PwC Luxembourg Monthly Barometer

In collaboration with AGEFI Luxembourg

Economic Confidence Indicator

October 2017

A decline in morale of Luxembourg industrialists caused our barometer to lose 3 points, despite a slight increase in confidence among investors and analysts within the euro zone.
In Luxembourg, morale is mixed: up in financial activities and construction, down in industrial and non-financial services. Besides, the STATEC figures for the second quarter indicate some negative signs. Non-financial services revenues were down about 1% in the second quarter of 2017 compared with the first quarter. Concerning the labour market, the dynamism observed since 2013 seems to be slowly fading: the ratio between new job offers and declarers of unemployment is no longer rising. However, the upturn is confirmed in the financial sector. The net assets of collective investment schemes reached a record level of 3.96 billion euros. In addition, Standard and Poor's confirmed the good health of the Luxembourg economy; classifying it “AAA” with a "stable" perspective.
In the euro zone, confidence remains high: the ZEW economic sentiment index rose by 2.4 points to 31.7 points. In addition, the OECD has revised its forecasts by + 0.3%, therefore real GDP growth is now expected to reach 2.1% in 2017. Finally, the euro zone Purchasing Managers Index (PMI) still remains high, although the service index has slightly decreased. Notwithstanding a very slight depreciation at the end of September, the strength of the euro has unavoidable disinflationary effects. Core inflation is at 1.1% year-on-year in September, which is below its expectation (1.2%) and well below the ECB inflation target (2%). In this context of disinflationary growth, which is debated within the economic community, the ECB should be cautious about reducing quantitative easing in 2018.

PwC Luxembourg's Monthly Barometer was created in cooperation with AGEFI Luxembourg as a simple and practical tool designed to provide a monthly snapshot of the economic climate in Luxembourg.

The barometer combines the results of Statec's short-term indicator on industrial output in Luxembourg with data published by ZEW, a German research institute, on the economic perceptions of analysts and investors regarding the euro area.


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