- 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 DebonoEurozone
- The Q4 survey data in France have been robust so far, pointing to solid underlying GDP growth…
- …But the return of the virus threatens new restrictions, putting Christmas festivities in question.
- We're reducing our forecast for Q4 quarteron-quarter GDP growth, by 0.6pp, to 0.6%.
Claus Vistesen and Melanie DebonoEurozone
- EZ GDP and employment rebounded robustly in the third quarter, but growth is now slowing.
- We're sticking to our view of 0.8% q/q GDP growth in Q4, but risks are piling up to the downside.
- Core inflation in France will remain close to 1.5% through Q4, but we think the trend is around 1.0%.
Claus Vistesen and Melanie DebonoEurozone
- EZ Labour demand has surged and the supply-side labour market recovery has also been impressive...
- ...But in Italy the participation rate remains below its pre-virus level, trailing that in Spain.
- We expect the jobless rate in both to fall over the coming quarters, but Italy will underperform.
Claus Vistesen and Melanie DebonoEurozone
- EZ unemployment fell again in September, and survey data point to further improvement in Q4.
- We think Eurozone unemployment will fall below 7% next year, hitting 6% by 2023.
- The SNB is fine with EURCHF closing in on 1.05, but only for as long as inflation is rising.
Claus Vistesen and Melanie DebonoEurozone
In one line: EZ Jobless rate has further to fall.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Italy has a reputation for a slow judicial system, weak tax collection and low labour productivity...
- ...But Draghi has pushed through reforms aimed at reversing these drags on the economy.
- We are hopeful, but sceptical, about how much reform will happen before the next election, in 2023.
Claus Vistesen and Melanie DebonoEurozone
In one line: A big fall in claims, but the smoothed trend is now rolling over.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A four-week Covid lockdown in Latvia is a warning shot across the bow for the EZ…
- …But we're sticking to our view that hospitalisations will remain contained, even as cases rise.
- Early survey data for October hint at robust economic activity at the start of Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Inflation in Switzerland likely has peaked, keeping it lower than the headline HICP in the EZ...
- ...Currency effects will soon be a drag on headline inflation, to the SNB's dismay...
- ...Meanwhile, rising natural gas prices are no worry for the Swiss, and wage pressures are limited.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ inflation rose further in September, probably by 0.5pp to 3.5%, higher than the consensus, 3.3%.
- Core inflation in the EZ was lifted by gains in Italy and Germany in September.
- The rate of improvement in the EZ labour market is now slowing, but unemployment is still falling.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The Italian government's GDP growth forecast for next year looks too high to us.
- Spain's new ERTE scheme is the first of, probably many, Covid-led labour market reforms in the EZ.
- We continue to expect the EZ jobless rate to fall be- low most estimates of NAIRU by end-2023.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ manufacturing output is still hampered by supply-side woes, but it's not all bad news.
- Unemployment in the EZ fell further at the start of Q3; we think the good news will keep coming.
- SPD's lead in the German polls is startling, but not yet a game-changer for the final outcome.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ inflation is running hot, and it will rise further in Q4; will markets and the ECB flinch?
- German unemployment fell further midway through Q3, and further improvement is in store.
- Consumers' spending, ex-services, in France dipped in July, but Q3 as a whole will be decent.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Core inflation in the euro area rocketed in August, but we doubt that markets will notice.
- PEPP tapering is coming, but the overall tenor of the ECB's communication remains as dovish as ever.
- The EZ survey data are now softening, but that won't matter for GDP in Q3; for Q4, however, it might.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- European birth rates have rebounded since the end of the 1990s, but remain below replacement levels.
- The rebound in German marriage and birth rates stands out; not much sign of a rebound elsewhere.
- Women are still postponing having their first child; that will continue to hold back total fertility rates.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The second Q2 GDP estimate for the EZ will confirm the advance report while we are away.
- Detailed GDP data in Germany will show that consumers' spending rocketed in Q2.
- We look for soft surveys for August, but we still think Q3 as a whole will be great for the EZ economy.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Headline inflation in the EZ likely was a touch stronger than we initially expected in July.
Core and headline inflation in Germany is rocketing, mostly due to base effects from last year's VAT cut.
The decline in German unemployment accelerated in July, and more good news is on the way.
Claus Vistesen (Chief Eurozone Economist)Eurozone
