we expected in the second quarter. The advance estimate indicates that real GDP in the euro area rose 0.3% quarter-on-quarter in Q2, down from a 0.6% jump in the first quarter. This was in line with the consensus, but it likely doesn't tell the whole story.

05 August. 2015 Corporate Bonds are Struggling, But QE and ZIRP offer Support (Publication Centre)

A looming rate lift-off at the Fed, chaos in Greece, and a renewed rout in commodities have given credit markets plenty to worry about this year. The Bloomberg global high yield index is just about holding on to a 0.7% gain year-to-date, but down 2.5% since the middle of May. The picture carries over to the euro area where the sell-off is worse than during the taper tantrum in 2013.

1 Dec. 2014 Eurozone Inflation Squeezed Down from All Sides (Publication Centre)

Inflation data last week confirmed that the spectre of deflation is slowly but surely encroaching on the euro area. In Germany, inflation slipped to 0.6% year-over- year in November, from 0.8% in October, and in the Eurozone as a whole the he adline rate declined to 0.3%, from 0.4% in September.

1 December 2017 Blame Italy for November's Undershoot in EZ Core Inflation (Publication Centre)

Inflation in the euro area edged higher in November, but our prediction of a rebound in the core proved to be wrong. Headline inflation increased to 1.5% in November, from 1.4% in October.

1 June 2017 Dovish EZ CPI Data Take the Sting out of Next Week's ECB Meeting (Publication Centre)

Yesterday's advance EZ CPI report bolstered the ECB doves' case for only marginal adjustments to the language on forward guidance at next week's meeting. Inflation in the euro area fell to 1.4% in May, from 1.9% in April, constrained by almost all the key components.

11 Mar 2020 Covid-19 has a Strong Grip on Italy, it will be Costly to Beat it (Publication Centre)

It's still unclear how exactly Covid-19 will impact the euro area as a whole, but little doubt now remains that Italy's economy is in for a rough ride.

12 Jan. 2015 More Misery for Industrial Production in the Eurozone (Publication Centre)

Manufacturing data for the euro area's major economies point to renewed downside risks for GDP growth, despite the likely tailwind to consumption from low oil prices. November industrial production fell 0.1% and 0.3% month-to-month in Germany and France respectively, indicating that the manufacturing sector remains under pressure.

14 Apr. 2016 The Eurozone's Manufacturing Outperformance Likely Won't Last (Publication Centre)

Industrial production in the euro area dipped in February. Output fell 0.8% month-to-month pushing the year-over-year rate down to 0.8% from a revised 2.9% in January. This indicates that Eurozone manufacturing continues to lag the pace seen in previous business cycle upturns.

13 Oct. 2015 Construction to Push Up EZ GDP Growth in Coming Quarters? (Publication Centre)

Households remain the key driver of the cyclical recovery in the Eurozone. We have seen, so far, little sign that investment will be able convincingly to take over the baton if momentum in consumers' spending slows. The average rate of growth of investment since 2013 has been 0.5%, about two-thirds of the pace seen in previous cyclical upturns. Weakness in construction--about 50% of total euro area investment--has been one of the key factors behind of the under performance.

14 August 2018 The Chaos in Turkey is Mainly a Political Risk for the Eurozone (Publication Centre)

Investors in the euro area have mostly been focused on downside risks this year, and the spectre of Turkey spinning out of control has done little to change that.

14 December 2017 The ECB Will Deliver a Carbon Copy of its October Meeting Today (Publication Centre)

Car registrations, French inflation, advance PMIs and a central bank meeting make up today's substantial menu for investors in the euro area.

15 Feb. 2016 Upbeat Q4 GDP Headline, but Private Demand Likely Slowed (Publication Centre)

Eurozone GDP data last Friday suggest the cyclical recovery continued at the end of last year. Real GDP in euro area rose 0.3% quarter-on-quarter in Q4, the same as in Q3, lifted by growth in all the major economies. This was in line with the consensus forecast, but noticeably higher than implied by monthly industrial production and retail sales data.

14 June 2017 Fact-checking the ECB on Low Wages and Employment in the EZ (Publication Centre)

Today's employment report in the euro area should extend the run of positive labour market data. We think employment rose 1.4% year-over-year in Q1, accelerating marginally from a 1.2% increase in Q4.

13 November 2017 German GDP Growth Likely Slowed in Q3, but Trend is Robust (Publication Centre)

Macroeconomic data in the euro area were mixed in our absence.

13 January 2017 The Eurozone Economy Remains Oblivious to Political Risks (Publication Centre)

The euro area economy continues to defy rising political uncertainty. Data yesterday showed that industrial production, ex-construction, in the Eurozone jumped 1.5% month-to-month in November, pushing the year-over-year rate up to 3.2% from a revised 0.8% in October. Output rose in all the major economies, but the headline was flattered by a 16.3% month-to-month leap in Ireland. This was due to a production jump in Ireland's "modern sector" which includes the country's large multinational technology sector.

12 Nov. 2015 German Inflation Will Rise Faster than the ECB and Market Expect (Publication Centre)

CPI data today in France and Germany will confirm that current inflation rates remain very low in the euro area. Inflation in Germany likely rose to 0.3% year-over-year from 0.0% in September, in line with the consensus and initial estimate. State data indicate that the rise was driven by surging fresh food prices and slightly higher services inflation, principally due to a jump in the volatile recreation and culture sector. Looking ahead, food prices will drop back, but energy inflation will rise rapidly as last year's plunge drops out of the year-over-year comparison, while upward core pressure is now emerging too.

12 January 2017 Eurozone Equities in 2017: Another Year of Dashed Hopes? (Publication Centre)

A strong December didn't change the story of another year of Eurozone equity underperformance in 2016. The total return of the MSCI EU, ex-UK, last year was a paltry 3.5%, compared to 11.6% and 10.6% for the S&P 500 and MSCI EM respectively. In principle, the conditions are in place for a reversal in this sluggish performance are present. Equities in the euro area do best when excess liquidity--defined as M1 growth less GDP growth and inflation--is rising.

12 November 2018 Further Downgrades to 2018 EZ GDP Growth are on their Way (Publication Centre)

The economic data were mixed while we were away. The final PMI data showed that the composite PMI in the euro area fell to 53.1 in October, from 54.1 in September, somewhat better than the initial estimate, 52.7.

12 September 2017 Government Bonds in the EZ Enjoy Support Even Without QE (Publication Centre)

The EZ government bond market has been in a holding pattern for most of 2017. The euro area 10- year yield--German and French benchmark--is little changed from a year ago, though it is at the lower end of its range.

13 August 2018 The 2018 Story is Intact: Slower GDP growth, and Higher Inflation (Publication Centre)

A sluggish GDP headline, a further increase in inflation, and poor German manufacturing data were the primary euro area highlights in our absence.

19 January 2018 Are Eurozone Equities Pegged Back by a Stronger Euro? (Publication Centre)

Investors in the euro area demand to know whether their equities can climb--in local currency terms-- even as the euro appreciates.

19 January 2017 The ECB Will Stand Pat Today After Policy Adjustments Last Month (Publication Centre)

The ECB won't make any major changes to its policy stance today. We think the central bank will keep its main refinancing rate unchanged at 0.00%, and that it will maintain its deposit and marginal lending facility rate at -0.4% and 0.25%, respectively. The central bank also will keep the pace of QE unchanged at €80B per month until March, and at €60B hereafter until December. This is the first ECB meeting for some time in which Mr. Draghi will be able to report significantly higher inflation in the euro area.

27 January 2017 Will Mr. Trump Single out Germany for its Large Trade Surplus? (Publication Centre)

The uncertainty over the new U.S. administration's economic policies new is clouding the outlook for the Eurozone economy. The combination of loose fiscal policy and tight monetary policy in the U.S. should be positive for the euro area economy, in theory. It points to accelerating U.S. growth--at least in the near term--wider interest rate differentials and a stronger dollar. In a " traditional" global macroeconomic model, this policy mix would lead to a wider U.S. trade deficit, boosting Eurozone exports.

27 February 2019 Consumer Sentiment Signal better EZ Consumption Data in H1 (Publication Centre)

Yesterday's consumer sentiment data in the two major euro area economies were mixed, but they still support our view that a rebound in EZ consumption growth is underway.

27 July. 2015 PMIs Point to Stable GDP Growth, but EM Rout is Hurting Germany (Publication Centre)

The July Eurozone PMI survey echoed the message from consumer sentiment earlier of a mild dip in momentum going into Q3. The composite PMI in the euro area fell to 53.7, from 54.2 in June due mainly to a fall in the services index. Companies' own expectations for future business fell in the core, but the survey was conducted soon after the Greek referendum. Markit claims this didn't depress the data, but we are on alert for revisions to the headline and expectations next week, or a rebound next month.

27 June 2017 The Italian Job on Two Small Venetian Banks is a Good Start (Publication Centre)

The strengthening recovery in the euro area is proving to be a poisoned chalice for some of the region's most vulnerable banks. Earlier this month-- see our Monitor of June 8--Spain's Banco Populare was acquired by Banco Santander, and the bank's equity and junior credit holders were bailed-in as part of the deal.

28 August 2018 Germany's Economy is Resilient in the Face of External Risks (Publication Centre)

Friday's detailed GDP data in Germany confirm that the euro area's largest economy performed strongly in the second quarter.

28 Apr. 2015 Too Far, Too Fast For Eurozone Equity Markets since October? (Publication Centre)

QE and a gradually strengthening economy will remain positive catalysts for equities in the euro area this year. But with the MSCI EU ex -UK up almost 24% in the first quarter, the best quarterly performance since Q4 1999, the question is whether the good news has already been priced in.

27 Apr. 2015 Could higher inflation upset bunds in the second quarter? (Publication Centre)

Monitoring bond markets in the Eurozone has been like watching paint dry this year. Yields across fixed income markets in the euro area were already low going into QE, but they have been absolutely crushed as asset purchases began in February.

26 September 2016 PMIs Point to Slower EZ GDP Growth, but Details are Confusing (Publication Centre)

Friday's PMI data in the Eurozone added to the evidence that GDP growth is slowing, after a cyclical peak last year. The composite PMI in the euro area slipped to a 21-month low of 52.6 in September, from 52.9 in August.

26 Feb. 2015 GDP growth will pick up in the Eurozone this year (Publication Centre)

Hard economic data for the first quarter will appear over the next few weeks, but the EC sentiment survey later today gives a useful overview of how the euro area economy started the year.

19 Oct. 2015 No Slowdown Yet in EZ Car Sales, But Next Year Will be Different (Publication Centre)

Car sales continue to offer solid support for consumption spending in the Eurozone. Growth of new car registrations in the euro area fell trivially to 10.6% year-over-year in September, from 10.8% in August, consistent with a stable trend. Surging sales in the periphery are the key driver of the impressive performance, with new registrations rising 22.1% and 17.1% in Spain and Italy respectively, and surging 30% in Portugal. Favorable base effects mean that rapid growth rates will continue in Q4, supporting consumers' spending.

26 July 2017 National Surveys are Not Bogged Down by Disappointing PMIs (Publication Centre)

Yesterday's national business surveys provided an optimistic counterbalance to the underwhelming PMIs on Monday, although they all suggest that the euro area economy is in good form.

26 July. 2016 The German Economy Stalled in Q2, But Should Rebound in Q3 (Publication Centre)

The German statistical office will supply a confidential estimate to Eurostat for this week's advance euro area Q2 GDP data. Our analysis suggests this number will be grim, and weigh on the aggregate EZ estimate. Our GDP model, which includes data for retail sales, industrial production and net exports, forecasts that real GDP in Germany contracted 0.1% quarter-on-quarter in the second quarter, after a 0.7% jump in Q1.

26 November 2018 An Amber Alert Warning from the Eurozone PMIs in November (Publication Centre)

Friday's economic reports delivered more sobering news for the euro area economy.

28 July 2017 The Eurozone is in fine form, as we start our summer break (Publication Centre)

This is the final report before your scribe disappears into the Scottish Highlands for a few weeks, and we are leaving you with a Eurozone economy in fine form. The calendar will be relatively light in our absence and will tell us what we already know; namely that the euro area economy maintained its strong momentum in Q2.

28 July. 2015 Unassailable Bullish Message from M1 Growth in the Eurozone (Publication Centre)

Money supply data continue to send a bullish message on the euro area economy. Broad money growth was unchanged at 5.0% year-over-year in June, but M1 growth surged to 11.8%, from 11.2% in May. Combined with low inflation, real M1--the best leading indicator in the Eurozone--indicates a surge in GDP growth on par with previous record business cycle upturns in 1999, 2005-06 and 2009-10.

3 July 2017 Is the Jump in Eurozone Core Inflation Really Temporary? (Publication Centre)

Friday's euro area inflation reported capped a difficult week for EZ bondholders, although most of the damage was done beforehand by the advance German data.

3 January 2017 The Eurozone in 2017: Higher Inflation and Slower M1 Growth? (Publication Centre)

A bullish EZ money supply report was the key highlight while we were away over the holidays. M3 growth in the euro area accelerated to 4.8% year-over-year in November from 4.4% in October.

3 June 2019 Headline and Core Inflation in the Eurozone Fell Sharply in May (Publication Centre)

Last week's May CPI data in the major EZ economies all but confirmed the story for this week's advance estimate for the euro area as a whole.

*November 2019 - EZ Economic Chartbook* (Publication Centre)

GDP Growth In The Euro Area Has Stabilised....But The Surveys Still Warn That Worse Is To Come

30 April 2018 Q1 Slowdown Confirmed in the EZ, but Don't Push the Panic Button (Publication Centre)

Friday's advance GDP data provided the first solid evidence of a Q1 slowdown in the euro area economy.

3 October 2018 Are Higher Wages Squeezing EZ Manufacturing Margins? (Publication Centre)

Producer price inflation in the euro area almost surely peaked over the summer.

3 Feb. 2015 Inflation will trough in Q3 (Publication Centre)

One of the questions we have been asked recently is when inflation in the euro area will trough this year. This is difficult to answer without a look at the structural drivers of price pressures in Europe.

3 August. 2016 Fundamentals Don't Matter For The EZ's Mighty Corporate Bonds (Publication Centre)

Debt issuance by Eurozone non-financial firms is soaring, consistent with the ECB's hope that adding private debt to QE would boost supply. Our first chart shows that the three-month sum of net debt sold in the euro area jumped to a new record of €60.3B in May. A short-term decline in issuance is a good bet after the initial euphoria in firms' treasury departments.

29 Feb. 2016 The Eurozone is Back in Deflation, but the Relapse is Temporary (Publication Centre)

Advance inflation data on Friday added to the gloom on the Eurozone economy. Reports from Germany, France, and Spain all surprised to the downside, indicating the euro area as a whole slipped back into deflation in February. Inflation in Germany dipped to 0.0% year-over-year in February, from 0.5% in January, and France slid back into deflation as the CPI index fell 0.2%, down from a 0.2 increase last month.

28 March 2017 EZ Money Supply Hit by Non-M1 Components in February (Publication Centre)

Momentum in the euro area's money supply slowed last month. M3 growth dipped to 4.7% year-over-year in February, from a downwardly-revised 4.8% in January. The headline was mainly constrained by the broad money components. The stock of repurchase agreements slumped 24.3% year-over-year and growth in money market fund shares also slowed sharply.

29 January 2019 Is it a Good Idea for Markets to Ignore Poor Macro Data in the EZ (Publication Centre)

In the last few weeks markets have been treated to the news that euro area industrial production crashed towards the end of Q4, warning that GDP growth failed to rebound at the end of 2018 from an already weak Q3.

29 June 2018 EZ Inflation is Back to Normal, but that's not Enough for the ECB (Publication Centre)

Yesterday's inflation data in the major euro area economies force us to mark down slightly our prediction for today's headline EZ number.

3 August 2018 Does the BoJ Believe in Targeting 2% Inflation Anymore? (Publication Centre)

Why should Japan, the U.S., the Euro Area, the U.K. and Japan all have the same inflation target?

25 May 2018 Germany Slowed in Q1, but what Happened to Private Demand? (Publication Centre)

The headline in yesterday's detailed Q1 German GDP data was old news, confirming that growth in the euro area's largest economy slowed at the start of the year.

25 October 2017 EZ PMIs Stepped Back at the Start of Q4, but Still Signal Solid Growth (Publication Centre)

Yesterday's advance PMI reports in the euro area signal that economic momentum slowed slightly at the start of Q4.

20 March 2018 Up or down for the EZ current account surplus in 2018? (Publication Centre)

The euro area's trade advantage with the rest of the world slipped at the start of the year.

20 February 2018 Everyone is Talking About Current Accounts Again (Publication Centre)

The euro area's current account surplus stumbled at the end of 2017, falling to €29.9B in December from an upwardly-revised €35.0B in November.

20 Oct. 2015 Slowdown in U.K. GDP Growth to Dent EZ Exports Next Year? (Publication Centre)

Our new Chief U.K. economist, Samuel Tombs, initiated his coverage yesterday with a sombre, non-consensus, message on the economy. Headwinds from fiscal tightening and net trade will weigh on GDP growth next year, but the BoE will likely have to look through such cyclical weakness, and hike as inflation creeps higher. An intensified drag from net trade in the U.K. will, other things equal, benefit the Eurozone. But a slowdown in U.K. GDP growth still poses a notable risk to euro area headline export growth, especially in the latter part of next year.

21 March 2017 Real Wage Growth in the Eurozone is Being Hit by Higher Inflation (Publication Centre)

One of the key characteristics of this euro area business cycle has been near-zero inflation due to structurally weak domestic demand and depressed prices for globally traded goods and commodities. This has supported real incomes, despite sluggish nominal wage growth.

25 Mar. 2015 PMIs point strengthening cyclical recovery (Publication Centre)

Evidence is mounting that the cyclical recovery in the Eurozone accelerated further in the first quarter. The Composite PMI in the euro area rose to 54.1 in March, up from 53.3 in February, taking the quarterly average to 53.3, its highest level since the second quarter of 2011. Combined with latest available retail sales and industrial production data, this is consistent with real GDP growth in the euro area accelerating to about 0.4-to-0.5% quarter-on quarter in the first quarter, from 0.3% in Q4.

21 March 2018 Fiscal stimulus in the EZ won't cure global imbalances (Publication Centre)

Global current account imbalances are back on the agenda. In the U.S., economic policies threaten to blow out the twin deficit, while external surpluses in the euro area and Asia are rising.

20 February 2017 Is the Eurozone Construction Sector is Back in Business? (Publication Centre)

Construction in the euro area stumbled at the end of last year. Output fell 0.2% month-to-month in December, but the year-over-year rose to 2.4%, from a revised 1.6% in November.

2 November 2017 2017 The ECB Probably Should Lower its Inflation Target, but it Won't (Publication Centre)

Policymakers and macroeconomic forecasters at the ECB will be doing some soul-searching this week. GDP growth in the euro area accelerated to a punchy 2.5% year-over-year in Q3, and unemployment dipped to a cyclical low of 8.9%.

2 Dec. 2014 - Eurozone Manufacturing Sector Unlikely to Recover in Q4 (Publication Centre)

The PMI survey continues to send a downbeat message on growth in the euro area despite signs of improvement in other sentiment data: The final manufacturing PMI in the Eurozone fell to 50.1 in November from 50.6 in October.

2 August. 2016 EZ Manufacturing Was Resilient in July, But Only Thanks to Germany (Publication Centre)

Industrial sector activity in the euro area was broadly stable at the beginning of the third quarter, despite the headline dip in the July manufacturing PMI. The Eurozone index fell to 52.0 in July, from 52.8 in June, but if it holds at this level it will be unchanged in Q3 compared with the second quarter.

2 January 2018 Bank Lending in the Eurozone Will Strengthen Further in 2018 (Publication Centre)

The economic calendar in the euro area was relatively quiet over Christmas, and broadly conformed to our expectations.

2 January 2019 The EZ Economy is Flirting With Recession at the Start of 2019 (Publication Centre)

We suspect that euro area investors have one question on their mind as we step into 2019.

2 June 2017 PMIs Signal a Strong Q2 for the EZ Manufacturing Sector (Publication Centre)

Yesterday's final May manufacturing PMIs confirmed that the EZ industrial sector is in fine form. The PMI for the euro area was unchanged at a cyclical high of 57.0 in May, in line with the initial estimate.

22 Apr. 2015 Sustained job gains are key to Eurozone consumers sentiment (Publication Centre)

Advance April consumer survey data will likely confirm that households remain the standout driver of the cyclical recovery in the euro area. We think the headline EC consumer sentiment index rose to -1.0 in April from -3.7 in March.

21 September 2018 The EZ Consumer is Still in Good Shape (Publication Centre)

Consumer sentiment in the euro area has slipped this year, though the headline indices remain robust overall.

24 May 2017 The Eurozone Data Deluge Shows an Economy in Rude Health (Publication Centre)

Investors in the Eurozone were faced with a busy economic calendar yesterday, but the message from the plethora of survey data was simple. The economic recovery in the euro area is strengthening, and risks to GDP growth are firmly tilted to the upside in coming quarters.

24 March 2017 TLTROs Finish with a Bang, but it Probably does not Mean Much (Publication Centre)

Robust demand in the ECB's final TLTRO auction was the main story in EZ financial markets yesterday. Euro area banks--474 in total-- took up €233.5B in the March TLTRO, well above the consensus forecast €110B. To us, this strong demand is a sign that EZ banks are taking advantage of the TLTROs' incredibly generous conditions.

24 November. 2016 EZ PMIs Rise Further in November- The Outlook is Good for Q4 GDP (Publication Centre)

The PMIs are telling an increasingly upbeat story for the EZ economy in Q4. The composite PMI in the euro area rose to an 11-month high of 54.1 in November, from 53.3 in October. The uptick was driven by strong new business growth across all private sectors, and employment also increased in response to higher work backlogs.

24 October. 2016 The Eurozone needs better PR (Publication Centre)

The EZ doom-and-gloom crew has come crawling out of the woodwork again this year. Earlier this month, Nobel laureate Joseph Stiglitz told a German newspaper that Italy and other euro area countries likely will leave the currency union soon.

24 Sept 2019 Ugly EZ PMIs in September, but Don't Hit the Panic Button Yet (Publication Centre)

Yesterday's PMI data were an open goal for those with a bearish outlook on the euro area economy.

22 November 2017 What's the Case for Increased Fiscal Stimulus in the Eurozone? (Publication Centre)

The euro area's record-high external surplus has prompted commentators to suggest that the zone has room to loosen fiscal policy to support growth, or at least relax the deficit reduction rules.

24 July 2017 Not Much Upside for Eurozone Equities in the Rest of 2017 (Publication Centre)

The tailwinds that have propelled Eurozone equities higher since the middle of last year remain place, in principle. In the economy, political uncertainty in the euro area has turned into an opportunity for further integration and reforms, and cyclical momentum in has picked up. And closer to the ground, fundamentals also have improved.

24 January 2017 EZ Economic Data Will Struggle to Live Up to Expectations in Q1 (Publication Centre)

Consensus forecasts expect further gains in this week's key EZ business surveys, but the data will struggle to live up to expectations. The headline EZ PMIs, the IFO in Germany, and French manufacturing sentiment have increased almost uninterruptedly since August, and we think the consensus is getting ahead of itself expecting further gains. Our first chart shows that macroeconomic surprise indices in the euro area have jumped to levels which usually have been followed by mean-reversion.

22 Sept. 2015 Moody's Fires a Shot Across the Bow on French Sovereign Debt (Publication Centre)

Mr. Draghi's pledge in 2012 to do "whatever it takes to preserve the euro," and QE have stymied sovereign debt risk in the euro area. At the same time, the EU's relaxed position over debt sustainability was highlighted earlier this year by the Commission's decision to give France two more years to get its deficit below 3% of GDP. But Moody's downgrade of the French government bond rating last week to Aa2 from Aa1 serves as a gentle reminder to investors of the underlying fundamentals.

23 August 2017 All Systems Go for Italy's Economy, but Don't ask About the Long Run (Publication Centre)

The performance of Italy's economy in the first half of 2017 proves that the strengthening euro area recovery is a tide lifting all the r egion's boats.

23 Aug 2019 Further Evidence of Resilience in the Eurozone PMI Data (Publication Centre)

Yesterday's August PMI data in the euro area ran counter to the otherwise gloomy signals from the ZEW and Sentix investor sentiment indices.

23 August. 2016 EZ PMIs to Signal Stable GDP Growth in the Third Quarter (Publication Centre)

Today's market attention will be focused on the advance August PMI data in the major EZ economies. We think the composite PMI in the euro area was unchanged at 53.2 in August, consistent with stable GDP growth of 0.3%-to-0.4% quarter-on-quarter in Q3. The signal of "stability" in the Eurozone business cycle has been consistently relayed by the PMI since the beginning of the year.

24 April 2018 Welcome Signs of Stabilisation in the Eurozone PMI Data (Publication Centre)

Eurozone investors will be drawing a sigh of relief after yesterday's PMI data. The alarming plunge in February and March made way for stabilisation, with the composite PMI in the euro area unchanged at 55.2 in April.

FORBES - All Hail The Eurozone's Disaster-Prone Economy (Really) (Media Centre)

Provocative notes from Ian Shepherdson, the Chief Economist at Pantheon Macroeconomics

Consistently Right

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