- Strong data keep rolling in – in Europe, confirming our view that the EMU economy is already recovering, with Germany acting as the locomotive, France following suit and periphery steadily re-coupling. Better-than-expected Italian (as well as Spanish) GDP figures and very strong industrial reports in Germany this week illustrate this.
- Our long-held German spring GDP call (+0.6% qoq) now looks even more buttressed. And as there are also upside risks to our French forecast (unchanged), it is highly likely that the eurozone economy returned to growth already this spring – thus ending the six-quarter-long recession. All three 2Q13 GDP reports will be released next Wednesday. With improved momentum carrying over into the summer, the EMU recovery should gain some traction further down the road – supported by the fiscal drag fading further and low inflation fuelling consumer spending.
- Continuing strong UK data were overshadowed this week by yesterday's Forward Guidance statement of the Bank of England. Basically, it is following in the footsteps of the Fed, but with the 7% unemployment threshold conditional on three so-called knockouts. Overall, we think that the BoE delivered a dovish signal to the public. We expect the "Old Lady" to remain on hold at least until 2015.
- Recent remarks by regional Fed chiefs Evans and Lockhart together with the improvements in most economic indicators (including this week's trade numbers) underpin our long-held view that the Fed will announce to slow asset purchases in September – despite last Friday's weaker labor market report.
- Editor's note. This is the last edition before our summer recess. We will return on 5 September. In the meantime, we will keep you updated via our Economic Flashes.
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