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Intesa Sanpaolo : The rise of inflation depends on transitory factors

Intesa Sanpaolo : Euro area – For the time being, the rise of inflation depends entirely on transitory factors, with the upsurge in oil prices playing a crucial role.

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Weekly Economic Monitor – 01. April  2021

Intesa Sanpaolo – Research Department


The dynamic could remain rather stable in the next few months, accelerate sharply between the third and fourth quarter, and subsequently plunge back down. The recovery will become more solid thanks to post-pandemic reopenings.

Italy – The Italian labor market is close to a crossroads: expiration of the freeze on layoffs (expected from July) could result in the loss of between 170k and 460k jobs. The effect could be amplified in case of a reduction of the scope of the CIG redundancy scheme, and of a “normalisation” of the activity rate.

The week’s market movers

In the euro area, February’s industrial output data in Germany and France should show a moderate expansion, in line with positive indications from recent surveys in the manufacturing sector. The final estimate of the services PMI for March is expected to confirm that the services sector remains in recessionary territory (for the tenth month in the last twelve). Finally, unemployment is expected to rise in February both in the eurozone average and in Italy (where Istat will release a revision of the series to take into account new European rules).

This week, only a few noteworthy data releases are lined up in the United States . Focus will be on the minutes of the March FOMC meeting, that could shed some light on the differences of opinion within the Committee on the timing of the reversal on rates, and on the assessment of the progress that needs to be made to start discussing the future tapering of asset purchases. March data will include the services ISM, expected to improve in line with other non-manufacturing surveys, and the PPI, that should keep up an acceleration trend. In February, the trade deficit is expected to widen further.


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