- German jobless claims fell less than expected in December, but we doubt the trend is improving.
- Employment growth slowed midway through Q4, and momentum will wane further in Q1.
- Nominal income growth is slowing, but real wage growth is rebounding as inflation falls.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: EZ manufacturing remained in recession in Q4; is the plunge in M1 fading?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ manufacturing remained in recession in Q4, but global data point to an improvement in Q1.
- The slowdown in narrow money growth is easing, adding to upside risks for the composite PMI in Q1.
- Private sector lending growth slowed midway through Q4; it will slow further in H1 2024.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Markets think the ECB will cut rates in March, as do we; inflation below 2% by February should do it.
- Energy prices are the key wildcard for headline inflation in Q1; so far the trend looks benign.
- In the core, non-energy goods inflation is about to collapse, but services inflation is still sticky.
Claus Vistesen (Chief Eurozone Economist)Eurozone
THE ECB IS DONE HIKING; WHEN WILL IT CUT?
- ...WE THINK EASING WILL BEGIN IN MARCH
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Jump in services sentiment leads the way; will it be sustained?
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Not enough to convince us consumption rose in Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
- GDP is likely to rebound from Q1 next year, albeit slowly; consensus expects a quicker recovery.
- Inflation will fall more sharply than the consensus or ECB expects in H1, if we are correct on January…
- ...If so, the ECB will cut rates five times next year, starting in March, earlier than consensus expects.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Not as good as the headline would suggest.
Melanie Debono (Senior Eurozone Economist)Eurozone
- German consumer confidence is on the rise but risks to our consumption call remain to the downside.
- The EZ current account surplus climbed in October; the trend in the euro suggests it will decline soon.
- EZ construction started Q4 on a rough note, and all signs point to the struggle stretching into 2024.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Further increases likely over the coming months.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: The start of a more sustained climb?
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: The start of a more sustained climb?
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Drop confirmed. Inflation will rebound in December, but what happens in January?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Inflation fell sharply in November; it will rebound in December, but what will happen in January?
- Our inflation forecasts remain at odds with the ECB’s; we still see a March rate cut.
- We’re betting that inflation falling below target will prompt the ECB to focus less on wage growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Net exports are poised to lift GDP growth in Q4, but by how much? We look for a 0.1pp rise.
- Export growth will rebound next year, but we think imports will recover relatively more.
- We believe rising goods imports will weigh on net exports and GDP growth in 2024.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: German firms will be happy to say Goodbye to 2023!
Melanie Debono (Senior Eurozone Economist)Eurozone
- Friday’s PMIs confirmed the EZ economy was still is in a rut in December, pointing to falling GDP in Q4.
- The PMI input price component suggests EZ headline inflation will stabilise at just under 2% in H1 24.
- Accelerating third quarter growth in hourly labour costs is grist on ECB hawks’ mills.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Still-strong growth in labour costs; net trade on track for a rise in Q4?
Melanie Debono (Senior Eurozone Economist)Eurozone
