- EZ auto sales fell in 2021, again, though we suspect they rebounded in Q4, after a terrible Q3.
- Investment by EZ auto-makers has fallen in line with weakening production, due to supply-side woes…
- …But employment has rebounded strongly, pointing to underlying confidence in the future.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Decent hard data lead us to raise our Q4 forecast for Italy, as for Spain, but GDP growth has slowed.
- Italian GDP likely rose by 0.8% in Q4; Q1's outcome will be little more than zero, as virus restrictions bite.
- An early election in Italy would put upward pressure on BTP yields, but it would prove short-lived.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: More evidence that industry in the periphery continues to outperform that in the core.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Distorted by Irish data; industry was probably a small drag on GDP growth in Q4.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Stronger-than-expected industry and retail data lead us to revise up our Q4 GDP forecast for Spain.
- We now think GDP grew by 1.5% q/q, much quicker than in the other major EZ economies.
- Solid Q4 growth increases the carry-over for 2022 growth forecasts, but Spain is still a laggard.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Industry supported growth last quarter.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Retail sales data had a decent November, but online sales can't offset falling services spending.
- Germany is on track to meet our expectations for Q4 growth, but we're reducing our forecasts in France.
- EZ inflation has peaked; a strong rebound in the core will be a headache for the ECB in Q2 and Q3.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
In one line: Goods spending rebounds but industrial production still in the doldrums.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Strangely weak industrial production; nominal imports are surging due to rising energy costs.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German factory orders are running hotter than manufacturing production...
- ...And the jump in manufacturing turnover points to a consensus-beating production report today.
- Headline inflation in Germany was broadly stable in December, but the core rate rose further.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
In one line: Orders rebound; turnover points to consensus-beating production data tomorrow.
Melanie Debono (Senior Eurozone Economist)Eurozone
- The December PMIs indicate that EZ manufacturing production is now outpacing services output.
- German GDP growth underperformed in Q4, according to the PMIs; Spain did relatively well.
- French consumer sentiment remained resilient in Q4, but we look for a setback in Q1.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Omicron is less of a burden on hospitals than Delta, but surging cases will still lead to restrictions in Q1.
- Warm weather and energy imports are driving a fall in natural gas prices; good news for consumers.
- The slowdown in real M1 growth points to a further fall in the EZ composite PMI in Q1, to about 52.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- The upward revision to Q3 GDP in Spain still leaves it further below the Q4 2019 level than elsewhere...
- ...The recovery has now slowed sharply; we look for just 1.0% growth in Q4; risks are to the downside.
- Data over the holidays are likely to show soft retail sales and yet more softening in business surveys.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- Gas prices have further to rise in the short term boosting energy inflation into Q1.
- But easing demand and base effects will then bring gas inflation hurtling down.
- Political tensions with Russia, and Germany's plans to wind down nuclear energy, present upside risks.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- Supply bottlenecks are now easing, but likely will remain a challenge at the start of next year.
- Rising energy costs and new virus restrictions are the key risks to manufacturing in the near term.
- The virus might also drive more long-lasting distortions between supply and demand.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
Ms. Lagarde will stick to the signal that PEPP is likely to end in March, but Omicron is a big risk to this call.
The ECB's inflation forecasts will increase today; how close to 2% will they be for 2023 and 2024?
No rate hikes in 2022, but speculation about lift-off will intensify in the next six-to-12 months.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
- German core inflation will fall sharply in January, but then rebound; the HICP rate will stay sticky in 2022.
- Spanish and Italian industrial production both fell at the start of Q4, in contrast to increases in the core...
- ...We think industry will be a drag on GDP growth in Q4, just when risks to services activity are rising.
Claus Vistesen and Melanie Debono (Eurozone Team)Eurozone
In one line: A weak start to Q4 for Italian manufacturing.
Melanie Debono (Senior Eurozone Economist)Eurozone
