EME Macro/Strategy: History lessons on the business cycle

The new batch of sentiment indices for June contained a few signals of improvements relative to May, but not enough for us to flag a potential turnaround in the downward growth trend that has started this year for most of the EU. The countries that appear not to have reached the peak of the business cycle yet are Hungary and Greece. In Poland and the Czech Republic, the sentiment indices have peaked, but the breakdown shows continuing sizeable dynamism. The Romanian sentiment indices continue to signal a deceleration, but with some improvements in manufacturing and construction. In Turkey, the June data confirm a slowdown, but not as much weakness in the consumer space as we would have expected. In the Eurozone, the sentiment results were weak across the board and the drop in ESI has now reached levels close to September 2017. The country breakdown suggests that the softening is coming from Germany, while the periphery is actually showing signs of improvements.