- We're lowering our Q3 growth forecast for Germany; we now think the economy fell into recession…
- …But beware, Nowcast models in Germany are less reliable than usual; Q3 GDP is a true wild card.
- France won't cut public spending by €40B next year, but a deficit of 5% of GDP is doable, and then some.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: The boost to GDP from rising net exports is reversing, we think.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- German manufacturing came roaring back in August, but output fell again in September.
- We estimate industrial production in Germany fell by 1.4% q/q in Q3, a touch worse than in Q2.
- Look past the fall in spending on non-durables for a more optimistic story on the EZ consumer.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Comments from BdF Governor François Villeroy de Galhau all but guarantee a 25bp rate cut this month.
- EZ rate expectations and bond yields are too low relative to the medium-term outlook for inflation.
- We’ve lowered our bond yield forecasts, but still see bear-steepening of the yield curve next year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Depressed by large orders; upside risks for industrial production in August.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Eurozone house price growth rebounded strongly in Q2, and we think further increases are likely.
- We see signs that housing demand is picking up healthily amid falling interest rates.
- We now think house prices will rise by 1.5% in 2024 after they slid by 1.2% in 2023.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: An October cut is now fully priced, and for good reason.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- French and Spanish inflation data lend support to ECB doves pushing for an October cut...
- ...But beware of whiplash in market pricing, if the German and Italian data don’t play ball.
- French consumer spending isn’t going anywhere in Q2; German jobless claims are still rising.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Decent, but where is the spending growth?
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Likely boosted by rapidly falling inflation.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- French households celebrate falling inflation, but confidence-sapping tax hikes loom on the horizon.
- France’s deficit will hit 6% of GDP soon without corrective action; markets won’t let that slide.
- Spending cuts alone won’t reduce the deficit in France, tax hikes will be needed too.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The EZ PMIs plunged in September, as the boost from the Summer Olympics ended.
- Our EZ Nowcast for Q3 GDP looks ugly, but we think it is misleadingly pessimistic at this point.
- The ECB will consider an October rate cut if non-energy goods inflation stays subdued in September.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- INSEE survey data show further signs of stabilisation in September but remain soft overall.
- The Summer Olympics boosted Q3 GDP growth in France, but a payback looms in Q4.
- We look for a big fall in the EZ PMIs today as the Olympics boost to French services reaches an end.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Better, but still consistent with weak growth in domestic demand.
Claus Vistesen (Chief Eurozone Economist)Eurozone
