Archive

August 06, 2025
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EA: Resilient Retail Rebound

  • Consumers need to drive activity growth as tariffs and Euro strength harm export competitiveness. Reassuringly, retail sales returned to their trend after a trimmed fall.
  • Growth was broad across countries and categories, taking the annual pace 0.5pp above consensus expectations. Non-food retail is critical and the strongest of them all.
  • Surveys are gloomier, especially about the future, but rarely right. Resilient real wage and employment growth can sustain brisk retail trends, preserving economic expansion.

By Philip Rush

August 05, 2025
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Payrolls Challenge Resilient Narrative

  • Revisions drove payrolls into a stagnation that runs contrary to our narrative of rolling resilience, but some contributors are spurious and don’t break the broader strength.
  • Seasonal adjustment caused 76k of the 258k revision. State and local education workers represented 108k, and are lower since April, despite the DOE closure shifting jobs here.
  • Payrolls still grow by 1% y-o-y, like household employment, with JOLTs data fine and the unemployment rate stable. The Fed should resist cutting without follow-through.

By Philip Rush

August 01, 2025
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EA: Sticky Summer Inflation

  • The ECB’s victory party can continue for another month, as inflation proved surprisingly sticky at the target. But the hangover is disappointing, amid broad-based upside news.
  • Two-thirds of national outcomes exceeded our expectations, with a slight skew higher, and pressures concentrated in services. Seasonal travel parts would be payback-prone.
  • Another upside surprise to the ECB’s forecast makes the profile likely to shift higher in September. The news is the opposite of what is needed for another rate cut.

By Philip Rush

July 31, 2025
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ECB Job Tightened By Jobs

  • The EA labour market proved tighter than the ECB expected in Q2 as the unemployment rate held at a downwardly revised 6.2%. That is hawkish news to its neutral stance.
  • Most countries still face falling unemployment, suggesting monetary conditions were slightly loose, and avoiding pressure to lower underlying inflation further.
  • A hawkish domestic surprise should keep the ECB on hold, especially with the US trade policy risk fading. Passthrough of past cuts may mean the ECB needs to hike later.

By Philip Rush

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