Report
The most likely scenario in the euro zone: Disinflation in industry, continued high inflation in services
The starting point is the trend in per capita labour productivity. In 2023, it fell by 1.1% in the economy as a whole and by 3.5% in manufacturing industry , and rose by 0.3% in services. Given this fall in productivity, unit labour costs in manufacturing industry increased by 9% year-on-year in 2023. However, because of international competition, industrial companies are unable to raise their selling prices in line with their rising costs, and industrial profit margins are falling, which means that consumer prices for industrial products are not rising very much. In services, foreign competition is weak, and service prices can rise more freely than industrial prices. As a result, prices of services are still rising rapidly, while prices of industrial products are rising slowly.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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