- Spain was again the star performer in Q1; we look for GDP to have risen by 0.6% quarter-to-quarter.
- Italy was close behind, faring better than France and Germany, as construction investment rose again.
- Growth should rise in Spain and Italy later this year, but risks are to the downside, especially in Italy.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Industry was still a drag on EZ GDP growth in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Industry was a bigger drag on Italian Q1 GDP than we previously thought.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Net trade is still likely to have been a drag one growth in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
- EZ compensation-per-employee growth slowed in Q1, but what about negotiated wages?
- The HICP components most correlated with wage growth point to a significant slowdown in H1 2024.
- The Q1 bank lending survey is not the slam dunk for ECB doves that many seem to believe.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Pointing to further gains in the PMI.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Industry is a key reason Spain outperformed in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The fall in Swiss inflation in March solidifies our view that more SNB rate cuts are on the way this year.
- EZ house prices fell in Q4 and were down by 1.1% in 2023 overall; we look for another 1% drop this year.
- The PMI adds to the evidence that Spain’s economic outperformance continued in Q1; we concur.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Staying where it's been for most of the past year.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still touch and go for the recovery in EZ industry.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The drop in German inflation cements the outlook for a below-consensus EZ inflation report today.
- Why wouldn’t the ECB cut this month if inflation hit 2.2% in March? We can’t see why not either.
- Weakness in France and Germany is still holding back momentum in EZ manufacturing.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Improvement in money supply continues; Italian business confidence rises & German unemployment will climb further.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Consistent with a rise in EZ GDP this quarter.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Spanish inflation rose 0.4pp to 3.2% in March, less than we expected...
- ...We are revising down our forecast for the Eurozone headline; it likely rose just 0.1pp to 2.7% in March.
- Spanish CPI is further along than the EZ headline, suggesting EZ inflation will rise further before it falls.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Pointing to a recovery in consumption, albeit a tepid one.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The ECB faces a unique challenge in thinking about fiscal policy; fiscal tightening is now lifting inflation.
- We estimate that the unwinding of fiscal stimulus is now boosting EZ headline inflation by 0.4pp...
- ...In a fight for every percentage point to get inflation to target, this could prevent ECB rate cuts.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: The SNB beats the ECB to the punch on rate cuts.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The SNB cut interest rates, beating other major DM central banks to the punch on easing policy.
- More easing is likely over the coming year; we look for 75bp of further cuts by December.
- The risks are to fewer cuts; the SNB sees inflation in line with its price-stability mandate out to 2026.
Melanie Debono (Senior Eurozone Economist)Eurozone