May 10, 2018 - Although economic optimism steadied at 112.6, sentiment faltered in the retail trade, services, and const
Chartbook NBK Economic Research Department I 10 May 2018
Eurozone > Chaker El Mostafa Economist +965 2259 5356,
[email protected]
1Q18 GDP growth faltered but other data is mixed
> Daniel Kaye Head of Research +965 2259 3136,
[email protected]
Eurozone GDP growth softened to 1.7% q/q annualized, its slowest pace since 2Q16.
Unemployment was steady at 8.5% in March.
April’s headline and core inflation surprised on the downside, at 1.2% and 0.7%, respectively.
Both business sentiment and economic sentiment steadied in April.
March’s retail sales growth was the weakest since October, possibly impacted by bad weather.
Lending activity to businesses and households edged higher in March.
Weaker economic data helped tighten yields on German bunds.
Eurozone equities have outperformed their global peers so far in 2Q18, up 6%.
The euro edged lower in April, affected by weaker data and higher US bond yields.
Chart 1: Real GDP growth
Chart 2: Unemployment rate
(Quarterly, %)
(%)
3.5
3.5 q/q annualized
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
12
12
11
11
10
10
y/y
1Q18
9
9
8 Mar-15
8
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
EZ GDP softened to 1.7% q/q annualized, its slowest pace since 2Q16, on weaker output growth and temporary factors.
Unemployment was unchanged at 8.5% in March, having shown a steady decline since May 2013.
Source: Eurostat
Source: Eurostat
DP growth Chart 3: Wage growth
Chart 4: Consumer price inflation
(% y/y)
(% y/y)
2.5
2.5
3
3 Headline inflation
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
1Q15
3Q15
1Q16
3Q16
1Q17
3Q17
1Q18
Core Inflation
2
2
1
1
0
0
-1 Apr-15
-1
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Wages in 1Q18 grew at their fastest pace since 2Q16, perhaps reflecting some tightening in the labor market.
April’s headline and core inflation surprised on the downside, coming in at 1.2% and 0.7%, respectively.
Source: Eurostat
Source: Eurostat
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Chart 5: Bank lending
Chart 6: Retail sales
(% y/y)
(% y/y)
4
4
3
3
2
2
1
1
0
0
-1
-1
Loans to non-financial corporations
-2 Mar-15
Loans to households
Sep-15
Mar-16
Sep-16
Mar-17
-2
Sep-17
Mar-18
5
5
4
4
3
3
2
2
1
1
0 Mar-15
0
Sep-15
Mar-16
Sep-16
Mar-17
Sep-17
Mar-18
Lending activity to businesses and households edged higher in March despite weaker economic sentiment.
At 0.7% y/y in March, retail sales growth was the weakest since October, possibly impacted by bad weather.
Source: European Central Bank
Source: Thomson Reuters Datastream
Chart 7: PMI Composite
Chart 8: Economic sentiment
(index)
(index)
60
60
118
118
58
58
114
114
56
56
110
110
54
54
106
106
52
52
102
102
50 Apr-15
50
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
98 Apr-15
98
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
The eurozone’s PMI was unchanged at 55.2, but new orders growth eased on weaker expected demand.
Although economic optimism steadied at 112.6, sentiment faltered in the retail trade, services, and construction sectors.
Source: IHS Markit
Source: European Central Bank
Chart 9: Interest rates
Chart 10: German government bond yields
(%)
(%)
0.2
0.2
1.0
EIBOR 3M 0.1
0.0
-0.1
-0.1
-0.2
-0.2
-0.3
-0.3
-0.4
-0.4 -0.5
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
5 year
1.0
10 year
0.1
Overnight deposit rate
0.0
-0.5 Apr-15
2 year
Apr-18
0.5
0.5
0.0
0.0
-0.5
-0.5
-1.0 May-16
-1.0
Nov-16
May-17
Nov-17
May-18
The ECB’s policy rates remained steady with the focus on prospects for the bank’s asset purchases program.
Weaker economic data helped tighten yields on bunds, despite US 10-year yields breaching the 3% mark.
Source: Thomson Reuters Datastream
Source: Thomson Reuters DatastreamSource: QCB
NBK Economic Research, T: (965) 2259 5500, F: (965) 2224 6973, © 2018 NBK
Source: SAM
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Chart 11: Equities
Chart 12: Exchange rate
(Euro Stoxx 600)
(euro index)
420
420
400
400
380
380
360
360
340
340
320
320
300 May-16
300
Nov-16
May-17
Nov-17
May-18
Eurozone equities have outperformed their global peers so far in 2Q18, up 6%. Source: Thomson Reuters Datastream
NBK Economic Research, T: (965) 2259 5500, F: (965) 2224 6973, © 2018 NBK
112
112
110
110
108
108
106
106
104
104
102
102
100
100
98 96 May-16
98 96
Nov-16
May-17
Nov-17
May-18
The euro edged lower in April, affected by weaker data and higher US bond yields.
QCB Source: Saud
Source: Saudi Source: Ministry Thomson of Finance Reuters Datastream
www.nbk.com
NBK Economic Research, T: (965) 2259 5500, F: (965) 2224 6973, © 2018 NBK
www.nbk.com
