• Should get back to pre-pandemic levels of activity by year-end
• Reaffirms earlier French economic growth forecast
• French auto sector under-performing but other areas of the economy are doing well
• No reason why the ECB should raise rates between now and the end of next year

We’ve heard this all before, but amid the energy crisis, inflation worries and supply bottlenecks, there is considerable uncertainty as we head towards year-end and a new year. If nothing else, this could slow the recovery process.

Remarks by ECB policymaker, Olli Rehn

• Eurozone inflation is still mostly transitory
• Some components are more persistent, in part, than previously thought
• If elevated inflation lasts much longer, it is likely to have an effect on expectations

That’s a somewhat softer stance but it reaffirms that policymakers can only do so much to fight against what they know is inevitable and undeniably the truth of the situation. The worst part is that they don’t exactly have the tools to counteract the root of the problem. BOE governor Bailey’s remarks last month still outline it perfectly:

Monetary policy cannot solve supply side shocks. Monetary policy cannot produce computer chips, it cannot produce wind, it cannot produce truck drivers.

Eurozone August construction Report

• August construction output MoM -1.3%
• September output was +0.1%
• Construction output YoY -1.6% y/y
• Output Yo +3.3%; revised to +3.5%

Supply and capacity constraints appear to be weighing on construction output, but that is to be expected, considering the PMI data much earlier on. This is a lagging release, so it isn’t telling us anything new.