Euro Area

Research evidence excerpt

Euro Area

dly may also reflect business pur- end estimate reflects the signal from a model that incorpo-

chases, are up over 10%ar. That puts the burden on services rates retail sales confidence, which fell in 2Q. Taken together,

spending to print into line with the weaker signals from con- these bottom-up indicators suggest overall consumption was

sumer-related surveys. If it does not, consumer spending almost flat in the quarter. Upside risks could materialize if

could surprise on the upside and send a more positive behav- services spending holds up better than suggested by the sur-

ioural signal. All of this could fit with the hard data out of the veys.

UK and Scandis, which is not showing any real slowing in

2Q26. Figure 2: Euro area household consumption

% q/q saar, boxes are 2Q tracker

The signals from the hard activity data in 2Q and the PMI’s 10

recovery through June to a level consistent with GDP growth 8 Goods

at a 0.8% ar may point to a faster recovery also in the current 6 Services

quarter. This must still be tempered against the reminder that 4

energy supply risks from the Middle East have not disap- 2

peared. 0

-2

Still tracking soft albeit resilient consumers -4

96 01 06 11 16 21 26

With June new passenger car registrations now in for the Source: Eurostat, J.P. Morgan

region’s main economies, our bottom-up tracker points to flat

registrations at the Euro area level. If this holds, barring revi- Hence, despite encouraging goods-side momentum, we con-

sions to the historical data, the level of registrations would be tinue to look for a modest increase in spending of about

around 12%ar above 1Q, sustaining the gains seen over the 0.25%ar in 2Q, broadly in the mid-range of our nowcast

prior three months (Figure 1).