Recent data suggest that the so far firm economic expansion has carried over into Q4 2017. Industrial production continued to increase in November (+0.6% m/m) and manufacturers’ output projections for December point to another healthy gain that would seal a clear acceleration in industrial output growth in Q4. Manufacturing activity continues to be supported by strong global demand. Real goods exports advanced by +5.1% m/m in November after an already strong +2.6% increase in October. As a result, the October-November average of the real goods exports index was +2.4% above the Q3 average. Moreover, consumption appears to have regained some momentum after weakness in Q3. The solid growth backdrop is obviously helping a firming in core inflation which was up +0.3% y/y in November, compared to 0% around midyear. It remains to be seen, whether wage negotiations in spring will reinforce the slow recovery now that the government has proposed a new tax credit for companies that raise hourly wages.
