In one line: Better than expected but still a gloomy start to the year.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Core inflation was still rising by the end of 2021, but it will fall in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Retail sales data had a decent November, but online sales can't offset falling services spending.
- Germany is on track to meet our expectations for Q4 growth, but we're reducing our forecasts in France.
- EZ inflation has peaked; a strong rebound in the core will be a headache for the ECB in Q2 and Q3.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
In one line: Goods spending rebounds but industrial production still in the doldrums.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still hot, but also old news; both the headline and core will fall in January.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The December PMIs indicate that EZ manufacturing production is now outpacing services output.
- German GDP growth underperformed in Q4, according to the PMIs; Spain did relatively well.
- French consumer sentiment remained resilient in Q4, but we look for a setback in Q1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Solid, but it doesn’t fully reflect the recent deterioration in the virus numbers.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Gas prices have further to rise in the short term boosting energy inflation into Q1.
- But easing demand and base effects will then bring gas inflation hurtling down.
- Political tensions with Russia, and Germany's plans to wind down nuclear energy, present upside risks.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
In one line: Omicron puts a damper on Christmas cheer.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The ECB’s data continue to paint a less dramatic picture of trade in goods than Eurostat's numbers.
- Net services exports likely will jump in Q4, but this will be offset in part by a fall in IP capex.
- The euro glut has expanded during the pandemic, due mainly to a rise in EZ foreign equity holdings.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
In one line: Hit by surging virus cases, and worse is coming.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Supply bottlenecks are now easing, but likely will remain a challenge at the start of next year.
- Rising energy costs and new virus restrictions are the key risks to manufacturing in the near term.
- The virus might also drive more long-lasting distortions between supply and demand.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
Ms. Lagarde will stick to the signal that PEPP is likely to end in March, but Omicron is a big risk to this call.
The ECB's inflation forecasts will increase today; how close to 2% will they be for 2023 and 2024?
No rate hikes in 2022, but speculation about lift-off will intensify in the next six-to-12 months.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- German core inflation will fall sharply in January, but then rebound; the HICP rate will stay sticky in 2022.
- Spanish and Italian industrial production both fell at the start of Q4, in contrast to increases in the core...
- ...We think industry will be a drag on GDP growth in Q4, just when risks to services activity are rising.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- Factory orders in Germany crashed in October, pegged back by a plunge in large orders…
- …But turnover jumped, by 3.6% on the month, pointing to a consensus-beating production report today.
- German manufacturing likely will do well in Q4, but the virus is now a severe risk for services.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- Eurozone house prices are rising at their fastest pace since before the global financial crisis..
- ...Indicative signs point to further upside ahead, supporting consumer spending...
- ...But the virus remains a threat in the near term, weighing on consumer confidence.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- Lending growth has accelerated in the EZ, thanks to a pick-up in lending to firms...
- ...This is positive for the outlook for EZ investment, but will the new virus wave nip it in the bud?
- The decline in the ESI suggests GDP growth took a leg down in Q4; it will drop further in December.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- B.1.1.529 could be a grim game-changer in the pandemic, but it is too soon to say.
- The slowdown in real M1 growth indicates that the composite EZ PMI will fall to 53 in Q1.
- French consumer sentiment data indicate that unemployment is now below 7%.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
