- The downturn in the EZ composite PMI was halted by the Olympics in France; only temporarily we think.
- The PMIs point to firming growth in services, while manufacturing is still stuck in recession.
- A big drop in Q2 wage growth seals the deal for a September cut, and helps our call for an October cut.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Activity springs back up again thanks to the Olympics.
Melanie Debono (Senior Eurozone Economist)Global
In one line: Activity springs back up again thanks to the Olympics.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Services boosted by the Olympics; manufacturing is sinking without a trace.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Construction output jumped in June but still fell over the second quarter as a whole…
- ...This is consistent with a drop in construction capex, which accounts for nearly half of investment in GDP.
- The outlook for the sector is bleak; it will remain a drag on growth for the rest of this year.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- EZ inflation data suggest market pricing for 70bp-worth of easing this year is much too ambitious.
- The ECB will cut by 25bp in September; we still see a second cut in October, but this is a very close call.
- Inflation in food, core goods and energy are all set to firm in Q4, and services inflation will fall only slightly.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: Energy inflation will back in August and September; the core will remain high.
Claus Vistesen (Chief Eurozone Economist)Eurozone
In one line: A record high, but not sustainable; net portfolio flows are shifting.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- Negotiated wage growth likely eased in Q2 even as compensation per employee probably held steady.
- Hourly labour cost data are the wild card; we doubt they will prevent an ECB cut in September...
- ...But early Q3 indicators, pointing to a rebound in wage growth, cast a shadow over a cut in October.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Imports will rise back soon, we think.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Resilient to weak German activity and much better than we anticipated.
Melanie Debono (Senior Eurozone Economist)Eurozone
- Energy inflation remains on track for a big fall in coming months, but it will rebound into year-end.
- EZ headline inflation will fall to within touching distance of 2% in August, but will snap back in Q4.
- Swiss GDP outpaced the Eurozone average in Q2, as industry fared better than we anticipated.
Melanie Debono (Senior Eurozone Economist)Eurozone
In one line: Q2 GDP increase confirmed, despite another drag from industry.
Claus Vistesen (Chief Eurozone Economist)Eurozone
- The 0.3% increase in Eurozone GDP in Q2 was confirmed, despite industry remaining in recession.
- The service sector again drove growth; we do not trust the reported fall in service production in May.
- Productivity is not sliding as fast as in recent quarters; the ECB will welcome this development.
Claus Vistesen (Chief Eurozone Economist)Eurozone
