The Eurozone economy contracted by 0.1% in the second quarter, with a wide variation among member states.  

A sizeable share of companies still indicates that the tight labour market hinders their production. On balance, companies don’t expect their headcount to shrink soon.  

We expect some loosening of the labour market going forward but don’t expect a steep rise in unemployment. This will put a floor under the economic contraction, especially since we expect real wages to rise soon, but will also continue to hinder activity in several sectors.  

We expect another modest decline in GDP in Q4 followed by a slow recovery. The war in the Middle East is a clear downside risk to our outlook, however.