- This week the ECB will continue to push back against expectations of a rate cut in the first half of 2024...
- ...But the central bank is now happy to underwrite the consensus position of a rate cut by summer.
- We still see the ECB cutting by March, as January and February HICP surprise to the downside.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Pulled lower by a widening primary income deficit.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The slowdown in EZ construction intensified in Q4 and won’t improve any time soon.
- A sharply wider primary income deficit stung the EZ current account surplus in November.
- EZ portfolio outflows accelerated in Q4, but the market setback in January points to a pullback in Q1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Old news; will January and February inflation be soft enough for a March cut?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB is not happy with market expectations for a spring rate cut but is fine with June.
- If our forecast for inflation to fall below 2% by February is right, the ECB will cut in March.
- Plunging PPI points to downside risks to services inflation, but the output price PMI is still high.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: All due to base effects; how far will inflation fall in January?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Pulled lower by falling domestic demand; GDP likely fell in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German GDP fell by 0.1% in 2023, which—according to Destatis—includes a 0.3% decline in Q4.
- Manufacturing in the euro area remained in recession in Q4, but net trade in goods jumped.
- We think EZ GDP fell by 0.2% quarter-to-quarter in Q4, due to broad-based domestic weakness.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A rise in core goods consumption not enough to lift Q4 spending; inflation will fall sharply in Q1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent, but production likely fell over Q4 as a whole.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- New budget rules in the EU will put France, Italy and Spain on the spot, but will they be enforced?
- The Commission’s fiscal proposals leave plenty of room for exceptions and long adjustment paths.
- Retaining the 60% debt-to-GDP threshold exposes many countries to prolonged adjustment plans.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German manufacturing remained subdued in Q4, but net trade in goods likely soared.
- Retail sales in the euro area fell midway through Q4, due principally to weakness in Germany.
- Investor sentiment continues to signal upside risk for the EZ composite PMI at the start of 2024.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Factory orders remain depressed; net trade in goods soared in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: All due to base effects in energy; the downtrend in the core remains intact.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Headline rebounds more than expected, but the core undershot our forecast.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Revised higher, but still consistent with a technical recession.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: EZ headline rebounded in December, but the core likely eased further.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ headline inflation will match the consensus today, but the core will undershoot expectations.
- The rebound in German inflation in December will be short-lived; the downtrend in the core continues.
- Sticky services inflation in France will soon roll over, judging by surveyed selling prices.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Stable, but we doubt the trend in claims is improving.
Claus Vistesen (Chief Eurozone Economist)Eurozone
