Chart of the week
Inflation, monetary tightening and the downturn in some economic indicators raise questions about the trajectory of economic activity in the coming months. Could a recession occur now, especially in Europe, where energy prices have risen the most?
If we take the case of Germany, we are indeed seeing a decline in manufacturing indices, but services activity continues to benefit from the lifting of health restrictions (May PMI indices*). Job creation showed no real sign of deceleration in April. In May, unemployment remained almost stable, but the number of job vacancies continued to rise.
OUR ANALYSIS
Looking at the details of the IFO index**, the decline in recent months is mainly due to the “expectations” component, while the assessment of the current situation remains stable. The growth in job vacancies confirms that companies have not yet revised their hiring and investment intentions downwards. This reflects a lack of change in attitudes despite the conflict in Ukraine and seems to rule out a sharp slowdown in the short term.
* PMI : Purchasing Managers Index. PMI are confidence indicators that summarize the results of surveys conducted among corporate purchasing managers.
** IFO: index reflecting the business climate in Germany, calculated monthly.
The opinion expressed above is dated June 3, 2022 and is subject to change.
See also: https://latribune.lazardfreresgestion.fr/en/u-s-inflation-moving-past-the-peak-does-not-mean-the-end-of-inflation/
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