Friday June 16 2017
Euro Area Inflation Rate Confirmed At 5-Month Low
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the Euro Area increased 1.4 percent year-on-year in May of 2017, slowing from a 1.9 percent rise in April and matching preliminary estimates. It is the lowest inflation rate so far this year as cost of fuel and heating oil slowed and prices of telecommunication fell further, final figures showed.

The largest downward impacts came from telecommunication (prices down 1.7 percent following a 1.4 percent drop in April); social protection (-0.9 percent); garments (prices edged up 0.2 percent, the same as in April). In addition, prices rose less for fuels for transport (5.9 percent compared to 11.2 percent in April) and heating oil (10.3 percent from 21.2 percent). Prices went up 4.5 percent for accomodation services. 

The lowest annual rates were registered in Ireland (0 percent from 0.7 percent in April), the Netherlands (0.7 percent from 1.4 percent), France (0.9 percent from 1.4 percent), Finland (0.9 percent from 1 percent) and Cypus (0.9 percent from 2.1 percent). The highest annual rates were seen in Estonia (3.5 percent from 3.6 percent), Lithuania (3.2 percent from 3.5 percent) and Latvia (2.7 percent from 3.3 percent). German inflation was 1.4 percent (2 percent in April) and in Italy it was 1.6 percent (2 percent in April).

Excluding prices of processed food, alcohol and tobacco, the inflation declined to 0.9 percent from 1.2 percent in April and excluding energy only it fell to 1.1 percent from 1.3 percent.

Considering the whole European Union, the inflation rate eased to 1.6 percent from 2 percent in April. 

On a monthly basis, consumer prices declined 0.1 percent, the first fall in four months. 





Thursday June 15 2017
Euro Area April Trade Surplus At 3-Year Low
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

The Euro Area trade surplus narrowed to EUR 17.85 billion in April of 2017 from a EUR 26.63 billion surplus a year earlier. It is the lowest surplus for an April month since 2014. Exports went down 2.8 percent year-on-year, the first decline in six months while imports rose 2.7 percent.

Exports fell to EUR 167.67 million, following a 14.4 percent jump in March. Imports rose to EUR 149.82 billion, after a 16 percent gain in the previous month. Intra-euro area trade stood at EUR 144.7 billion, nearly stable compared with April of 2016. In the first four months of the year, exports of goods fell to EUR 63.2 billion from EUR 78.1 billion a year earlier. Intra-euro area trade rose to EUR 609.3 billion, up by 7 percent.

Considering the European Union, exports went down 2 percent to EUR 144.6 billion in April and imports rose 2 percent to EUR 144.6 billion, thus resulting in a EUR 0.1 billion deficit. It compares with a EUR 4.5 billion surplus a year earlier. Intra-EU 28 trade fell to EUR 259.2 billion, -1 percent compared with April of 2016.

In the first four months of 2017, EU 28 exports went up 9 percent to EUR 607.4 billion, boosted by machinery and vehicles (6 percent); other manufactured goods (5 percent); chemicals (10 percent); food and drinks (5 percent); energy (58 percent) and raw materials (22 percent). Sales increased for the US (6 percent), China (17 percent) and Switzerland (9 percent), the top three export partners. Imports jumped 10 percent to EUR 613.7 billion as eneergy purchases increased 54 percent. The trade balance swang into a EUR 6.3 billion deficit from a EUR 0.8 billion surplus a year earlier.




Wednesday June 14 2017
Euro Area Industrial Output Rises More Than Expected
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Industrial production in the Euro Area increased 1.4 percent year-on-year in April of 2017, following an upwardly revised 2.2 percent rise in March and above market expectations of 1.3 percent. On a monthly basis, production rose 0.5 percent boosted by energy. It is the biggest gain in five months and in line with forecasts.

Year-on-year, production rose at a slower pace for durable consumer goods (4.6 percent from 5.7 percent in March); intermediate goods (3 percent from 3.6 percent); capital goods (1 percent from 3.7 percent) and non-durable consumer goods (0.6 percent from 1.6 percent). On the other hand, energy output shrank less (-0.1 percent from -5.1 percent).  

In the EU 28, production also went up 1.4 percent, slowing from a 2.7 percent rise in March. Production rose less for intermediate goods (3.8 percent from 4 percent in March); durable consumer goods (3.7 percent from 5.7 percent); capital goods (1.7 percent from 4.4 percent) and non-durable consumer goods (0.2 percent from 1.9 percent). Production of energy fell less (-0.9 percent from -4.4 percent). 

Among Member States for which data are available, the highest increases in industrial production were registered in Latvia (9.6 percent from 10 percent), Estonia (9.5 percent from 15 percent) and Slovenia (7.8 percent from 9.3 percent) and the largest decreases in Luxembourg (-3.3 percent from +1.1 percent) and Slovakia (-3.2 percent from +13.2 percent). Production also slowed in France (0.6 percent from 2.5 percent) and Italy (1 percent from 2.9 percent) but went up faster in Germany (2.4 percent from 1.9 percent). 

On a monthly basis, energy production in the Euro Area jumped 4.7 percent, following a 4 percent decline in March. In contrast, output slowed for intermediate goods (0.1 percent from 0.6 percent in March); durable goods (0.6 percent from 2.1 percent) and non-durable goods (0.2 percent from 1.7 percent) and fell 0.7 percent for capital goods (-0.7 percent from +0.9 percent). 

In the EU 28, production edged up 0.2 percent, below 0.3 percent in March. Energy jumped 3.6 percent (-3.3 percent in March) while output eased for non-durable goods (0.2 percent from 1.6 percent); was flat for intermediate goods (0.7 percent) and fell for capital goods (-0.8 percent from +0.7 percent) and durable goods (-0.1 percent from +1.8 percent). 

Among Member States for which data are available, the highest increases in industrial production were registered in Ireland (7.7 percent from 2 percent), Malta (2.9 percent from -3.5 percent) and Portugal (2 percent from -0.5 percent), and the largest decreases in Slovakia (-10.9 percent from +10.4 percent), Luxembourg (-3.1 percent from +3 percent) and Greece (-2.9 percent from -1 percent). Production also jumped 1 percent in Germany (-0.3 percent in March) but shrank in France (-0.6 percent from +2.4 percent) and Italy (-0.4 percent from +0.4 percent). 




Thursday June 08 2017
ECB Leaves Monetary Policy Unchanged
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

The ECB held its benchmark refinancing rate at 0 percent for the eleventh consecutive meeting on June 8th and closed the door to further rate cuts, as the Euro Area economy is expected to expand faster than previously estimated and the risks to the growth outlook are now broadly balanced. The central bank also left the pace of its bond-purchases unchanged, saying a very substantial degree of monetary accommodation is still needed to support inflation in the medium term.

Excerpts from the Introductory statement to the press conference by Mario Draghi:

Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We expect them to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases. Regarding non-standard monetary policy measures, we confirm that our net asset purchases, at the current monthly pace of €60 billion, are intended to run until the end of December 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. 

Our monetary policy measures have continued to preserve the very favourable financing conditions that are necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2% over the medium term. The information that has become available since our last monetary policy meeting in late April confirms a stronger momentum in the euro area economy, which is projected to expand at a somewhat faster pace than previously expected. We consider that the risks to the growth outlook are now broadly balanced.

At the same time, the economic expansion has yet to translate into stronger inflation dynamics. So far, measures of underlying inflation continue to remain subdued. Therefore, a very substantial degree of monetary accommodation is still needed for underlying inflation pressures to build up and support headline inflation in the medium term. If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, we stand ready to increase our asset purchase programme in terms of size and/or duration.

According to Eurostat’s flash estimate, euro area annual HICP inflation was 1.4% in May, following 1.9% in April and 1.5% in March. As expected, the recent volatility in inflation rates was mainly due to energy prices and temporary increases in services prices over the Easter period. Looking ahead, on the basis of current futures prices for oil, headline inflation is likely to remain around current levels in the coming months. At the same time, measures of underlying inflation remain low and have yet to show convincing signs of a pick-up, as unutilised resources are still weighing on domestic price and wage formation. Underlying inflation is expected to rise only gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion and the corresponding gradual absorption of economic slack.

The ECB cut its inflation forecasts for the next three years on lower energy prices. The central bank expects inflation of 1.5% this year, down from a March forecast of 1.7%. Also, it expects 2018 inflation at 1.3% (from 1.6%) and 2019 inflation at 1.6% (from 1.7%). Meanwhile, the ECB upgraded its growth forecasts for this year to 1.9%, up from an earlier forecast of 1.8%. Also, ECB expects 2018 GDP growth at 1.8% (from 1.7%) and 2019 GDP growth at 1.7% (from 1.6%).




Thursday June 08 2017
Eurozone Economy Grows The Most Since Q1 2015
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Eurozone economy expanded 0.6 percent on quarter in the first three months of 2017, better than a second estimate of 0.5 percent and following a 0.5 percent advance in the previous period. It was the strongest growth rate since the first quarter of 2015, mainly boosted by fixed investment and household consumption. Growth picked up in Germany, Spain and Italy but slowed in France.

From the expenditure side, the positive contribution to GDP came mainly from gross fixed capital formation (0.3 percentage points), household final consumption expenditure (0.2 percentage points) and government spending (0.1 percentage points). Meawnhile, the contribution of both external demand and changes in inventories was neutral.

Gross fixed capital formation jumped by 1.3 percent (3.4 percent in Q4 2016), household consumption increased by 0.3 percent (0.4 percent in Q4) and government spending advanced by 0.4 percent (0.3 percent in Q4). Meanwhile, exports rose 1.2 percent (1.7 percent in Q4) and imports went up at a faster 1.3 percent (3.8 percent in Q4).

From the production side, industry grew by 0.2 percent (0.7 percent in Q4), boosted by manufacturing (0.6 percent from 0.5 percent in Q4). Construction advanced by 1.1 percent (0.2 percent in Q4) and agriculture jumped 2.1 percent (0.1 percent in Q4). Among services, output rose for: trade, transport, accommodation and food service activities (0.6 percent from 0.7 percent in Q4); information and communication (0.7 percent from 0.3 percent in Q4); financial and insurance activities (0.9 percent from -0.3 percent in Q4); real estate activities (0.5 percent from 0.4 percent); professional and support service activities (1.2 percent from 0.6 percent in Q4); and administration and other public services (0.2 percent from 0.4 percent in Q4). 

Among countries for which data is already available, GDP expanded at a faster pace in: Germany (0.6 percent from 0.4 percent in Q4); Spain (0.8 percent from 0.7 percent); Italy (0.4 percent from 0.3 percent); Finland (1.2 percent from 0.6 percent); Belgium (0.6 percent from 0.4 percent); Latvia (1.6 percent from 1.2 percent); Portugal (1 percent from 0.7 percent); and Slovenia (1.5 percent from 1.3 percent). Meanwhile, GDP growth was unchanged in Austria (at 0.6 percent) and Slovakia (at 0.8 percent); and slowed in: France (0.4 percent from 0.5 percent in Q4); Estonia (0.8 percent from 1.9 percent); Cyprus (0.6 percent from 0.7 percent); Lithuania (1.4 percent from 1.5 percent); and the Netherlands (0.4 percent from 0.6 percent). Greek GDP rebounded 0.4 percent after contracting 1.1 percent in the previous period.

Year-on-year, the economy advanced 1.9 percent, also better than preliminary figures of 1.7 percent and following a 1.8 percent expansion in the previous three months. 




Wednesday May 31 2017
Euro Area Jobless Rate Falls Further To 9.3% In April
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in the Eurozone declined to 9.3 percent in April of 2017 from a downwardly revised 9.4 percent in the previous two months and below market expectations of 9.4 percent. It is the lowest jobless rate since March of 2009.

The EU 28 unemployment rate was 7.8 percent, down from 7.9 percent in March and the lowest rate since December of 2008.

There were 19.121 million unemployed persons in the EU28, of whom 15.040 million in the Euro Area. Compared with the previous month, the number of persons unemployed decreased by 253 000 in the EU28 and by 233 000 in the Euro Area. 

Among Member States, the lowest unemployment rates in April 2017 were recorded in the Czech Republic (3.2 percent), Germany (3.9 percent) and Malta (4.1 percent). The highest ones were observed in Greece (23.2 percent in February 2017) and Spain (17.8 percent). The jobless rate in France (9.5 percent) and Italy (11.1 percent) was above the Euro Area average while in Ireland it was below (6.4 percent). 




Wednesday May 31 2017
Eurozone Inflation Rate Slows To 5-Month Low
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the Euro Area are expected to increase by 1.4 percent year-on-year in May 2017, following a 1.9 percent rise in the previous month and missing market expectations of 1.5 percent gain, a flash estimate showed. It was the lowest inflation rate since December last year, as prices rose at a slower pace for energy and services.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in May (4.6 percent, compared with 7.6 percent in April), followed by food, alcohol & tobacco (1.5 percent, stable compared with April), services (1.3 percent, compared with 1.8 percent in April) and non-energy industrial goods (0.3 percent, stable compared with April).

Annual core inflation, which excludes volatile prices of energy and unprocessed food and tobacco and at which the ECB looks in its policy decisions, fell to 0.9 percent from 1.2 percent in April.


Thursday May 18 2017
ECB Is Less Likely To Loosen Policy: Minutes
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

ECB's policymakers widely agreed that the current monetary policy stance remained appropriate as the outlook for inflation remained fragile while Euro Area's economic recovery was becoming increasingly solid and downside risks had further diminished, minutes from the ECB's April meeting showed. At the same time, the point was made that recourse to non-standard monetary policy measures for providing further accommodation was becoming less likely, in line with the Governing Council’s evolving assessment.

Excerpts from the Account of the monetary policy meeting of the Governing Council of the European Central Bank, held in Frankfurt am Main on Wednesday and Thursday, 26-27 April 2017:

With regard to the monetary policy stance, members widely shared the assessment provided by Mr Praet in his introduction that, while the cyclical recovery of the euro area was becoming increasingly solid and downside risks had further diminished, underlying inflation pressures had remained subdued and had yet to show a convincing upward trend.

In their assessment of the outlook for price stability, members generally agreed that overall growth prospects had further improved. At the same time, it was underlined that, given continued uncertainty, the outlook for inflation remained fragile. While deflation risks had virtually disappeared, underlying inflation remained subdued. Moreover, euro area HICP inflation had been volatile recently, largely on account of energy price developments. 

Hence, from today’s perspective, there was broad agreement among members that the current monetary policy stance remained appropriate. This entailed keeping the ECB’s policy rates unchanged, as well as confirming both the intended pace and horizon of APP purchases and the Governing Council’s forward guidance on policy rates and the asset purchase programme, including the associated “easing biases”. At the same time, the point was made that it could be acknowledged that recourse to these options for providing further accommodation was becoming less likely, in line with the Governing Council’s evolving assessment.

Looking ahead, it was suggested that, if the euro area recovery kept up its momentum and progress was made in attaining a sustained adjustment in the path of inflation, due consideration would need to be given to adjusting the present formulation of the Governing Council’s forward guidance. It was highlighted that, ultimately, the future path of monetary policy in all its elements depended crucially on the Governing Council’s forward-looking in-depth assessment of the outlook for price stability. 

The Governing Council’s communication should be adjusted in a very gradual and cautious manner as, at the current juncture, monetary and financial conditions were particularly sensitive to changes in communication. After a long period of very accommodative monetary conditions, even small and incremental changes in communication could have strong signalling effects when interpreted as heralding a change in the monetary policy stance. A premature and unwarranted tightening of financial conditions could put the prospects of a sustained adjustment in inflation towards the Governing Council’s inflation aim at risk, particularly in an environment of persisting uncertainty.


Wednesday May 17 2017
Euro Area Inflation Rate Confirmed At 1.9%
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the Euro Area increased 1.9 percent year-on-year in April of 2017, matching initial estimates and higher than 1.5 percent in March. Fuels, heating oil and package holidays had the largest upward effects. Excluding energy, food, alcohol and tobacco, the inflation increased to 1.2 percent from 0.7 percent and excluding energy only, it went up to 1.3 percent from 0.9 percent.

The largest upward impacts came from fuels for transport (prices rose 11.2 percent), package holidays (9.8 percent) and heating oil (21.2 percent), while telecommunication (prices down 1.4 percent), garments (prices edged up 0.2 percent) and bread & cereals (prices down 0.1 percent) had the biggest downward impacts.

The highest annual rates were recorded in Estonia (3.6 percent), Lithuania (3.5 percent) and Latvia (3.3 percent) and the lowest in Ireland (0.7 percent) and Slovakia (0.8 percent). The inflation rose in Germany (2 percent from 1.5 percent in March), Italy (2 percent from 1.4 percent) and Spain (2.6 percent from 2.1 percent) but was steady in France at 1.4 percent. 

Considering the whole European Union, the inflation rate went up to 2 percent from 1.6 percent in March. 

On a monthly basis, consumer prices rose 0.4 percent in both the Euro Area and the European Union. 


Tuesday May 16 2017
Euro Area GDP Growth Confirmed At 0.5% In Q1
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

The Eurozone economy expanded 0.5 percent on quarter in the first three months of 2017, the same as in the previous period and in line with the preliminary estimate. Growth picked up in Germany and Spain but slowed in France and was steady in Italy.

Among countries for which data is already available, the GDP expanded at a faster pace in Germany (0.6 percent from 0.4 percent in Q4); Spain (0.8 percent from 0.7 percent in Q4); Belgium (0.5 percent from 0.4 percent); Portugal (1 percent from 0.7 percent); Finland (1.6 percent from 0.3 percent) and Latvia (1.5 percent from 1.2 percent). 

Meanwhile, GDP growth slowed in France (0.3 percent from 0.5 percent in Q4); Austria (0.6 percent from 0.5 percent); Netherlands (0.4 percent from 0.6 percent); Cyprus (0.6 percent from 0.7 percent) and Lithuania (1.4 percent from 1.5 percent). In addition, GDP growth was steady in Italy (0.2 percent) and  Slovakia (0.8 percent). The Greek economy contracted for the second quarter (-0.1 percent from -1.2 percent). 

Year-on-year, the Euro Area economy expanded 1.7 percent, easing from a 1.8 percent growth in the previous period and in line with earlier estimates.

Considering full European Union, the GDP growth slowed to 0.5 percent from 0.6 percent in Q4, better than initial estimates of 0.4 percent. Annual growth rate was also revised up to 2 percent from 1.9 percent.