Germany leads pandemic recovery in Europe


JPMorgan says while the trade-off between virus-containment and near-term growth is present everywhere, the tension is diminished across much of Europe due to the success in reducing the outbreak and limiting its reemergence.

“In the Euro area, mobility indicators have been rising rapidly for nearly six weeks, and are now reflected in official activity data… Consumer spending is bouncing, with German retail sales jumping to well above the pre-COVID-19 level in May.”

The firm notes that other countries are lagging Germany because they reopened shops later in May, but it expects the Euro area to post a 16% M/M May retail sales gain next week and see other regions catch up to Germany later in the summer.

Absent concerns that the virus makes a comeback, the lingering risk called out by JP is that as wage subsidies fade, businesses will want to protect earnings and begin layoffs.

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