- 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
- The Swiss economy had regained more of its Covid losses than the euro area as of Q2.
- We still expect it to complete its recovery in Q3, ahead of the EZ, and grow by 3.5% overall this year.
- The outperformance and incoming ECB PEPP taper will push up the CHF; a headache for the SNB.
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
- 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
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
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
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
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
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
Virus cases fell throughout the second quarter, allowing EZ governments to ease restrictions and the economy to roar back to life.
Claus Vistesen (Chief Eurozone Economist)Eurozone
We last set our outlook for the Italian economy at the end of May—see here—and in this Monitor, we take stock of what has changed since. In preview; it's good news.
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
We recently wrote about the prospects of a reopening leap in core inflation—see here—as the restrictions are eased.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Industry in the euro area remained red hot at the end of Q2.
Claus Vistesen (Chief Eurozone Economist)Eurozone
The evidence continues to support our own and consensus forecasts that the euro area economy is roaring back to life in the second quarter.
Claus Vistesen (Chief Eurozone Economist)Eurozone
For forecasters, including us, pinning their hopes on
a reopening-rebound in EZ Q2 GDP , chiefly thanks to rising consumers' spending, Friday's data were a slap in the face.
Claus Vistesen (Chief Eurozone Economist)Eurozone
