Author Archive

European PMI surveys: resilient despite worries about China’s economy

In August, Flash PMIs for the euro area came in above consensus expectations. The July-August average Composite PMI is now consistent with real GDP growth running at around 0.4% q-o-q in the euro area in Q3, in line with our scenario. One development of note was the increase posted by the Manufacturing ‘New Export Orders’ […]

Euro area: GDP expanded modestly in the second quarter

In Q2 2015, real GDP growth in the euro area was slightly below both consensus expectations and our forecast. Economic activity disappointing in Q2 According to Eurostat’s preliminary estimate, euro area real GDP grew by 0.3% q-o-q (1.3% q-o-q annualised; 1.2% y-o-y) in Q2, below consensus expectations (0.4%) and marked a gentle slowdown from the […]

Germany: mixed bag of hard data

After the weakness registered in Q1, demand for German products has seemingly been recovering on the back of better sentiment in some regions, particularly the US. As a result, the German outlook remains quite positive for the months ahead. Industrial production: much lower than expected In June, German industrial production (including construction) decreased by 1.4% […]

Germany: manufacturing orders recover in the second quarter

After the collapse registered in foreign orders in Q1, demand for German products has seemingly been recovering on the back of better global sentiment. Nevertheless, uncertainties surrounding Greece could dent order flows in the future if the crisis were to deepen. Industrial production depressed by construction and energy In May, German industrial production (including construction) […]

Euro area: recovery broadens despite the Greek crisis

Recent developments in business surveys have been sending out contradictory indications. On the one side, PMI surveys sounded a strong note in June whereas national surveys (INSEE, IFO, Zew) posted declines. Overall for Q2, surveys do not suggest any pick-up in economic activity and are in line with real GDP growth of around 0.4% q-o-q. […]

Industrial activity in the euro area: strong first quarter, but mixed data for March

National data for the four biggest economies suggest that euro area industrial production (excluding construction) fell in March (-0.2% m-o-m). However, on a quarterly basis, industrial activity in France, Italy and Spain accelerated strongly in Q1. In contrast, data (factory orders, industrial production and trade) for Germany suggest a slowdown, partly explained by weak global […]

Euro area: inflation and interest rates

A slightly stronger German inflation report and a weak 5-year Bund auction seem to have succeeded in radically reshaping the financial world: from one where a lack of sovereign bonds might have forced the ECB to taper its QE towards an environment where European governments could run into difficulties trying to allocate their bonds. Does […]

Euro area’s economic activity supported by QE, but impacted by the Greek crisis

M3 growth has finally normalised after six years of sub-par advances, while the dynamics in bank lending are continuing on their way to normalising. In addition, the April EC survey echoed recent business surveys (PMIs) suggesting that the Greek crisis might have started to dent confidence among industrialists and consumers. Credit back into positive territory […]

Euro area: manufacturing sector gained momentum in March

Overall, PMIs and national surveys (IFO, BnB survey) were in line with the recent uptrend in economic data, confirming that the euro area is experiencing a cyclical improvement, largely driven by lower oil prices, a weaker euro and an expansive monetary policy. Services led the upward move The euro area flash manufacturing PMI increased from […]

Euro area: on track to normalisation

Four drivers are currently supporting the euro area recovery: the crude oil price drop, euro depreciation, the end of austerity and, finally, expansionary monetary policy. Monetary aggregates have already started the normalisation process ahead of the launch of the ECB’s QE. It is essential that these forces last for a while to give the still […]

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