JP Morgan AM: Eurozone data points to weakening activity and sticky inflation

JP Morgan AM: Eurozone data points to weakening activity and sticky inflation

4 september 2023

Inflatie Eurozone
Inflatie (08)

Data releases from the eurozone in August pointed to a challenging combination of sticky inflation and weakening activity. 

On the latter, last month’s business surveys hinted at cracks forming in the growth outlook with a deceleration in the services activity that has supported the economy year-to-date. Yet while base effects should help further cool headline inflation over the coming months, more persistent core inflation threatens to limit the European Central Bank’s (ECB) ability to ease policy in response to a weakening economy.

Investors currently expect the ECB to cut rates in the first half of next year, but we see a risk that these hopes are disappointed absent a substantial slowdown in core price pressures. Quality focused strategies, which screen for demonstrated earnings’ resilience and strong balance sheets, should bolster portfolios facing this combination of slowing growth and ‘higher for longer’ rates.

04092023 JP Morgan AM

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