Economic surveys in September are sending out mixed signals. Consumer confidence is falling in most countries, which in some cases (France, Spain) underlines a slight rise in inflation. This loss of confidence is also accompanied, in general, by a decline in purchasing intentions for durable goods, which can be linked to high interest rates and an expectation of a moderate downturn on the labour market. Lower consumer demand is affecting companies' order books, with an impact that varies according to sector. In industry, economic surveys are more affected, while in services, activity remains dynamic in the US and Japan, while being more modest in Europe.
Regarding inflation, developments remain ambivalent. Inflation in the eurozone fell sharply in September (-0.9 points to 4.3% y/y), driven down by German inflation (-2.1 points to 4.3%), while momentum was less favourable elsewhere. Inflation in the UK and US remained unchanged (6.7% and 3.7%, respectively). In addition, in the US, the rise in gasoline prices promptly led to a sharp upturn in consumer expectations for inflation in October, for the year-ahead and for 5 years (according to the University of Michigan survey). This change is a reminder of the upside risks still surrounding the disinflation trajectory, which itself underpins our expectation that the Federal Reserve, the European Central Bank and the Bank of England will stop raising their key rates (so, further hikes cannot be completely ruled out).
The labour market is gradually easing, but not to the same extent in each region. In the US, job creation remained significant in September. This was more measured in the eurozone in Q2, an indication of less tensions than in the past, although said tension remains significant. This suggests that wages growth should remain steady in the coming months, which, with more moderate inflation, would allow a rebound in consumer purchasing power. In the UK, however, the available employment indicators show that the number of employees fell in September for the second month in a row. In Japan by contrast, the labour market is marked by a historic labour shortage.
In terms of growth prospects, the US is continuing to stand out in Q3, with clearly positive growth forecast (0.9% q/q), while growth should be very modest in the UK and Japan (0.1% q/q), and zero at aggregated eurozone level.
