GDP figures for Q3 and recent economic data confirm the existing hierarchy among the major developed economies in terms of growth.
The United States and Spain are out in front, with strong growth in Q3 and a favourable outlook for Q4 (albeit with a slight slowdown from 0.7% to 0.5% q/q for the United States). Conversely, Germany and Italy are at the back of the pack, with growth virtually stagnating in Germany (+0.1% q/q) and stalling in Italy (zero growth). In terms of absolute size, these are the two main manufacturing sectors in the euro zone (ahead of France), and both these countries are understandably being hit harder by the difficulties in the manufacturing sector, which are also fairly widespread.
Business climate indicators deteriorated in November, particularly in France and Germany - with the euro zone in their wake - as well as in the UK. In several countries (Germany, UK), manufacturing output is even close to the lowest level recorded post-Covid. In Japan, business climate indicators are consistent with a more stable economy.
The signals sent out by the labour market are mixed, with a clear slowdown in job creation (or even job losses, as in Germany and France) on the one hand, and, on the other, wage dynamics that remain favourable and are even increasing in Germany and, to a lesser extent, in Italy. As a result of these contradictory signals, household confidence is not benefiting fully from the associated gains in purchasing power.
Persistent differences in growth on both sides of the Atlantic could mean a period of divergence in monetary policy ahead. While the ECB is expected to continue its rate cuts, the Fed has signalled through its Chairman, Jerome Powell, that there is no urgency to continue easing monetary policy. At this stage, we are still expecting further easing in December, but a status quo seems equally likely. The Bank of England is likely to opt for the status quo at its next meeting in December, while the Bank of Japan is likely to hike rates again.
Article completed on 27 November 2024
