PwC/AGEFI Monthly Barometer - September 2018

Unfortunately our barometer has lost another 5 points in September, anchoring it firmly in the negatives at -11. With the ZEW index also in the negative, this marks the first time since the Brexit vote in July 2016 that both our indices are negative at the same time.


Luxembourg manufacturers’ morale is down sharply this month, but statistics remain reassuring. The Central Bank predicts a growth of 3.9% for 2018 and 3.6% for 2019. At the same time, inflation is expected to increase to 1.4% in 2018 and 1.8% in 2019. In the first half of 2018, the Grand Duchy exported 7.3 billion euros worth of goods in the first half of this year, of which 6.2 billion was within the European Union. This is a 4% increase on last year. Adem released statistics indicating that the unemployment rate stabilised at 5.5% in July. Over one year, the number of resident job seekers has also dropped to 5.8%. This trend mainly benefitting younger workers, with unemployment among under-30s dropping by 11.4% and among low-skilled job seekers dropping by 7.7%.

Turning to the Eurozone, the ZEW index remains negative, but has risen from -18.7 to -11.1. Thanks to the automotive industries in Germany, Netherlands, and Spain, the Eurozone maintained a strong growth rate of 0.4% in the second quarter. This translates to an annual rate of 2.2%. Fuelled by wage increases, investments, and job creation, Germany saw an unexpected 0.5% growth in the second quarter. This is compared to Italy and France, which both only saw 0.2% growth rates. Regarding Italy, it seems that with tightening monetary policies and protectionist trade measures have begun to weigh on the outlook for external demand. This has led some investors and analysts becoming a bit more concerned about a possible exit from the Euro for Italy. We see this as being somewhat of an unlikely scenario however.

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