Tag Archives: 2) Swiss and European Macro

We do not like Purchasing Power or Real Effective Exchange Rate (REER) as measurement for currencies. For us, the trade balance decides if a currency is overvalued. Only the trade balance can express productivity gains, while the REER assumes constant productivity in comparison to trade partners. Who has read Michael Pettis, knows that a rising trade surplus may also be caused by a higher savings rate while the trade...

But there is room for further improvement. This week euro area employment data confirmed that labour market recovery remains on track. Employment grew at 0.4% q-o-q in Q2 2018, marking the 20th consecutive quarter of expansion. Employment is now 2.4% above its pre-crisis (2008) level. Since Q2 2013, 9.2 million jobs have been created in the euro area. One development of note is that employment growth has been broad,...

The main risk facing ECB watchers is that the next few meetings of the Governing Council will be increasingly boring and predictable. However, from the central bankers’ perspective, this may considered a sign of success, “like a referee whose success is judged by how little his or her decisions intrude into the game itself”, to quote former BoE Governor Mervyn King. Back to the economy, downside risks stemming from...

The Producer Price Index (PPI) or officially named “Producer and Import Price Index” describes the changes in prices for producers and importers. For us it is interesting because it is used in the formula for the Real Effective Exchange Rate. When producers and importers profit on lower price changes when compared to other countries, then the Swiss Franc reduces its overvaluation. The Swiss PPI values of -6% in 2015...

The latest headline Swiss GDP figures were impressive. According to the State Secretariat for Economic Affairs’ (SECO) quarterly estimates, Swiss real GDP grew by 0.7% q-o-q in Q2 (2.9% q-o-q annualised, 3.4% y-o-y), slightly above our 0.6% projection and consensus (0.5% q-o-q). This was the fifth consecutive quarter with an above average rate. Q1 GDP growth was significantly revised up to 1.0% q-o-q (from 0.6%). Thus,...

Unemployment Rate (not seasonally adjusted) Registered unemployment in August 2018 – According to SECO surveys, at the end of August 2018, 107,893 unemployed people were enrolled in the Regional Employment Centers (RAV), 1,841 more than in the previous month. The unemployment rate remained at 2.4% in the month under review. Compared to the same month of the previous year, unemployment fell by 27,685 people (-20.4%)....

The Swiss economy once again recorded dynamic growth in the 2nd quarter of 2018. GDP (+0.7%) expanded at an above-average rate for the fifth quarter in a row. This expansion was largely supported by manufacturing, which has been experiencing a remarkable upturn since spring of 2017. Exports of goods increased accordingly. Switzerland’s GDP grew by 0.7% in the 2nd quarter of 2018, after 1.0% (revised) in the previous...

Neuchâtel, 4 September 2018 (FSO) – The consumer price index (CPI) remained stable in August 2018 compared with the previous month, remaining at 101.8 points (December 2015 = 100). Inflation was 1.2% compared with the same month of the previous year. These are the results from the Federal Statistical Office (FSO). The stability of the index compared with the previous month is the result of opposing trends that...

Neuchâtel, 3 September 2018 (FSO) – Turnover in the retail sector rose by 0.3% in nominal terms in July 2018 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.9% compared with the previous month. These are provisional findings from the Federal Statistical Office (FSO). Real turnover in the retail sector also adjusted for sales days and holidays fell by 0.3% in July 2018 compared with the...

Tensions between Rome and Brussels could lead to significant market volatility before an agreement is found. September will be a key month for gauging the Italian government’s budgetary plans for 2019. The government has communicated neither a precise timeline for implementing the measures announced in its ‘contract for government’ nor a precise cost analysis for these measures. In this contract, the governing...