February activity surveys point to robust, but slowing, activity

Macroeconomic indicators continue to improve, and latest business surveys – while pulling back from January’s high levels – signal robust economic activity.

Taking the latest PMIs – which decreased slightly in February – levels point to a strong GDP growth rate this quarter (+0.8% QoQ). We are not as optimistic, and believe that ‘hard’ economic data, while improving, are likely to be more moderate.

As to the labour market, though the unemployment rate remained stable in the beginning of the year, PMI survey results signal further job creation, with staffing increasing to one of the greatest levels over the past seven years.
This bodes well for further decreases in the unemployment rate, which remains, however, high.

As to monetary policy, we do not anticipate major changes from the ECB this week. The latest PMI sub-indices on inflation show varied inflationary pressures across the Eurozone. While Germany experiences a strong upward trend, French and Italian companies have much more difficulties in rising their prices.

Gero Jung – Chief Economist – Mirabaud AM