- 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
- German industrial output rebounded at the start of Q3, but the trend likely is still flat.
- Consumers' spending propelled the EZ economy in Q2; a full recovery in GDP is possible in Q3.
- We are lifting our full-year forecasts for 2021, but this is mostly book-keeping; growth is now slowing.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Don't fret the July plunge in EZ retail sales; Q3 as a whole will be OK, and services will do even better.
- The risk of new virus restrictions remains low, de- spite the uptick in new cases since the end of Q2.
- Consumers' spending in services will deliver strong growth in Q3 in the major EZ economies.
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
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
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
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
The PMIs point to a sustained, and strong, expan- sion in EZ economic activity at the start of Q3.
The renewed surge in virus cases is a threat to the lofty consensus Q3 forecast.
The EZ budget deficit remained wide in Q1, but it will come down as the economy recovers.
Claus Vistesen (Chief Eurozone Economist)Eurozone
The ECB formally presented its new inflation target yesterday, and updated the forward guidance on rates attached to it.
Claus Vistesen (Chief Eurozone Economist)Eurozone
The ECB is pushing forward with its commitment to incorporate climate change into its policy framework over the next few years.
Claus Vistesen (Chief Eurozone Economist)Eurozone
The ECB sprang a surprise on markets yesterday, releasing the details of its policy review—see here—ahead of the planned announcement in September.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Weakness in the core remained a drag on euro area manufacturing midway through Q2, amid strength elsewhere.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Judging by the questions we're receiving from
readers, and reports in the financial news, the outcome
of the ECB's strategic policy review is now starting to occupy investors' minds.
Claus Vistesen (Chief Eurozone Economist)Eurozone
