- Negotiated wage growth in the EZ slowed slightly in Q4; it will decelerate further at the start of 2024.
- EZ construction output rebounded in December, leaving a decent carry-over for Q1.
- The Eurozone current account surplus jumped at the end of Q4 but will soon decline.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Leading indicators point to significant downside risks for German construction at the start of 2024.
- The fall in real estate prices is happening amid solid growth in rents; the cap rate is soaring as a result.
- German commercial real estate is in trouble, but cap rates are now rocketing, for both retail and office.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The sticky core will come undone soon; we look for a big fall in February
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss industrial production fared worse than we thought in Q4, but construction outperformed...
- ...We are sticking to our call that GDP fell by 0.2% on the quarter in Q4; if so, it rose by 1.2% in 2023.
- Base effects point to a big fall in French core inflation in February, to around 2% on the HICP.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Old news; net trade will be a drag on growth this year.
Melanie Debono (Senior Eurozone Economist)Eurozone
- EZ GDP growth is falling behind the US; relatively sluggish productivity is part of the reason.
- The inflation shock has depressed EZ labour productivity, but it should now be rebounding.
- Our interest rate forecasts are consistent with a relative shift in the EZ inflation and policy regime.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Weak GDP growth, still-solid trend in employment; industrial production boosted by Ireland.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Eurozone GDP was flat in Q4, and we doubt the picture will improve in the first quarter.
- Investment will remain under pressure in H1, but consumers’ spending should now be rebounding.
- EZ employment growth is still outpacing the surveys; unemployment is pinned at a record low.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Still consistent with a rising PMI.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss inflation fell sharply in January, beneath our below-consensus forecast...
- ...We are sticking to our call that the SNB will first cut its key policy rate in March, by 25bp to 1.50%.
- It will likely follow this up with 75bp-worth of cuts, split between 50bp in June and 25bp in September.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Consumer prices in the EZ exhibit strong seasonality throughout the year, especially in the core.
- Core inflation is falling on all seasonally adjusted indices, but the tempo varies across methodologies.
- Seasonally adjusted price momentum is rebounding, but that shouldn’t matter for the year-over-year rate.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German energy prices should be falling more quickly; will they adjust further in coming months?
- The drop in German food inflation is almost over, but we think it will dip a bit further in Q1.
- Core inflation in Germany will decline further in the first half of the year, despite stickiness in services.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Suggests increase in GDP in Q4 will be revised down, but outlook is turning.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Services inflation pushed higher by healthcare, education and hospitality.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Swiss GDP likely fell in Q4 last year; it will recover this year as real disposable income growth rebounds.
- But base effects mean GDP growth will slow to 0.7% this year, from 1.2% last year.
- Inflation will stay low, the SNB will match ECB cuts to starve off CHF appreciation.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Ugly; recession in industry will continue this quarter.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Output still rose in Q4, unlike in Germany and France.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: A downward revision to Q4 GDP growth?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Germany’s economy is in a cyclical rut; it remains to be seen whether its problems are more structural.
- Nominal GDP in Germany has been soaring, but higher prices have compressed growth in real terms.
- Many politicians in Germany want to tighten fiscal policy, but will the economy allow it?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: EZ retail ends the year on a low note.
Melanie Debono (Senior Eurozone Economist)Eurozone