In one line: Soft, but manufacturing likely will only be a small drag on Q1 GDP growth.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The ECB will open the door to a June rate cut this week, while emphasising the risk of sticky inflation.
- Staff projections will show a downgrade to the ECB’s headline inflation forecasts for 2024 and 2025.
- Utility margins in the Eurozone are soaring; this will soon become a hot potato for policymakers.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Is the door now shut on an April cut? Probably.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Hopes for a spring ECB rate cut have been dashed; we now see the first of four 2024 rate cuts in June.
- Services inflation in the Eurozone is still running hot; it likely won’t drop much below 3% this year.
- Absent a negative shock, underlying inflation in the EZ will struggle to return to 2% on a sustained basis.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Pegged back by a plunge in food inflation; the core HICP likely fell.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Inflation fell further, but less than we anticipated; January spending was resilient to plunge in auto sales.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- 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
THE ECB IS DONE HIKING; EASING WILL BEGIN SOON
- ...WE STILL SEE A FIRST RATE CUT IN APRIL
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Investment crashed at the end of 2023.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- A crash in investment weighed down the German economy in Q4; capex is set for a big fall in 2024.
- Consumers’ spending is now rebounding in Germany, in line with firming growth in real income.
- We now see zero growth in Germany this year, down from +0.3% previously; risks are to the downside.
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
- 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
