- EZ core inflation fell further in April; the June rate cut looks safe, but July’s is hanging in the balance.
- EZ GDP rose by 0.3% in Q1, in line with our forecast; country data suggest net trade was the main boost.
- Southern economies did the heavy lifting, again, and likely will continue to outperform this year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Headline in line; services inflation a touch higher than we anticipated.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Early April HICP data in Spain and Germany confirm that energy inflation rose, while core inflation dipped.
- We’re lowering our EZ headline inflation forecast by 0.1pp, to 2.4%; the core likely fell by 0.4pp, to 2.5%.
- The Irish economy sprang back to life in Q1; we still look for EZ GDP to have risen by 0.3% in the quarter.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Downside surprise in Spain; bang on consensus in Germany.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- We look for agreeable data this week; we see upside risk to GDP growth, and downward to core inflation.
- Money data point to a lift-off in GDP growth over the coming quarters, adjusted for the savings shift...
- ...But lending figures suggest we are right to think investment will remain depressed in H1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
THE FIRST ECB RATE CUT IS COMING IN JUNE...
- ...IF THE INFLATION AND WAGE DATA COOPERATE
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A pick-up in services production boosted French growth in Q1; Q2 is set for further improvement, just.
- Forecast upgrades in Germany and France mean we now estimate EZ GDP rose by 0.3% in Q1.
- Political uncertainty is increasing in Spain, as the Prime Minister mulls resignation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- We’re lifting our forecast for German Q1 GDP growth, by 0.2pp to 0.2% quarter-to-quarter.
- German manufacturing and services output are on the mend, while retail sales are still stuck in the mud.
- Construction was boosted by mild weather in Q1; output will fall sharply in the second quarter.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Great, but can the services PMI be trusted?
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Great, but can the services PMI be trusted?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent, but exclusively due to strength in services
Claus Vistesen (Chief Eurozone Economist)Global
In one line: Decent, but exclusively due to strength in services
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The jump in US rate expectations is not needed to explain the similar repricing in EZ expectations.
- We expect bond yields in Germany to drift lower in the near term as the ECB starts cutting rates...
- ...But we still see an increase next year as the policy rate settles above neutral and inflation risks return.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The Eurozone is still an incomplete currency union, but we think it will carry on regardless.
- The pandemic and war in Ukraine show that inflation is possible even in a rapidly aging economy.
- Fiscal activism, inflation and higher interest rates are all here to stay in the EZ, for the foreseeable future.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Hit by a fall in the goods surplus; portfolio inflows remain robust.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ construction rose in February, but less so than implied by the advance data; seasonals to blame?
- Either way, construction was a boost to EZ GDP in Q1, and it suggests risks are tilted to the upside.
- The EZ current account surplus dipped in February and will fall further; portfolio inflows remain robust.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Core inflation will fall further in coming months, but rising oil prices is a threat to the headline.
Claus Vistesen (Chief Eurozone Economist)Global
