In one line: Q3 carry-over looks o.k., but survey data remains depressed.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Services inflation revised down marginally; headline to fall further in September.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Falling energy inflation will pull headline HICP below 2% in September; we look for 1.8% year-over-year.
- Obsessing about services inflation is ‘so yesterday’; all eyes on non-energy goods in September and Q4.
- An October rate cut is back in play if core goods inflation fails to rebound in September.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The day of reckoning for Italy's public finances under the new EU fiscal rules has been delayed…
- ...Rome will submit its new MTFS plan 10 days late, at month-end; it needs more spending cuts.
- A sub-4% deficit this year is just wishful thinking; it will remain above 4% until 2026.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: EZ trade pulled lower by imports in July; hourly labour cost growth remained elevated in Q2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Mr. Draghi's report on European competitiveness could help Italy and France in their EDP negotiations.
- We agree with Mr. Draghi's broad conclusions, but he is too upbeat on productivity and inflation.
- EZ hourly labour cost growth remained high in Q2, but stagnant profits point to lower inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Held down by falling energy inflation; the core firmed.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- One more ECB rate cut this year is a good baseline, but the probability of two has increased.
- Surveys point to downside risks for core inflation in France, but we still look for a rebound in Q4.
- The misery in EZ manufacturing continued at the start of Q3, despite a boost from Ireland.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: As expected; plenty to talk about on the press conference.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB cut by 25bp as expected; an October cut is now a tall order, but a December cut is back on.
- The rise in the ECB’s core inflation forecast will prevent the Bank from being mugged by reality in Q4.
- Early signs show that the ECB is noticing the sustained weakness in EZ domestic demand.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Germany’s economy is now in recession, judging by the trend in investment and survey data…
- …But we think rising consumers’ spending will just about keep the economy’s head above water in Q3.
- We’re lowering our German GDP growth forecasts for Q3, Q4 and Q1 by a cumulative 0.3pp.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A hefty fall; set for a sixth quarter-on-quarter decline.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Dovish, but upside risks loom in Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Italian industry remains in recession in Q3, in line with its German counterpart…
- ...Spanish industry is now joining the recession party, though it is still faring better than elsewhere.
- The outlook for EZ industry remains bleak, especially given signs of still-weak import demand from China.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The ECB will cut its policy rate by 25bp this week, as widely expected, but what happens in Q4?
- We see a higher chance than markets of an October cut, and a lower probability of December easing.
- Will the ECB lift its Q4 core inflation forecasts this week? We think so, but how far?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Held back by deteriorating views on Germany.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Revised down; held back by consumption and investment.
Melanie Debono (Senior Eurozone Economist)Eurozone
