In one line: The downturn in industry will last a while yet.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The PMI remains consistent with a bigger fall in GDP than we expect in Q4, despite rising in November.
- Price pressures have eased, supporting our call for an ECB pivot to slower rate hikes from next month.
- The EU-agreed gas price cap will work to our favour here too; preventing price hikes at times of stress.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: A fall in GDP in Q4 seems a sure bet.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Activity is still falling in Germany.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Factory orders in Germany are starting to match the grim surveys; output is set for a big fall in Q4.
- Early evidence suggests that EZ industrial output was resilient at the end of the third quarter.
- The composite EZ PMI was revised up marginally in October, but still points to a recession ahead.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Upward revision nothing to write home about.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Germany’s €200B Double-Kaboom energy support package is a game-changer for households in 2023.
- The PMIs say EZ manufacturing is in a tail-spin; will Q4 official output data tell the same story?
- German unemployment was unchanged in October, and the upturn in imports is petering out.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- PMI data support our view that EZ GDP is likely to fall more quickly in Q4 than in Q3.
- High energy prices and rising borrowing costs are weighing on output and weakening demand.
- Activity in Germany took another leg down at the start of Q4, but it merely stalled in France.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: A glimmer of hope, but more evidence is needed to call a bottom.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ composite PMI sank further in September, consistent with GDP falling in the third quarter
- Supply-side tensions eased in September, but higher energy costs drove a rise in input price inflation.
- Markets look for the ECB deposit rate to end 2022 at 2.25, with 75bp more in 2023; that's too much.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ construction output rose slightly in July, but we doubt this is the beginning of a sustained rebound.
- Survey data suggest that construction will weaken further in the third quarter, after a soft Q2.
- Private sector construction will be hit by rising rates; civil engineering should be more resilient.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Stung by a plunge in Ireland, but the weakness was broad-based, overall.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Activity fell faster than previously thought in August; we expect a recession in H2.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The surge in gas prices adds to our conviction that inflation will remain high, despite a hit to EZ activity.
- A probable EZ recession is weighing heavily on the outlook for Switzerland’s economy in H2.
- EZ investor sentiment tumbled in September; it will sour further as the ECB continues to hike.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Germany is now likely entering a technical recession, but inventories and net trade are wildcards.
- The survey data in Germany are plunging, and real M1 growth is sinking without a trace...
- ...But near-real-time data are holding up and early hard data for Q3 have been robust.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- ECB doves have little to pin their hope on for next
week, despite soft survey data in manufacturing.
- The EZ labour market was resilient at the start of Q3, but spending, ex-services, was mixed.
- EZ manufacturing is now likely in recession, but this is not enough to stay the ECB's hand.
Claus Vistesen (Chief Eurozone Economist)Eurozone
Soft money data rounded up a week of gloomy leading indicators for EZ GDP last week.
ISTAT data lend support to our view that Italy, along with Germany, is leading the EZ downturn in H2.
The sour data spooked some ECB members, but the ECB is not about to turn dovish.
Melanie Debono (Senior Eurozone Economist)Eurozone
German GDP grew by 0.1% in Q2, finally returning to its pre-virus, Q4 2019, level.
But the tiny expansion is now old news; survey data imply GDP in the EZ’s largest economy is now falling.
France’s economy will avoid a recession, we think, but risks here are also skewed to the downside.
Melanie Debono (Senior Eurozone Economist)Eurozone
