In August and September, the economic indicators of the main OECD economies point to a downturn. Business climate surveys in the UK and the euro zone - and especially in Germany and France - point to an already marked weakening of the economy. In the United States, this is expected, particularly by households. We predict this will happen from Q4 onwards. Japan is the exception, with the Services PMI remaining high.
At the same time, disinflation stalled in August. The upturn in oil prices has driven up the contribution from energy, a phenomenon also accompanied, in France, by an increase in the regulated electricity tariffs. Also at the same time, core inflation continued to fall, whilst remaining high, with disinflation on services’ prices remaining marginal. Nevertheless, inflation should start to drop again more significantly in the coming months (assuming that the rise in oil prices is not much sharper) given the disinflationary pressures elsewhere. Against this backdrop, the cycle of rate hikes is coming to an end: this could already be the case for the ECB or the Fed, and imminently for the BoE, but with a greater degree of uncertainty.
The labour market seems less under pressure, with job creation rates moderating to varying degrees: still limited in the United States, more pronounced in Germany and France. While this slower employment momentum reflects the slowdown in growth, the labour market remains tense with unemployment rates staying at historically low levels. Wage increases remain sustained and, with falling inflation, are about to overtake price increases.
Stéphane Colliac
