Daily Insight
Group Economics Macro & Financial Markets Research
31 March 2016
An Easter gift for the ECB Aline Schuiling Senior Economist Tel: +31 20 343 5606
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Early timing of Easter set to lift eurozone inflation …
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… but we expect it to drop back below zero in April
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Eurozone economic sentiment declined further in March
aline.schuiling@nl.abnamro.com
Eurozone inflation lifted by early Easter… Inflation in Germany rose to 0.3% yoy in March, up from 0.0% in February. The jump was stronger than expected, with the consensus forecast at 0.1%. The HICP measure rose to +0.1% yoy in March from -0.2% yoy in February. The detailed regional data clearly show that there was a considerable impact of the timing of Easter. The Easter holidays were in March this year, but in April in 2015. As a result, the yoy rise in the price of services such as package holidays and hotels and restaurants jumped sharply higher this year. We roughly estimate that the shift in the timing of Easter had an upward impact of around 0.3-0.5 percentage points on inflation. This suggests that excluding the impact of Easter inflation would have moved a touch lower in March. Indeed, the detailed nationwide data show that the drop in energy price inflation intensified in March, to -8.9% yoy from -8.5% in February, while some individual states also reported a decline in goods price inflation. … eurozone total to have moved back to zero or above temporarily The early estimates for inflation in Belgium and Spain also showed rises in March. This suggest that the eurozone total – to be published on Thursday at 11.00 CET – increased from -0.2% yoy in February to zero or slightly above zero. That said, the upward impact on yoy inflation of the timing of Easter will be followed by a downward impact in April that will be twice as big. Therefore, eurozone inflation is set to fall back to levels well below zero next month. There will then be a normalization in May, when the underlying trend will become clearer. We think headline inflation in the eurozone will be negative over the next few months before turning significantly positive in the second half of the year, as the drag from energy dissipates. However, it will likely remain at levels well below the ECB’s price stability goal for the foreseeable future, reflecting very weak core inflation. Eurozone economic sentiment drops further The European Commission’s economic sentiment indicator staged its third monthly decline in a row in March, falling to 103.0, down from 103.9 in February. At its current level sentiment is still somewhat above its long-term average value of 100 and consistent with moderate economic growth. Indeed, we expect eurozone GDP growth to have lost some momentum in
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Daily Insight – An Easter gift for the ECB - 31 March 2016
2016Q1, but to have remained in positive territory. This was basically the picture that was also painted by the composite PMI for March (even though that indicator rose) that was published earlier. The detailed sentiment data show that the weakness in the first three months of this year was broad-based, with sentiment in industry, services, construction and the retail sector, as well as consumer sentiment all moving lower.
GDP growth and Economic Sentiment % qoq
index
1.0
120 110
0.5
100 0.0 90 -0.5
80
-1.0
70 10
11
12
GDP (lhs)
13
14
15
16
Economic sentiment (rhs)
Source: Thomson Reuters Datastream, ABN AMRO Group Economics
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Daily Insight – Further ECB easing - 22 March 2016
Day
Date
Time
Country
Monday Monday Monday
28/03/2016 28/03/2016 28/03/2016
14:30:00 16:00:00
US US US
Tuesday Tuesday Tuesday Tuesday Tuesday
29/03/2016 29/03/2016 29/03/2016 29/03/2016 29/03/2016
01:30:00 10:00:00 11:30:00 15:00:00 16:00:00
Wednesday Wednesday Wednesday Wednesday Wednesday
30/03/2016 30/03/2016 30/03/2016 30/03/2016 30/03/2016
Thursday Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday Friday
Period
Latest outcome
Consensus
PCE deflator core - % mom PCE deflator core - % yoy Pending hom e sales - % mom
Feb Feb Feb
0.3 1.7 -2.5
0.2 1.8 1.5
JP EC US US US
Unemployment - % M3 growth - % yoy Fed Williams speaks in Singapore S&P/Case Shiller house price index Conference Board cons. confidence - index
Feb Feb
3.2 5.0
3.2 5.0
Jan Mar
0.8 92.2
0.7 93.5
01:50:00 06:30:00 11:00:00 14:00:00 14:15:00
JP NL EC DE US
Industrial production - % m om Producer confidence manufacturing - index Econom ic sentiment monitor - index CPI - % yoy ADP nat. employment report - thousands
Feb P Mar Mar Mar P Mar
3.7 3.1 103.8 0.0 213.8
-5.5 103.6 0.2 195.2
31/03/2016 31/03/2016 31/03/2016 31/03/2016 31/03/2016 31/03/2016
09:55:00 10:30:00 11:00:00 11:00:00 13:00:00
DE GB EC EC CZ US
Unemployment change - thousands GDP - % qoq Core inflation - % yoy CPI - % yoy Repo rate - % Fed's Dudley speeks on Financial Crises
Mar 4Q F Mar A Mar Mar 31
-10.0 0.5 0.8 -0.2 0.1
-5.4 0.5 0.9 0.0 0.1
01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016 01/04/2016
01:50:00 03:00:00 03:45:00 09:00:00
JP CN CN NE EC GB EC US US US US US US US RU
Tankan business conditions large enterprises PMI manufacturing - index (official) PMI manufacturing - index (HSBC) - flas h PMI PMI manufacturing - index PMI manufacturing - index Unemployment - % Change in employment private employment - thousands Change in employment total - thousands Unemployment - % Markit - Flash PMI Univ. of Michigan cons. confidence - index ISM manufacturing - index Fed Mester speaks in NY GDP - % yoy
1Q Mar Mar Mar Mar F Mar Feb Mar Mar Mar Mar F Mar F Mar
12 49.0 48.0 51.7 51.4 50.8 10.3 230 242 4.9 51.4 90.0 49.5
10 49.4 48.4
4Q
-4.1
10:30:00 11:00:00 14:30:00 14:30:00 14:30:00 15:45:00 16:00:00 16:00:00
Key Economic Indicators and Events
ABN AMRO
0.7 92
2.9 103.5 0.0 190
0.7 -0.4
51.8 51.4 51.2 10.3 196 203 4.9
10.3 190 200 4.9
90.7 50.6
90 51.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
Find out more about Group Economics at: https://insights.abnamro.nl/en/
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