Monday December 18 2017
Eurozone November Inflation Rate Confirmed at 1.5%
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the Euro Area increased by 1.5 percent year-on-year in November 2017, following a 1.4 percent gain in the previous month and matching the preliminary estimate. Energy prices rose at a faster pace while food inflation slowed.

Year-on-year, energy prices jumped 4.7 percent after rising by 3 percent in October. Meanwhile, unprocessed food prices rose at a softer 2.4 percent, compared with a 2.8 percent gain in the previous month. Inflation was flat for processed food, alcohol and tobacco (at 2.1 percent), services (at 1.2 percent) and non-energy industrial goods (at 0.4 percent).

Among Eurozone's largest economies, the highest annual rates was registered in Germany (1.8 percent) and Spain (1.8 percent), followed by France (1.2 percent), Italy (1.1 percent), Greece (1.1 percent) and Ireland (0.5 percent). 

Annual core inflation, which excludes volatile prices of energy, food, alcohol and tobacco and at which the ECB looks in its policy decisions, was also confirmed at 0.9 percent, unchanged from the previous month's five-month low.

On a monthly basis, consumer prices edged up 0.1 percent, the same pace as in October and in line with market consensus.




Friday December 15 2017
Eurozone October Trade Surplus Smaller than Expected
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Euro Area trade surplus narrowed to EUR 18.9 billion in October 2017 from EUR 19.2 billion in the same month of the previous year, way below market expectations of EUR 24.6 billion.

Imports of goods to the rest of the world jumped by 10.1 percent to EUR 168.9 billion from EUR 153.4 billion in October 2016, while exports advanced at a slower 8.8 percent to EUR 187.9 billion from EUR 172.6 billion. Intra-euro area trade rose to EUR 160.0 billion, up by 9.7 percent compared with October 2016.

In January to October 2017, the trade surplus narrowed sharply to EUR 187.9 billion from EUR 213.8 billion in the same period of 2016, as imports grew 10.4 percent to EUR 1,624.7 billion and exports increased 7.5 percent to EUR 1,812.6 billion.

Meanwhile, the European Union posted a trade deficit of EUR 0.3 billion in October, compared with a EUR 2.4 billion surplus a year ago. Imports climbed 10.6 percent to EUR 159.6 billion from EUR 144.4 billion in October last year, and exports increased 8.6 percent to EUR 159.4 billion from EUR 146.8 billion. 

In the first ten months of the year, the trade surplus narrowed to EUR 5.2 billion from EUR 5.3 billion in the same period of 2016. Imports went up 9 percent to EUR 1,544.5 billion, boosted by purchases of energy (30.5 percent), raw materials (16.1 percent), machinery and vehicles (7.5 percent); other manufactured goods (6.1 percent); chemicals (5.4 percent); and food and drink (4.0 percent). Imports went up from the US (2.4 percent), China (8.9 percent) and Russia (25.1 percent), but fell from Switzerland (-10.8 percent). Exports rose 8.9 percent to EUR 1,549.7 billion, boosted by sales of energy (35 percent); raw materials (18.7 percent); other manufactured goods (7.8 percent); machinery and vehicles (7.4 percent); chemicals (7 percent); and food and drink (5.7 percent). Shipments went up to the US (3.8 percent), China (18.7 percent), Switzerland (10.4 percent), Russia (20.8 percent) and Turkey (8 percent).




Thursday December 14 2017
ECB Leaves Monetary Policy Unchanged
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

The ECB held its benchmark refinancing rate at 0 percent on December 14th, as expected, and confirmed that from January 2018 the net asset purchases are intended to run at a monthly pace of €30 billion until the end of September next year, or beyond, if necessary. The bank raised its inflation forecast for 2018 to 1.4 percent from 1.2 percent previously estimated on higher oil and food prices. The projections for 2017 and 2019 were maintained at 1.5 percent.

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

The strong cyclical momentum and the significant reduction of economic slack give grounds for greater confidence that inflation will converge towards our inflation aim. At the same time, domestic price pressures remain muted overall and have yet to show convincing signs of a sustained upward trend. An ample degree of monetary stimulus therefore remains necessary for underlying inflation pressures to continue to build up and support headline inflation developments over the medium term. This continued monetary support is provided by the additional net asset purchases that we decided on at our October monetary policy meeting, by the sizeable stock of acquired assets and the forthcoming reinvestments, and by our forward guidance on interest rates.

Let me now explain our assessment in greater detail, starting with the economic analysis. The economic expansion in the euro area continued in the third quarter of 2017, when real GDP increased by 0.6% quarter on quarter, after 0.7% in the second quarter. The latest data and survey results point to solid and broad-based growth momentum. Our monetary policy measures, which have facilitated the deleveraging process, continue to support domestic demand. Private consumption is underpinned by ongoing employment gains, which are also benefiting from past labour market reforms, and by rising household wealth. Business investment continues to strengthen on the back of very favourable financing conditions, rising corporate profitability and strengthening demand. Housing investment has also risen further over recent quarters. In addition, euro area exports are being supported by the broad-based global expansion.

This assessment is broadly reflected in the December 2017 Eurosystem staff macroeconomic projections for the euro area. These projections foresee annual real GDP increasing by 2.4% in 2017, 2.3% in 2018, 1.9% in 2019 and 1.7% in 2020. Compared with the September 2017 ECB staff macroeconomic projections, the outlook for real GDP growth has been revised up substantially.

Risks surrounding the euro area growth outlook remain broadly balanced. On the one hand, the strong cyclical momentum, underpinned by continued positive developments in sentiment indicators, could lead to further positive growth surprises in the near term. On the other hand, downside risks continue to relate primarily to global factors and developments in foreign exchange markets.

According to Eurostat’s flash estimate, euro area annual HICP inflation was 1.5% in November, up from 1.4% in October. At the same time, measures of underlying inflation have moderated somewhat recently, in part owing to special factors. Looking ahead, on the basis of current futures prices for oil, annual rates of headline inflation are likely to moderate in the coming months, mainly reflecting base effects in energy prices, before increasing again. Underlying inflation is expected to rise gradually over the medium term, supported by our monetary policy measures, the continuing economic expansion, the corresponding absorption of economic slack and rising wage growth.

This assessment is also broadly reflected in the December 2017 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 1.5% in 2017, 1.4% in 2018, 1.5% in 2019 and 1.7% in 2020. Compared with the September 2017 ECB staff macroeconomic projections, the outlook for headline HICP inflation has been revised up, mainly reflecting higher oil and food prices.




Wednesday December 13 2017
Eurozone Industrial Output Rises Faster than Expected
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Industrial production in the Euro Area increased by 3.7 percent year-on-year in October 2017, beating market expectations of 3.5 percent and following an upwardly revised 3.4 percent gain in the previous month. Output rose at a faster pace for intermediate and non-durable consumer goods. Among Eurozone's largest economies, industrial production grew faster in France, Italy and Spain.

Year-on-year, production grew at a faster pace for: intermediate goods (5 percent from 4.6 percent in September); and non-durable consumer goods (5.7 percent from 1.5 percent). Meanwhile, production of durable consumer goods rose at a slower 3.7 percent after an increase of 7.5 percent in September; and capital goods output went up 3.3 percent, easing from a 4.4 percent gain. Energy output contracted 2.2 percent, following a fall of 0.8 percent in the previous month.

In the EU28, industrial output advanced by 4.2 percent, following a 3.6 percent gain in September, driven by higher production of intermediate goods (5.3 percent from 4.6 percent); and non-durable consumer goods (4.7 percent from 1.7 percent). On the other hand, output rose at softer rate for both durable consumer goods (3.5 percent from 7 percent in September) and capital goods (4.2 percent from 4.7 percent), while production of energy shrank (-0.3 percent from 0.5 percent).

Among EU Member States for which data are available, the highest increases in industrial production were registered in Ireland (13.4 percent), Slovenia (10.7 percent), Poland (10 percent) and Romania (9.1 percent). Also, output grew in France (5.7 percent), Spain (4.2 percent), Italy (3.1 percent) and Germany (2.5 percent).

On a monthly basis, industrial output increased 0.2 percent, above market expectations of a flat reading, due to rising production of non-durable consumer goods (0.5 percent) and energy (0.1 percent). Output fell for durable consumer goods (-1.9 percent) and capital goods (-0.3 percent). 

In the EU28, output grew 0.3 percent, due to production of non-durable consumer goods rising by 0.7 percent and intermediate goods by 0.2 percent, while production of both energy and capital goods fell by 0.2 percent and durable consumer goods by 1.7 percent.

Among EU Member States for which data are available, the largest increases in industrial production were registered in Ireland (10.6 percent), Denmark (2.8 percent) and Croatia (2.7 percent). Also, output rose in France (1.8 percent), Spain (0.6 percent) and Italy (0.5 percent). The highest decreases were recorded in Malta (-6.1 percent), Portugal (-2.3 percent) and the Netherlands (-1.8 percent) and Germany (-1.4 percent).




Thursday December 07 2017
Eurozone Q3 GDP Growth Confirmed at 0.6%
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Eurozone economy expanded 0.6 percent on quarter in the three months to September of 2017, in line with the second estimate and following a 0.7 percent advance in the previous period. Growth was mainly boosted by household consumption, fixed investment and exports. Among Eurozone's largest economies, GDP growth eased slightly in France and Spain; and picked up in Germany and Italy.

From the expenditure side, the positive contribution to GDP came mainly from household final consumption expenditure (0.2 percentage points), gross fixed capital formation (0.2 percentage points) and changes in inventories (0.1 percentage points). Also, the contribution of the external balance to GDP growth was slightly positive while that of government spending was neutral.

Household consumption went up 0.3 percent (0.5 percent in Q2), gross fixed capital formation jumped by 1.1 percent (2.2 percent in Q2) and government spending advanced by 0.2 percent (0.3 percent in Q2). In addition, exports rose 1.2 percent (1 percent in Q2) and imports went up at a slower 1.1 percent (1.7 percent in Q2).

From the production side, industry grew by 1.3 percent (1 percent in Q2), boosted by manufacturing (1.5 percent from 0.9 percent in Q2). Also, construction advanced by 0.4 percent (0.7 percent in Q2). Among services, output rose for: trade, transport, accommodation and food service activities (0.6 percent from 0.7 percent in Q2); information and communication (0.8 percent from 1 percent in Q2); financial and insurance activities (0.1 percent from 0.5 percent in Q2); real estate activities (0.5 percent from 0.2 percent in Q2); professional and support service activities (0.7 percent from 0.9 percent in Q2); administration and other public services (0.4 percent from 0.5 percent in Q2); and arts, entertainment and other services (0.6 percent from 0.5 percent in Q2). By contrast, agriculture, forestry and fishing continued to contract (-0.2 percent from -0.5 percent in Q2).

Among countries for which data is already available, GDP expanded at a slower pace in France (0.5 percent from 0.6 percent in Q2), Spain (0.8 percent from 0.9 percent), the Netherlands (0.4 percent from 1.5 percent), Finland (0.4 percent from 0.8 percent), Belgium (0.3 percent from 0.5 percent), Greece (0.3 percent from 0.8 percent), Cyprus (0.9 percent from 1 percent), Malta (1.9 percent from 2.1 percent), Estonia (0.3 percent from 1.3 percent), Lithuania (0.1 percent from 0.6 percent), Slovakia (0.8 percent from 0.9 percent), and Slovenia (1 percent from 1.2 percent). Meanwhile, GDP growth was unchanged in Austria (at 0.8 percent) and picked up in Germany (0.8 percent from 0.6 percent), Italy (0.4 percent from 0.3 percent), Latvia (1.5 percent from 1.4 percent) and Portugal (0.5 percent from 0.3 percent).

Year-on-year, the economy grew 2.6 percent, better than the second estimate of 2.5 percent and following an upwardly revised 2.4 percent expansion in the previous three-month period. It was the strongest growth rate since the first quarter of 2011.





Thursday November 30 2017
Euro Area Jobless Rate Falls Further to 8.8%
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in the Euro Area declined to 8.8 percent in October of 2017 from 8.9 percent in September and 9.8 percent in October 2016. It is the lowest jobless rate since January of 2009 as the number of unemployed persons declined.

The number of unemployed persons was 14.344 million, down by 88,000  from September and by 1.473 million from October of 2016. 

Considering the whole European Union, the unemployment rate was 7.4 percent in October of 2017, down from 7.5 percent in September and 8.3 percent in October of 2016. This is the lowest rate recorded in the EU 28 since November of 2008. There were 18.243 million unemployed, down by 111,000 from September and by 2.074 million from a year earlier.

Among Member States, the lowest unemployment rates were recorded in the Czech Republic (2.7 percent), Malta (3.5 percent) and Germany (3.6 percent) while the highest were observed in Greece (20.6 percent in August 2017) and Spain (16.7 percent). Compared with a year ago, the unemployment rate fell in all Member States for which data is comparable over time, except Finland where it remained stable. The largest decreases were registered in Cyprus (from 13.1 percent to 10.2 percent) and Greece (from 23.4 percent to 20.6 percent between August 2016 and August 2017).

In October of 2017, 3.722 million young persons were unemployed in the EU 28, of whom 2.657 million were in the Euro Area. Compared with October of 2016, youth unemployment decreased by 380,000 in the EU 28 and by 201,000 in the Euro Area. The youth unemployment rate was 16.5 percent in the EU 28 and 18.6 percent in the Euro Area, compared with 18.2 percent and 20.3 percent respectively in October 2016. The lowest rates were observed in Germany (6.6 percent) and the Czech Republic (7.2 percent), while the highest were recorded in Greece (40.2 percent in August 2017), Spain (38.2 percent) and Italy (34.7 percent).




Thursday November 30 2017
Eurozone November Inflation Rate Weaker than Expected
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Eurozone consumer price inflation is expected to increase to 1.5 percent year-on-year in November 2017 from 1.4 percent in the previous month, missing market expectations of 1.6 percent. Energy prices should rise at a faster pace while food inflation is expected to ease slightly.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in November (4.7 percent, compared with 3 percent in October), followed by food, alcohol & tobacco (2.2 percent, compared with 2.3 percent in October), services (1.2 percent, stable compared with October) and non-energy industrial goods (0.4 percent, stable compared with October).

Annual core inflation, which excludes volatile prices of energy and unprocessed food and tobacco and at which the ECB looks in its policy decisions, is expected to remain at 0.9 percent, unchanged from the previous month's five-month low.


Thursday November 23 2017
ECB Policymakers Differed on Keeping Bond Buys Open-Ended
ECB| Joana Ferreira | joana.ferreira@tradingeconomics.com

ECB policymakers broadly agreed to cut the current asset purchase scheme to €30 billion at the start of 2018 amid growing confidence in the gradual convergence of inflation towards the central bank's target, minutes from the ECB's October meeting showed. At the same time, there were some concerns about the open-ended nature of the asset purchase program, which could generate expectations of further extensions.

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, 25-26 October 2017:

The proposed package of measures was generally seen to be appropriate for delivering the necessary stimulus for underlying inflation pressures to build up and support headline inflation over the medium term, in particular to avoid validating inflation expectations below levels consistent with the inflation aim. At the same time, a careful and gradual recalibration was warranted in a more benign economic environment, in line with the Governing Council’s established “reaction function”, as shown on earlier occasions when the pace of the APP had been adjusted, up or down, depending on developments in the data.

Against this background, some initial preferences were expressed for a smaller overall envelope of intended APP purchases, as well as for a different monthly pace of purchases for a given intended envelope. On the one hand, it was argued that a higher monthly purchase volume from January 2018 implied a more gradual reduction in the pace of purchases, thereby limiting the risk of “cliff effects”, which could arise from too abrupt a reduction in the purchase volume. On the other hand, some initial preferences were also expressed for a slower monthly pace of purchases from the start of 2018, or a declining path of purchases as of January 2018, as better suited to conducting the asset purchases over an extended horizon, or to exercising the optionality embedded in the Governing Council's forward guidance, within the agreed parameters governing APP purchases.

With regard to the dimension of optionality, different positions were put forward as to whether an open-ended state-contingent formulation remained appropriate or whether the announcement of an end date was preferable. A large majority of members supported keeping the current formulation of the Governing Council’s forward guidance on the APP in place, whereby the purchases were intended to be conducted until the end of September 2018, or beyond, if necessary, and in any case until the Governing Council saw a sustained adjustment in the path of inflation consistent with its inflation aim. Allowing the path of the APP to be adapted in a data-contingent manner and, therefore, maintaining the flexibility to react to future shocks was seen to be an integral part of the Governing Council’s established “reaction function” and consistent with previous adjustments to the programme. Given the current assessment of the inflation outlook, when more convincing evidence of price pressures had yet to be observed in the data and uncertainties still prevailed, it was seen as more prudent to keep the flexibility to extend the programme further, if necessary.

Therefore, retaining the open-endedness of the APP underscored the Governing Council’s steadfast commitment to preserve the degree of accommodation needed for inflation to return towards levels that were below, but close to, 2%. It was cautioned that any doubt about the Governing Council’s price stability commitment could entrench inflation expectations at low levels. Together with a lower equilibrium real interest rate, this could hamper the Governing Council’s capacity to respond to future shocks. In addition, the announcement of an end date could induce market participants to frontload possible price adjustments, which might lead to an undue tightening in financial conditions.


Thursday November 16 2017
Euro Area Inflation Rate Confirmed at 1.4%
Eurostat |Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the Euro Area increased 1.4 percent year-on-year in October of 2017, below 1.5 percent in September and in line with preliminary estimates. It is the lowest rate in 3 months.

A slowdown was seen for energy (3 percent compared to 3.9 percent in September); non-energy industrial goods (0.4 percent compared to 0.5 percent) and services (1.2 percent compared to 1.5 percent). On the other hand, prices increased more for food, alcohol and tobacco (2.3 percent compared to 1.9 percent). 

Annual core inflation, which excludes cost of energy, food, alcohol and tobacco was 0.9 percent, down from 1.1 percent in September and matching earlier figures. Excluding energy only, inflation edged down to 1.2 percent from 1.3 percent. 

On a monthly basis, consumer prices increased 0.1 percent. 


Wednesday November 15 2017
Euro Area Trade Surplus Widens in September
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Euro Area's trade surplus increased to EUR 26.4 billion in September of 2017 from a EUR 24.3 billion surplus a year earlier. It is the highest surplus ever for a September month.

Exports went up 5.6 percent year-on-year to EUR 187.1 billion and imports increased at a slower 5.1 percent to EUR 160.7 billion. Intra-euro area trade rose to EUR 157.6 billion in September of 2017, up by 4.9 percent compared with a year earlier.

Considering the January to September period, exports went up 7.4 percent to EUR 1624.9 billion and imports rose 10.4 percent to EUR 1454.5 billion, thus narrowing the bloc's trade surplus to EUR 170.4 billion from EUR 195.1 billion in the same period of 2016. Intra-euro area trade rose 7.4 percent to EUR 1369.2 billion.

Considering the European Union, exports went up 6.3 percent year-on-year to EUR 156.8 billion and imports rose 3.2 percent to EUR 153.7 billion. The trade surplus jumped to EUR 3.1 billion from EUR 1.6 billion in September of 2016. Intra-EU28 trade rose 4.9 percent to EUR 287.8 billion.

In the first nine months of the year, sales surged 9 percent to EUR 1390.3 billion, with rises seen mainly for machinery and vehicles (7.3 percent); other manufactured goods (7.4 percent); chemicals (7.3 percent); food and drink (5.5 percent); energy (37.1 percent) and raw materials (18.4 percent). Imports rose at a slightly slower 8.6 percent to EUR 1382.9 billion, due to purchases of both manufactured (6.2 percent) and primary (22.5 percent) goods. The EU 28 surplus increased to EUR 7.4 billion from EUR 3.1 billion a year earlier. Intra-EU28 trade rose 7 percent to EUR 2483.5 billion.