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Last pieces of GDP-evidence confirm a favorable year 2017 (Martin Ertl)

19 Feb

Martin Ertl

Euro Area sustains the pace of its economic expansion: 0.6 % (q/q) GDP growth in Q4 2017.In 2017 the Austrian economy expanded by 3.1 % (y/y) surpassing Euro Area economic growth by 0.6 %-points.The Euro Area’s economic expansion continues to follow a supportive trend. Last week’s Eurostat flash estimate of Gross Domestic Product (GDP) for Q4 2017 has confirmed the preliminary estimate of 0.6 % seasonally adjusted quarter-on-quarter (swda, q/q) growth. Compared to the fourth quarter of 2016, the Euro Area’s economy expanded by 2.7 % (swda, y/y) which translates into an annual growth rate of 2.5 % (swda, y/y) for the whole year of 2017.Among the bigger Euro Area economies, the growth momentum during the fourth quarter of 2017 was broadly in line with the Euro Area average. The economic exp...     » Weiterlesen


USA: The impatience of stock markets (Martin Ertl)

12 Feb

Martin Ertl

We examine the link between wage growth and inflation.Prices are rigid and adjust slowly. A one %-age point rise in wages leads to 0.6 %-age points increase in prices of goods and services. It takes around one year for prices to fully adjust. Stock and bond markets plummeted following the release of the January US employment report on Friday 2nd February. Some commentators argued that this is not pure coincidence but investors’ fear of higher wages, higher inflation and higher treasury bond yields. The most important figures of the monthly report from the Bureau of Labor Statistics (BLS) are the non-farm payrolls job growth (NFP), the unemployment rate (UR) and the average hourly earnings (AHE). The prints in NFP (200.000 new jobs), the unemployment rate (4.1 %) were unexciting, while the AHE jumped ...     » Weiterlesen


Business cycles in the US, Euro Area and Austria (Martin Ertl)

05 Feb

Martin Ertl

USA:Solid domestic demand by year-endNo changes at Chair Yellen’s last FOMC In the final quarter of 2017, the US real GDP rose by 2.6 % (q/q, annualized rate) after 3.2 % in Q3 (Figure 1), according to the first release of the Bureau of Economic Analysis (BEA). While the headline GDP remained below expectations (Bloomberg consensus estimate: 3.0 %, Atlanta Fed GDPNow: 3.4 %, NY Fed GDP nowcast: 3.9 %), the details revealed a solid state of the domestic US economy. Personal consumption expenditure and fixed investments increased by 3.8 % and 7.9 %. The investments breakdown shows that investment in equipment and structures rose by 11.4 % and 1.4 % and residential investment increased by 11.6 % drawing a positive picture of the cyclical components of GDP. On the other side, firms had to run down invent...     » Weiterlesen


Phillips curves in CEE: Dead or alive? (Martin Ertl)

29 Jän

Martin Ertl

CEE Phillips Curves: dead or alive?Output gaps indicate very clearly that the business cycle has accelerated.Beveridge curves indicate tight labor markets in the Czech Republic (CZ) and Hungary (HU).Unit Labor Cost growth present clear evidence of wage pressure in Romania (RO), Hungary (HU) and the Czech Republic (CZ) but not in Poland (PL) or the Euro Area (EA). This is accompanied by average core inflation being more than double as high in CZ, HU and RO compared to the average rate in PL and EA.Estimating CEE Phillips Curves show that the output gap effect is well and active. Though, time-varying estimates indicate a recent weakening.2018 is projected to be a favorable year for the economies of the CEE region. The business cycle has already accelerated in 2017 with the fastest growth being reported in Ro...     » Weiterlesen


The threat of extended US sanctions on Russia (Martin Ertl)

22 Jän

Martin Ertl

CEE: Russia Threat of further US sanctions downplayed by market participantsWhile the recovery has been weak, several factors support macroeconomic stability.In August 2017, US President Trump signed the “Countering America’s Adversaries Through Sanctions Act” that instructed the US Treasury department to prepare reports for submission to congress. With respect to sanctions against the Russian Federation, the treasury was asked to report on potential effects of expanding sanctions to include sovereign debt. Furthermore, the report is on sanctions against “parastatal entities” and “senior political figures and oligarchs”. The report from the Treasury department is expected by February to be published and submitted to congressional committees. Based on the report, th...     » Weiterlesen

Martin Ertl

Chief Economist, UNIQA Capital Markets GmbH

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