Eurozone Economic Watch. March 2018

Transcription

1 Eurozone Economic Watch March 20

2 Eurozone Economic Watch March 20 Eurozone: The moderation of confidence continues We expect GDP growth to remain steady early this year supported mostly by strong global trade and fixed investment. Our MICA-BBVA model estimates a cruise speed in GDP growth at around 0.6/0.7% QoQ in 1Q, but we continue to see signs of moderation over the year ahead. Hard data softened in January although both domestic and global fundamentals remain strong. Global growth continued to support trade figures, reflected in high dynamism in exports and imports. There is some moderation in private consumption, as shown by January retail sales figures, but narrowing labour market slack and still low inflation should continue to support consumer s mood. Although in high levels, sectoral sentiment indicators showed early signs of moderation at the start of the year, with cooling optimism in the region, mostly in manufacturing, possibly affected by noise of protectionist measures. Headline inflation eased again in February to 1.1%, driven mostly by lower food inflation. In this context, core inflation remained steady in the month at 1.2% YoY. We still forecast a gradual increase of core measures over the year. 2

3 4Q16 1Q17 2Q17 4Q16 1Q17 2Q17 4Q16 1Q17 2Q17 4Q16 1Q17 2Q17 Germany France Italy Spain Eurozone Economic Watch March 20 The growth pace in major countries remained at high levels in supported mostly by global trade Nonetheless, during late 2017 domestic demand cooled down in Germany, France and Italy. Spain continued to outperform the region GDP, Contribution by Components (%QoQ, pp) Germany France Italy Spain Diff. GDP level relative to 2008 Private consumption Public consumption Gross fixed capital formation Change in inventories Exports Imports Real GDP Eurozone GDP 3

4 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar- 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Eurozone Economic Watch March 20 A broadly stable growth outlook in 1Q Global trade and fixed investment spurred growth in Q4 Our MICA-BBVA model suggests a stable quarterly GDP growth of 0.6/0.7% QoQ in 1Q GDP, contribution by components (%QoQ, pp) 2.5 GDP and MICA forecasts (%QoQ) Imports Change in inventories Public consumption Real GDP Exports Gross fixed capital formation Private consumption CI 20% CI 40% CI 60% Observed 4

5 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb- Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar- Eurozone Economic Watch March 20 Optimism continues to moderate in 1Q Both ESI and especially PMI figures cooled down in early 20, suggesting a peak in growth figures Early signs of moderation in optimism was broad based across sectors PMI and GDP (level, %QoQ) EC confidence survey (level) PMIs level GDP (% QoQ) Real GDP (% QoQ) Manufacturing PMI PMI Services PMI ESI (lhs) Industrial (rhs) Consumer (rhs) Services (rhs) 5

6 Eurozone Economic Watch March 20 The retreat in confidence took place especially in France and Germany The mood moderation is coming from manufacturing and to a lesser extent in services The fall of confidence in recent months is from very high levels, but more recently has been probably affected by protectionist narratives PMI survey (level) Jan- Feb- Mar- Jan- Feb- Mar- 2Q17 1Q 2Q17 1Q 2Q17 1Q 2Q17 1Q Germany France Italy Spain Jan- Feb- Mar- Jan- Feb- Mar- Composite PMI Manufacturing PMI Services PMI 6

7 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan- Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb- Eurozone Economic Watch March 20 Industrial output dropped in January after sharp increase in previous months IP declined % MoM in January, mostly driven by Germany, but still showing a solid yearly growth of 3.4% Strong production of capital goods still points to favourable investment figures Industrial production (level, %QoQ) IP (level) IP capital equipment, investment in M&E and capacity utilization (%QoQ, %) Inv. M&E, IP capital (% QoQ) Capacity utilization (%) IP (%) QoQ) Investment M&E (% QoQ) Capacity Utilization (%) IP Capital (% QoQ) IP (2012=100) IP (% QoQ) 7

8 oct-13 ene-14 abr-14 jul-14 oct-14 ene-15 abr-15 jul-15 oct-15 ene-16 abr-16 jul-16 oct-16 ene-17 abr-17 jul-17 oct-17 ene- 1T14 2T14 3T14 4T14 1T15 2T15 3T15 4T15 1T16 2T16 3T16 4T16 1T17 2T17 3T17 4T17 Eurozone Economic Watch March 20 External trade continued to spur growth in early 20 The trade balance remained high in January, showing strong dynamism in both exports (1.7% QoQ) and imports (2.5% QoQ) The broad based global growth should continue to support trade during the year, despite a stronger euro Trade balance ( bn, %GDP) Exports by destination (%QoQ, pp) Exports, imports & trade balance ( bn) Trade balance (% GDP) Trade balance ( bn) Exports ( bn) Imports ( bn) Trade balance (%GDP) Otros países UE China LatAm Exportaciones totales EEUU Asia (excl China) Resto del mundo 8

9 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Aug-17 Nov-17 Feb- 4Q10 2Q11 4Q11 2Q12 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 Eurozone Economic Watch March 20 Retail sales cooled down slightly at the start of the year, although drivers for consumption remain strong Improved consumer mood added to sustained job creation should support private consumption. Some moderation should be expected as inflation recovers during the year Retail sales and consumer confidence (%QoQ, pts) Retail sales and total wage bill (%YoY, pp) Retail Sales (%QoQ) Consumer -20 Confidence Employees Real compensation Total wage bill Retail sales Retail Sales (%QoQ) Consumer Confidence 9

10 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan- Eurozone Economic Watch March 20 The labour market slack continued to narrow in January The jobless rate kept steady at 8.6% in January, which is 1% lower than a year ago The decline in unemployment is concentrated in the group of prime-aged men Unemployment rate by country (%) Annual unemployment change by gender & age (millions) Jan-17 Dec-17 Jan- Eurozone Germany France Italy Spain Women 25-74Y Men 25-74Y Men < 25Y Women < 25Y Total 10

11 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb- Feb-06 Feb-07 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17 Feb- Eurozone Economic Watch March 20 Headline inflation declined again in February while the core measure remained steady HICP Inflation declined to 1.1% YoY (-0.2pp) driven mostly by food Inflation and contribution of components (%YoY, pp) Core inflation remained stable at 1.2% YoY, and is expected to recover gradually during the year Core and trimmed-mean inflation (%YoY) Services Processed Food Non-energy industrial goods Energy Trimmed mean inflation Core inflation Unprocessed Food HICP (% y/y) 11

12 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q Eurozone Economic Watch March 20 Core inflation has increased in most countries in early 20 Headline and core inflation (%YoY) Germany France Italy Spain Portugal Austria Belgium Finland Netherlands Greece Ireland Headline Inflation (% YoY) Core Inflation (% YoY) Headline Inflation 2017 Core Inflation

13 Eurozone Economic Watch March 20