Erste Bank Research Team
Erste Bank
EZ: Data confirm fast recovery in 3Q
After a slight fall in July, the volume of retail trade increased by 4.4% in the Eurozone in August. Germany in particular stands out among large countries with above-average growth. This is partly due to the temporary reduction of the sales tax in Germany until the end of the year, which has created corresponding incentives for consumers. In contrast, retail trade in Italy and Spain developed rather modestly. Next week (October 14), data on industrial production in August will come into focus. Based on data already released this week from Germany, France and Spain, industrial production is expected to grow at a much slower pace in August, following a strong sequential increase in July (+4.1% compared to June). In Germany, a fall in car production has dampened the recovery momentum. While production in the automobile sector was only 7% below the previous year's level in July, there was a significant drop in August, with production falling 35% below the previous year's level.
Despite the monthly variations, the average level of volume of sales in the retail trade (+13%) and industrial production (+20%) in the large Eurozone countries in 3Q so far is significantly higher than in 2Q. On the basis of this data, Eurozone GDP is expected to grow strongly in 3Q – our forecast is +9%. We expect the momentum of the recovery in industrial production to improve again in September. On the one hand, because new orders in German industry rose significantly in August, by 4.5% compared to the previous month, and are now only 2.2% below the previous year's level. On the other hand, industrial sentiment on the global level continued to improve in September, pointing to further growth in industrial production in the months ahead. Moreover, the momentum of German car production has already improved significantly in September (only -11% y/y), which should give an additional boost to German industrial production in September.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
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