In one line: Downtrend continues as unemployment fears near Covid-time peak.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Weak French inflation data put ECB doves in the driving seat ahead of next week’s May EZ HICP.
- German GfK consumer confidence and the ESI were robust midway through Q2; what tariff shock?
- EZ wage growth slowed sharply at the start of 2025; we doubt it will fall much further.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Services downturn clouding manufacturing’s recovery.
Melanie Debono (Senior Eurozone Economist)Eurozone
- A second straight fall in the EZ composite PMI in May points to downside risk for GDP in Q2.
- The INSEE and PMI suggest services are weakening, despite tight labour markets and little hit from tariffs.
- Inflation pressures are unwinding, so we are maintaining our call for further ECB easing.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: A new record high, thanks to tariff front-running by US firms.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Industry supported EZ GDP in Q1, as did the labour market.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: A strong first quarter for the Swiss economy.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Switzerland’s economy was on a tear before the trade-tariff shock hit.
- Strong growth is not inflationary, and is now slowing; the SNB will cut in June, taking rates below zero.
- EZ GDP was revised down in Q1 and will also slow ahead, but the unemployment rate will stay low.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Investor sentiment, measured by the ZEW, improved in May despite a fall in the current conditions index.
- Investor sentiment now points to a rebound in the PMI as markets forget all about tariffs.
- Near-real time data also signal resilience in the EZ economy midway through the second quarter.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Industry will likely support GDP again in Q2, but downside risks remain.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Decent, and strength likely to continue for now.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still trending sideways, as they have since November.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Rise in demand in Germany pulls up headline.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The EZ construction PMI rose in April, on the back of a recovery in new orders in Germany.
- Construction activity is still faring better in Italy than in Germany or France.
- The sector is likely to support EZ GDP in Q2, as it seems to have done in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Jump in April core inflation was due to Easter effects in services; the remaining components were soft.
- Dovish forecasts from the ECB will pave the way for for a back-to-back 25bp rate cut next month…
- …and we now look for an additional 25bp cut in July, but also hikes next year, in June and September.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Consistent with slower growth in Q2.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Inflation held steady, but declines are coming; we are adding a July ECB rate cut.
Melanie Debono (Senior Eurozone Economist)Eurozone
- We now think EZ investment is falling, mainly due to sustained weakness in machinery and equipment.
- Leading indicators for construction and services capex look solid, at least before the tariff shock.
- Surveys point to downside risks for inventories in H1, but brace for significant volatility this year.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: GDP growth pick up in Q1 will prove short-lived as trade uncertainty hits.
Melanie Debono (Senior Eurozone Economist)Eurozone
