PwC/AGEFI Monthly Barometer - December 2017

Despite an increase in confidence in the Eurozone, poor morale among Luxembourg manufacturers has once again led to our barometer falling. This time by three points to settle at +12. This marks the fifth consecutive month that our barometer has dropped.

Locally, we are seeing mixed results. On the one hand, we have a drop in confidence among manufacturers and in the service sector, which hit its lowest level since May 2016. On the other hand, confidence in the construction sector and among consumers seems to be soaring. The labour market in the country has also remained relatively dynamic, with the unemployment rate dropping from 5.9% in September to 5.8% in October. The financial sector is, as per usual, thriving. Third quarter numbers were particularly positive. The amount invested in undertakings for collective investments rose to EUR 4.135tn and premiums received in the life- and non-life insurance sectors increased by 12.4% year-on-year. Finally, the Grand Duchy’s reputation as an attractive location has been bolstered by the 10 insurance groups who decided to set up a European headquarters in the country following Brexit.

In the Eurozone, the ZEW Economic Index is up 4.2 points over the last month, reflecting stable economic fundamentals in most sectors. The Eurozone PMI continued its upwards trajectory, reaching 60.1 points, its highest level in 17 years. Similarly, the composite PMI stood at 57.5 points, its highest level since April 2011. According to the European Commission, GDP grew by 0.6% in the third quarter of 2017, while unemployment fell once again, reaching 8.8% in November. Growth is expected to continue and hit a steady rate of 2.1% in 2018, however uncertainties remain with regards to Brexit and the German coalition government.

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