Thomas Dvorak
@tomdvorak.bsky.social
Eurozone economist @OxfordEconomics
Economics alum @UniversityofGlasgow @UCL
Views & typos mine (who else's?)
Economics alum @UniversityofGlasgow @UCL
Views & typos mine (who else's?)
Find out more in our latest report: oxfordeconomics.com/resource/tar...
Please reach out if you're interested in the use of alternative data in macro forecasting and analysis!
11/11
Please reach out if you're interested in the use of alternative data in macro forecasting and analysis!
11/11
Tariff effects are starting to show
The scale of the US tariffs announced on April 2 suggests the economic impact on the Eurozone will be swift. Indeed, a range of high-frequency alternative data plus more timely surveys are already ind...
oxfordeconomics.com
May 27, 2025 at 10:57 AM
Find out more in our latest report: oxfordeconomics.com/resource/tar...
Please reach out if you're interested in the use of alternative data in macro forecasting and analysis!
11/11
Please reach out if you're interested in the use of alternative data in macro forecasting and analysis!
11/11
But it's not all doom and gloom: despite the heightened levels of uncertainty, double digit tariff rates being sounded off on the daily and recession fears, both consumer and business confidence seem to be holding up relatively well, as evidenced by our NLP-based proprietary sentiment data!
10/11
10/11
May 27, 2025 at 10:57 AM
But it's not all doom and gloom: despite the heightened levels of uncertainty, double digit tariff rates being sounded off on the daily and recession fears, both consumer and business confidence seem to be holding up relatively well, as evidenced by our NLP-based proprietary sentiment data!
10/11
10/11
Labour market is key. Our baseline is for hiring to grind to a halt, but for firms in aggregate to hold on to workers. But a larger deterioration in the job market would dent consumer spending even more and put the Eurozone economy uncomfortably close to a recession.
9/11
9/11
May 27, 2025 at 10:57 AM
Labour market is key. Our baseline is for hiring to grind to a halt, but for firms in aggregate to hold on to workers. But a larger deterioration in the job market would dent consumer spending even more and put the Eurozone economy uncomfortably close to a recession.
9/11
9/11
Data from online searches shows consumer spending, the key driver of growth in the eurozone over the past 18 months, is slowing down. While we tend to think of uncertainty as mainly affecting firms' investment decisions, consumers don't like it either.
8/11
8/11
May 27, 2025 at 10:57 AM
Data from online searches shows consumer spending, the key driver of growth in the eurozone over the past 18 months, is slowing down. While we tend to think of uncertainty as mainly affecting firms' investment decisions, consumers don't like it either.
8/11
8/11
Online job postings have dipped sharply around "Liberation Day", but have bounced back since, although they remain on a downward trend. Crucially, this trend isn't any more pronounced for manufacturing or logistics jobs which are more exposed to tariffs.
7/11
7/11
May 27, 2025 at 10:57 AM
Online job postings have dipped sharply around "Liberation Day", but have bounced back since, although they remain on a downward trend. Crucially, this trend isn't any more pronounced for manufacturing or logistics jobs which are more exposed to tariffs.
7/11
7/11
Electricity consumption data correlate well with industrial production, and they are showing a decline in manufacturing output in April & May after tariffs have been imposed - though tariff front-running in Q1 is likely overstating the scale slightly.
6/11
6/11
May 27, 2025 at 10:57 AM
Electricity consumption data correlate well with industrial production, and they are showing a decline in manufacturing output in April & May after tariffs have been imposed - though tariff front-running in Q1 is likely overstating the scale slightly.
6/11
6/11
This is why at Oxford Economics we also track a variety of high frequency alternative data for a glimpse into the economy in near-real time. Such data is unofficial but nonetheless useful in tracking economic activity - and they're already showing signs of the tariff impact.
5/11
5/11
May 27, 2025 at 10:57 AM
This is why at Oxford Economics we also track a variety of high frequency alternative data for a glimpse into the economy in near-real time. Such data is unofficial but nonetheless useful in tracking economic activity - and they're already showing signs of the tariff impact.
5/11
5/11
Consider this - we'll only get flash Eurozone GDP growth numbers for Q2 in early July. Consumer spending data a month later still. Industrial production numbers for April? We'll get those mid-June. At a time of rapid economic changes, this simply isn't good enough.
4/11
4/11
May 27, 2025 at 10:57 AM
Consider this - we'll only get flash Eurozone GDP growth numbers for Q2 in early July. Consumer spending data a month later still. Industrial production numbers for April? We'll get those mid-June. At a time of rapid economic changes, this simply isn't good enough.
4/11
4/11
These tariffs are already applied, and that chain reaction is already feeding through the economy. The problem is, waiting for that to show in the standard macroeconomic data will take quite a long while.
3/11
3/11
May 27, 2025 at 10:57 AM
These tariffs are already applied, and that chain reaction is already feeding through the economy. The problem is, waiting for that to show in the standard macroeconomic data will take quite a long while.
3/11
3/11
In fact, the current trade-weighted tariff rate is about 9%, accounting for all the exceptions and higher rates on specific goods such as metals or cars. It could rise to 15% if pharmaceuticals are also tariffed.
2/11
2/11
May 27, 2025 at 10:57 AM
In fact, the current trade-weighted tariff rate is about 9%, accounting for all the exceptions and higher rates on specific goods such as metals or cars. It could rise to 15% if pharmaceuticals are also tariffed.
2/11
2/11
Congratulations, well deserved! (Not sure the same can be said about Spurs though)
May 23, 2025 at 10:03 AM
Congratulations, well deserved! (Not sure the same can be said about Spurs though)
Our pay nowcast suggests private sector regular pay growth will stabilise in Q2, rather than fall as the BoE expects. As the MPC puts a high weight on pay as an indicator of underlying inflation pressures, this is likely to reinforce the caution around the pace of rate cuts.
7/8
7/8
May 23, 2025 at 9:56 AM
Our pay nowcast suggests private sector regular pay growth will stabilise in Q2, rather than fall as the BoE expects. As the MPC puts a high weight on pay as an indicator of underlying inflation pressures, this is likely to reinforce the caution around the pace of rate cuts.
7/8
7/8
Our measure of labour market sentiment has stabilised at very low levels. The detailed results continue to suggest that firms are prioritising retention over recruitment, though encouragingly the score for expansion plans has progressively strengthened in the past six months.
6/8
6/8
May 23, 2025 at 9:56 AM
Our measure of labour market sentiment has stabilised at very low levels. The detailed results continue to suggest that firms are prioritising retention over recruitment, though encouragingly the score for expansion plans has progressively strengthened in the past six months.
6/8
6/8
What's the data saying at the moment then? UK employment growth has continued to slow in recent months. But as yet, there is no evidence that last month’s increases in employers’ NICs and the national living wage have triggered large-scale job losses.
5/8
5/8
May 23, 2025 at 9:56 AM
What's the data saying at the moment then? UK employment growth has continued to slow in recent months. But as yet, there is no evidence that last month’s increases in employers’ NICs and the national living wage have triggered large-scale job losses.
5/8
5/8
We have been using proprietary NLP-based sentiment data (developed with Penta) to successfully nowcast UK's wage and employment growth long ahead of the official data releases. The granular sentiment data also provide a timely glimpse into the labour market.
4/8
4/8
May 23, 2025 at 9:56 AM
We have been using proprietary NLP-based sentiment data (developed with Penta) to successfully nowcast UK's wage and employment growth long ahead of the official data releases. The granular sentiment data also provide a timely glimpse into the labour market.
4/8
4/8
Yet the impact on hiring and wage growth is crucial for the Bank of England to set monetary policy, particularly as it still has to contend with sticky services inflation - wage costs are a large component of services prices.
Regular macro data just don't cut it in this case.
3/8
Regular macro data just don't cut it in this case.
3/8
May 23, 2025 at 9:56 AM
Yet the impact on hiring and wage growth is crucial for the Bank of England to set monetary policy, particularly as it still has to contend with sticky services inflation - wage costs are a large component of services prices.
Regular macro data just don't cut it in this case.
3/8
Regular macro data just don't cut it in this case.
3/8
Good case in point is the UK, where the employers' NICs and National Living Wage hikes went into effect recently. Waiting to assess the impact using traditional employment & wage data will take months. And the labour market data in particular are suffering from poor quality.
2/8
2/8
May 23, 2025 at 9:56 AM
Good case in point is the UK, where the employers' NICs and National Living Wage hikes went into effect recently. Waiting to assess the impact using traditional employment & wage data will take months. And the labour market data in particular are suffering from poor quality.
2/8
2/8
There are of course two sides to this coin - EU producers might well supplant Chinese exports in the US, thanks to lower *relative* tariffs. We estimate the ceiling of that to be $150bn (5% of the EU's manufacturing GVA). This highlights the variety of shift tariffs bring to global trade.
10/10
10/10
May 21, 2025 at 8:52 AM
There are of course two sides to this coin - EU producers might well supplant Chinese exports in the US, thanks to lower *relative* tariffs. We estimate the ceiling of that to be $150bn (5% of the EU's manufacturing GVA). This highlights the variety of shift tariffs bring to global trade.
10/10
10/10
There is a substantial overlap between the Chinese exports to the US & the EU but we remain sceptical about the flooding of EU markets.
Chinese firms' profitability is already low and the government stimulus efforts seem to be focused elsewhere. Plus the EC might always respond with tariffs.
9/10
Chinese firms' profitability is already low and the government stimulus efforts seem to be focused elsewhere. Plus the EC might always respond with tariffs.
9/10
May 21, 2025 at 8:52 AM
There is a substantial overlap between the Chinese exports to the US & the EU but we remain sceptical about the flooding of EU markets.
Chinese firms' profitability is already low and the government stimulus efforts seem to be focused elsewhere. Plus the EC might always respond with tariffs.
9/10
Chinese firms' profitability is already low and the government stimulus efforts seem to be focused elsewhere. Plus the EC might always respond with tariffs.
9/10