In one line: December’s survey is not going to be pretty.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Another rise in consumption pulled Q3 GDP in Switzerland above its pre-pandemic level.
- But activity is now softening; fast-falling surveys force us to cut our Q4 GDP estimate.
- The franc will strengthen further; we look for EURCHF of 1.03 at end-21 and 1.02 by mid-2022.
Claus Vistesen and Melanie DebonoEurozone
- EZ inflation is running red hot, hitting a record high of 4.9% in November.
- Shipping costs to the Eurozone's most important trading partners are still rising...
- ...Still, the fall in global measures points to shipping costs dragging headline inflation down.
Claus Vistesen and Melanie DebonoEurozone
In one line: A record high, but it still doesn’t justify rate expectations.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Spending starts Q4 on a weak foot; energy inflation drives the headline higher in November.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Lending growth has accelerated in the EZ, thanks to a pick-up in lending to firms...
- ...This is positive for the outlook for EZ investment, but will the new virus wave nip it in the bud?
- The decline in the ESI suggests GDP growth took a leg down in Q4; it will drop further in December.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Expect another hot reading in December.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Further falls are likely over the coming months.
Melanie Debono (Senior Eurozone Economist)Eurozone
- B.1.1.529 could be a grim game-changer in the pandemic, but it is too soon to say.
- The slowdown in real M1 growth indicates that the composite EZ PMI will fall to 53 in Q1.
- French consumer sentiment data indicate that unemployment is now below 7%.
Claus Vistesen and Melanie DebonoEurozone
- The Q4 survey data in France have been robust so far, pointing to solid underlying GDP growth…
- …But the return of the virus threatens new restrictions, putting Christmas festivities in question.
- We're reducing our forecast for Q4 quarteron-quarter GDP growth, by 0.6pp, to 0.6%.
Claus Vistesen and Melanie DebonoEurozone
In one line: Solid, but also old news given the recent surge in virus cases.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The new virus wave and associated return of restrictions adds to the downside risks for Q4...
- ...November's rise in the PMI hasn't captured the recent reimposition of restrictions in Germany.
- GDP growth in Q4 looks to be closer to 0.6% quarter-on-quarter; we are nudging down our forecast.
Claus Vistesen and Melanie DebonoEurozone
- Supply-demand dynamics remain supportive for low yields in EZ government bonds...
- ...This balance will shift next year, but underlying support from the ECB will remain robust overall.
- The trend in German net debt issuance points to bund yields rising next year, to at least zero.
Claus Vistesen and Melanie DebonoEurozone
- Switzerland's economy probably grew by 2% q/q in Q3, taking output back above its pre-virus level.
- Q3 is old news; growth is now slowing and the risks to the outlook are rising as virus cases surge.
- The SNB won't stay happy with CHF 1.05 per euro for much longer.
Claus Vistesen and Melanie DebonoEurozone
- Euro depreciation adds additional upside risk to the ECB's December core inflation forecasts.
- The outlook for relatively rapid Fed tightening is leading the euro lower, but fundamentals matter too.
- Recent comments from Isabel Schnabel suggest the ECB is o.k. with expectations of a hike in 2023.
Claus Vistesen and Melanie DebonoEurozone
- Inflation in the Eurozone is still rising, but it will cool next year as core goods and energy inflation ease…
- …But rising services inflation will keep the core rate uncomfortably high for the ECB in H1 22.
- Construction output in the EZ rebounded at the end of Q3; we look for further gains through Q4.
Claus Vistesen and Melanie DebonoEurozone
In one line: A few more high numbers are on the way, before the drop in Q1.
Melanie Debono (Senior Eurozone Economist)Eurozone
- EZ GDP and employment rebounded robustly in the third quarter, but growth is now slowing.
- We're sticking to our view of 0.8% q/q GDP growth in Q4, but risks are piling up to the downside.
- Core inflation in France will remain close to 1.5% through Q4, but we think the trend is around 1.0%.
Claus Vistesen and Melanie DebonoEurozone
In one line: Energy inflation is still rocketing; the core is held up by robust services inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ Labour demand has surged and the supply-side labour market recovery has also been impressive...
- ...But in Italy the participation rate remains below its pre-virus level, trailing that in Spain.
- We expect the jobless rate in both to fall over the coming quarters, but Italy will underperform.
Claus Vistesen and Melanie DebonoEurozone
