Eurozone | Firms’ margins won’t furnish long-lasting lift to inflation
Profitability has staged an impressive recovery, but the rise in Q1 operating margins to a 12-year high materially overstates corporate health. Excluding direct transfers to firms, operating margins remain below their weak 2019 average.
What you will learn:
- Gradual withdrawal of fiscal support is bound to offset part of the profitability boost from the expected added recovery in demand near term.
- Labour costs should remain well under control, though. Widely used furlough schemes have cut firms’ wage bills. But underlying pay growth also slowed to new lows during the pandemic.
- Soaring commodity prices and global supply shortages have boosted non-wage costs, especially for durable-goods producers. But we continue to think that once bottlenecks ease, input prices will soften quickly.
Inflation – not past the peak and easing will be gradual for France
France has dodged soaring price pressures better than its eurozone peers, but we think its inflation will fall more slowly.Find Out More
Answering the questions in our US forecasters’ inbox
In this new quarterly Research Briefing series, we answer the top five questions we've recently received from clients.Find Out More