In one line: German core inflation plunged in September.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German inflation dived in September, pulled lower by falling inflation in both core and energy.
- The slowdown in M1 continues, and we still think it is worth watching as a leading indicator.
- Spain’s search for a new government goes on; repeat elections look increasingly likely.
Claus Vistesen (Chief Eurozone Economist)Eurozone
GROWTH IS SLOWING, BUT INTEREST RATES ARE STILL RISING
- IS THE ECONOMY HEADED FOR A HARD LANDING?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A shift in the net balance of foreign trade and inventories will weigh on French GDP in Q3.
- Consumers’ spending in France is likely rebounding now, but investment has further to fall.
- Our full-year forecasts for growth in 2023 and 2024 imply further downside for official forecasts.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German business surveys stabilised at the end of Q3, but still paint a bleak near-term picture.
- We look for a 0.3% quarter-on-quarter decline in Q3 GDP, and risks are tilted to the downside.
- We are nudging our forecasts for 2024 growth down by 0.2pp, to 0.8%; further downgrades are possible.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Rebound in expectations is positive, but the near-term outlook remains poor.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ Composite PMI rose in September but still points to GDP falling by 0.5% q/q in Q3...
- ...We think the drop will be smaller, as the services PMI is likely being distorted by seasonals.
- Upward revisions to Italian GDP are a relief but don’t offer much fiscal leeway for next year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Not pretty; the rebound in services looks like an issue with seasonal adjustments.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ construction output rose at the start of Q3, but don’t extrapolate; the sector is stuck in a downturn.
- Surveys indicate that building activity is crashing, but civil engineering is looking better.
- Investment in construction slowed sharply in Q2, and we’re looking for an outright fall in Q3.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent, but the trend remains negative.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Headline and core inflation in the Eurozone remained sticky in August; they will fall back in September.
- Rising oil prices are only a minor threat to energy inflation at this point; don’t push the panic button.
- The ECB story is shifting; all eyes are now on the outlook for rate cuts in 2024; we still see two.
Claus Vistesen (Chief Eurozone Economist)Eurozone
