- EZ inflation fell further in February, probably to 2.5%; we think core inflation dipped by 0.3pp, to 3.0%.
- Consumers’ spending in the EZ got off to a slow start in Q1, but don’t write off the recovery just yet.
- The Swiss economy defied our expectations in Q4, boosted by strong growth in domestic demand.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Mixed, but consistent with a modest recovery in consumption growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Investment crashed at the end of 2023.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Core inflation remains on track for 2% by summer, but beware Easter effects in March and April.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Better, but rise in the PMI is at odds with the INSEE data.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ inflation will fall further in February; Easter effects will then add volatility over Spring.
- The euro area composite PMI is rebounding, but Germany’s index remains stuck in the mud.
- The February PMIs pour cold water on hopes of a Q1 rebound in EZ’s moribund manufacturing sector.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Boosted by a narrower primary income deficit; is the trend in portfolio outflows stalling?
Claus Vistesen (Chief Eurozone Economist)Eurozone
- 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
In one line: Weak GDP growth, still-solid trend in employment; industrial production boosted by Ireland.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Still consistent with a rising PMI.
Claus Vistesen (Chief 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
In one line: Services inflation pushed higher by healthcare, education and hospitality.
Claus Vistesen (Chief 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: Boosted by major orders in aircraft; core orders were weak.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- GDP in Spain grew by 2.5% last year, more than in any of the other major EZ economies.
- This year, quarter-to-quarter growth will remain solid, such that GDP rises by 2%.
- German industrial orders soared in December but they were skewed by major orders mainly in aircraft.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB’s policy rate is 100-to-150bp too tight; it will align with two-year yields by the end of the year.
- We see near-term downside risk to Bund yields but then look for bear-steepening in H2.
- Our forecasts for the bond markets assume a soft landing in the economy; what if we’re wrong?
Claus Vistesen (Chief Eurozone Economist)Eurozone