- A cold winter will turn rising gas prices into a macroeconomic issue; Q4 risks are tilted to the downside.
- Car sales in the Eurozone aren't going anywhere, mirroring the slump in production.
- The EV transition is underway in Europe, but lack of timely infrastructure investment is a challenge.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Growth in EZ hourly labour costs plunged in Q2, but other, more timely, data point to robust wage gains.
- Ms. Lagarde's comments last week suggest that we should watch negotiated wages closely in H2.
- We see few signs of accelerating wage growth in 2021 collective bargaining agreements, yet.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The trend in oil prices suggests energy inflation will soon fall and even turn negative next year in the EZ...
- ...But high, and rising, gas prices will offset this impact, keeping energy inflation sticky.
- We doubt this will lead the ECB to taper more quickly, particularly if some restrictions return in winter.
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
- 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
- There are many statistical hurdles to overcome to include housing costs into the EZ HICP...
- ...A rough & ready estimate suggests inflation would have been 0.3pp higher, on average, since 2011.
- Even if house price growth continues to accelerate, we doubt it will lead to tighter monetary policy.
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
- VAT base effects in core goods were the main driver of the July leap in German inflation.
- The yawning gap between national and HICP services inflation will close soon; the latter will rebound.
- We now see clear evidence of a reopening bump in hospitality prices; will it be sustained?
Claus Vistesen (Chief Eurozone Economist)Eurozone
The spread of the Delta variant seems to be slowing, at least in the Big Four EZ economies...
...But the threat of new variants looms, and booster shots elsewhere aren't providing promising signals.
We still think GDP growth in Q3 will be faster than Q2, but uncertainty is now rising for Q4.
Claus Vistesen (Chief Eurozone Economist)Eurozone
EZ bond yields have been dragged lower as investors have abandoned the reflation trade.
Idiosyncratic factors will weigh on bund yields in H2, but we still see room for a rise to -0.3-to-0.4% in Q4.
Energy imports, and goods demand from Eastern Europe, are weighing on Germany's trade surplus.
Claus Vistesen (Chief Eurozone Economist)Eurozone
German factory orders surged in June, more than reversing May's plunge ...
... But turnover data point to a weak end to Q2 for industry; we look for a 0.5% monthly fall in June.
French industry continued to tread water; even though car output rose for the first time this year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Peruvian New Sol — President Castillo already on fire
Chilean Peso —The copper-driven sell-off
Colombian Peso — Deteriorating fundamentals
Andres Abadia (Senior International Economist)Latin America
The PMIs confirm that the Q2 upturn in services continued at the start of the third quarter.
Data in France and Spain suggest that hospitality came roaring back in Q2; more to come in Q3.
EZ retail sales jumped by 3.4% in Q2; growth will slow in Q3, but should remain robust.
Claus Vistesen (Chief Eurozone Economist)Eurozone
We're raising our 2021 growth forecasts for France, mostly due to technicals linked to recent revisions.
We now think German GDP will rise by just 2.7% in 2021, but the carry-over into 2022 will be solid.
Our new Q3 forecasts are broadly in line with the consensus; all set for a spectacular quarter.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Raft of Swiss data reaffirm our view that the economy is recovering quicker than the Eurozone.
The pick-up in Swiss inflation in July is nowhere near enough to set alarm bells off at the SNB...
... but a stronger franc all but cements the need for higher FX intervention.
Claus Vistesen (Chief Eurozone Economist)Eurozone
EZ GDP data beat expectations in Q2, which will drive upward revisions to 2021 forecasts.
We now expect full-year GDP growth in the Euro- zone of 5.0% in 2021, up from 4.5% previously.
Ignore the July dip in euro area core inflation; it will leap to 1.5% in August.
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
Robust M1 growth points to solid GDP growth in the Eurozone, once the dust settles from reopening.
Loan growth is slowing, but that's mainly due to base effects; the underlying trend remains robust.
Non-financial firms are substituting short-term for long-term lending, a good sign for investment.
Claus Vistesen (Chief Eurozone Economist)Eurozone
We look for Q2 GDP growth in the EZ at 1.5% quarter-on-quarter, the same as the consensus.
This week's EZ inflation reports for July are a banana-skin for forecasters; don't bet the farm.
The IFO softened significantly in July, but it remains consistent with robust GDP growth in Q3.
Claus Vistesen (Chief Eurozone Economist)Eurozone
