Since the start of this year, the European Commission’s industry sentiment survey has seen a significant decline, yet companies continue to report that labour remains a key factor limiting production. This is probably due to order books that remain at record high levels in terms of duration of assured production. Through their impact on the growth of employment and wages, labour market bottlenecks should provide some resilience to consumer spending when the economy is turning down. This support will probably not last however. Hiring intentions of companies have started to decline, which should ease the bottlenecks through a slowdown of employment growth.
The latest activity data point to a widespread slowdown in the Chinese economy in October 2022. Industrial growth slowed to 5% year-on-year (y/y) from 6.3% in September, bringing an end to the acceleration seen during Q3 2022. The effects of tax incentives for purchasing cars have worn off, leading to a slowdown in car production. Most notably, the manufacturing sector adjusted its production (the electronics sector, in particular) in response to the rapid slowdown in exports.
Italy is facing an unprecedented and widespread surge in inflation and is unlikely to escape falling into recession this winter. Even though real GDP surprised on the upside in Q3 (+0.5% q/q according to initial estimates by the Italian National Institute of Statistics (Istat)), the barometer clearly indicates that the economic outlook is getting gloomier.
According to the preliminary estimate by the Office for National Statistics (ONS), quarterly growth in UK GDP fell by 0.2% (q/q) in Q3 (compared with +0.7% in Q1 and +0.2% in Q2). This contraction is mainly due to higher-than-expected destocking, particularly in the manufacturing and retail sectors.
After falling for a month, Covid-19 pandemic figures are again rising slightly in most regions of the world, but remain at a low level. The weekly proxy indicator for GDP is relatively stable or even on a slightly downward trend in the United States, France, Germany, Spain, Belgium and Japan.
