Thursday August 22 2019
ECB Officials Consider Stimulus Package
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

ECB policymakers noted that the economic growth was likely to be weaker than initially thought this year and a package of stimulus measures would be more effective in combating the slowdown than a sequence of selective actions, minutes of the July meeting showed.

Excerpts from Account of the monetary policy meeting of the Governing Council of the European Central Bank, held in Frankfurt am Main on Wednesday and Thursday, 24-25 July 2019:

Members shared the assessment that information available since the early June Governing Council meeting indicated that, while further employment gains and increasing wages continued to underpin the resilience of the economy, softening global growth dynamics and weak international trade were still weighing on the euro area outlook. The prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism, and vulnerabilities in emerging markets, continued to dampen economic sentiment, notably in the manufacturing sector. It was noted that, while recent data were broadly in line with the baseline scenario and the forces underlying the baseline – such as solid wage growth and rising cost pressures – were still seen as intact, the uncertainty around the projected duration of the economic slowdown remained high, also affecting the medium-term inflation outlook. In this environment, inflationary pressures had remained muted and indicators of inflation expectations had declined.

Members expressed broad agreement with the monetary policy proposals made by Mr Lane in his introduction: first, to adjust the forward guidance on the key ECB interest rates by reintroducing an easing bias; and, second, to initiate preparatory work, including on ways to strengthen the Governing Council’s forward guidance on policy rates, mitigating measures, such as the design of a tiered system for reserve remuneration, and options for the size and composition of potential new net asset purchases. It was seen as important for the Governing Council to demonstrate its determination and capacity to act and to be prepared to ease the policy stance further by adjusting all of its instruments, as appropriate, to achieve its inflation aim. Looking ahead, more information would be available at the Governing Council’s monetary policy meeting in September, when new projections, incorporating the effects of the measures taken at the Governing Council’s June meeting, would be presented.

Members also broadly supported the proposal made by Mr Lane to task the relevant Eurosystem Committees with examining options for future policy measures. Some nuances were expressed about the design and the individual elements of a possible policy package, which was presented as a list of options. In particular, it was argued that the term premium on long-term euro area bonds had already been compressed for quite some time and that the risk of an unwarranted tightening of financial conditions was higher at the short end than at the long end of the yield curve. However, the view was expressed that the various options should be seen as a package, i.e. a combination of instruments with significant complementarities and synergies, since experience had shown that a policy package – such as the combination of rate cuts and asset purchases – was more effective than a sequence of selective actions. The point was made that the choice of instruments and the design of a possible package should reflect the relative effectiveness of different instruments in addressing future contingencies.




Monday August 19 2019
Eurozone July Inflation Rate Revised Down to Near 3-Year Low
Eurostat | Agna Gabriel | agna.gabriel@tradingeconomics.com

The annual inflation rate in Euro Area decreased to 1 percent in July of 2019 from 1.3 percent in the previous month and below preliminary estimates of 1.1 percent. It was the lowest inflation since November of 2016, as cost went up at a softer pace for energy and services.

Prices slowed for energy (0.5 percent from 1.7 percent in June) and services (1.2 percent from 1.6 percent). On the other hand, cost rose faster for food, alcohol & tobacco (1.9 percent from 1.6 percent), of which processed food, alcohol & tobacco (2 percent from 1.9 percent) and unprocessed food (1.7 percent from 0.7 percent); and non-energy industrial goods (0.4 percent from 0.3 percent). 

Among Eurozone's largest economies, the highest annual rate was recorded in France (1.3 percent), followed by Germany (1.1 percent), Spain (0.6 percent) and Italy (0.3 percent).

The annual core inflation, which excludes volatile prices of energy, food, alcohol & tobacco and at which the ECB looks in its policy decisions, was confirmed at 0.9 percent, down from 1.1 percent in the prior month and in line with market consensus.

On a monthly basis, consumer prices dropped 0.5 percent, after a 0.2 percent gain in June and compared with flash estimates of a 0.4 percent decrease. 




Friday August 16 2019
Eurozone Trade Surplus Narrows Less than Expected
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Euro Area trade surplus narrowed to EUR 20.6 billion in June 2019 from EUR 22.6 billion in the corresponding month of the previous year and easily beating market forecasts of a EUR 16.3 billion surplus.

Exports fell 4.7 percent from a year earlier to EUR 189.9 billion in June from last year's EUR 199.3 billion, while imports decreased at a softer 4.1 percent to EUR 169.3 billion from EUR 176.6 billion. Intra-euro area trade dropped 6.6 percent year-on-year to EUR 160.5 billion in June.

Considering the first half of the year, the trade surplus narrowed to EUR 102.2 billion from EUR 103.6 in the same period a year ago, with exports rising 3.2 percent to EUR 1,163.3 billion and imports advancing 3.7 percent to EUR 1,061.2 billion.




Wednesday August 14 2019
Eurozone Q2 GDP Growth Confirmed at 0.2%
Joana Ferreira | joana.ferreira@tradingeconomics.com

The Eurozone quarterly economic growth was confirmed at 0.2 percent in the second quarter of 2019, compared to a 0.4 percent expansion in the previous period.

Germany's gross domestic product contracted 0.1 percent (vs 0.4 percent in Q1), mainly due to a slump in exports; while Italy's economy stagnated (vs 0.1 percent in Q1), as both trade and domestic demand made zero contribution to growth. In addition, GDP growth slowed in France (0.2 percent vs 0.3 percent), Spain (0.5 percent vs 0.7 percent), Austria (0.2 percent vs 0.4 percent), Belgium (0.2 percent vs 0.3 percent), Lithuania (0.9 percent vs 1.2 percent), and Slovakia (0.4 percent vs 0.7 percent); while it was unchanged in the Netherlands (at 0.5 percent), Portugal (at 0.5 percent), Cyprus (at 0.7 percent) By contrast, Finland's economic growth accelerated to 0.9 percent (vs 0.5 percent in Q1) and Latvia's economy expanded 0.8 percent (vs -0.1 percent in Q1).

Compared with the same quarter of the previous year, the Euro Area economy grew 1.1 percent in the second quarter, easing from 1.2 percent expansion in the previous period. That was the weakest growth rate since the last quarter of 2013.

Considering the European Union as a whole, GDP growth eased to 0.2 percent quarter-on-quarter (vs 0.5 percent in Q1); and to 1.3 percent year-on-year (vs 1.6 percent in Q1).




Wednesday August 14 2019
Eurozone Industrial Output Falls the Most in 6 Months
Eurostat | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

Industrial production in the Euro Area slumped 2.6 percent from a year earlier in June 2019, following a 0.8 percent decline in the previous month and compared with market expectations of a 1.2 percent fall. It was the steepest downturn in industrial activity since December, driven by capital and intermediate goods.

Production shrank for capital goods (-4.4 percent vs -1.8 percent in May); intermediate goods (-2.6 percent vs -2.4 percent); durable consumer goods (-1 percent vs 0.1 percent) and energy (-0.1 percent vs 0.4 percent). Also, output growth slowed sharply for non-durables (0.1 percent vs 3.4 percent).

Among Eurozone's largest economies, Germany's industrial output contracted the most (-6.2 percent vs -5.0 percent), followed by France (-0.4 percent vs 3.7 percent) and Italy (-1.2 percent vs -0.6 percent). Meanwhile, output growth was seen in Spain (1.5 percent vs 1.3 percent).

In the EU28, industrial activity fell 1.9 percent (vs 0.1 percent in May), amid declines in capital goods (-3.7 percent vs -0.8 percent); intermediate goods (-2 percent vs -1.3 percent) and durable consumer goods (-0.5 percent vs 1.0 percent). Also, output slowed for energy (0.6 percent vs 1.3 percent) and non-durable consumer goods (0.2 percent vs 3.0 percent).





Wednesday July 31 2019
Eurozone Jobless Rate Falls to 11-Year Low
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Euro Area seasonally-adjusted unemployment rate fell to 7.5 percent in June 2019 from an upwardly revised 7.6 percent in the previous month and in line with market expectations. It was the lowest jobless rate since July 2008 as the number of unemployed continued to decline.

Compared with May, the number of unemployed in the Euro Area decreased by 45,000 to 12.377 million. Compared with the previous year, it fell by 1.032 million.

Considering the European Union as a whole, the unemployment rate was unchanged at 6.3 percent in June, the lowest since the start of the EU monthly unemployment series in January 2000. There were 15.674 million people unemployed, a decrease of 36,000 from the previous month and of 1.205 million from June 2018.

Among EU Member States, the lowest unemployment rates in June were recorded in Czechia (1.9 percent) and Germany (3.1 percent). The highest unemployment rates were observed in Greece (17.6 percent in April 2019) and Spain (14.0 percent). Compared with a year ago, the largest decreases were registered in Greece (17.6 percent from 19.8 percent between April 2019 and April 2018), Cyprus (6.5 percent from 8.3 percent), Croatia (7.1 percent from 8.6 percent), Ireland (4.5 percent from 5.9 percent) and Slovakia (5.4 percent from 6.7 percent).

The youth unemployment rate was 14.1 percent in the EU28 and 15.4 percent in the Euro Area, compared with 15.2 percent and 17.0 percent respectively in June 2018. The lowest rates were observed in Germany (5.5 percent), the Netherlands (6.5 percent) and Czechia (6.6 percent), while the highest were recorded in Greece (39.6 percent in Q1 2019), Spain (32.4 percent) and Italy (28.1 percent).




Wednesday July 31 2019
Eurozone Inflation Rate at Near 1-1/2-Year Low
Eurostat | Agna Gabriel | agna.gabriel@tradingeconomics.com

The annual inflation rate in the Euro Area is expected to fall to 1.1 percent in July of 2019 from 1.3 percent in the previous month and in line with market expectations, a preliminary estimate showed. It is the lowest inflation rate since February last year, mainly due to a slowdown in cost of energy and services.

Year-on-year, prices should rise at a softer pace for energy (0.6 percent from 1.7 percent in June) and services (1.2 percent from 1.6 percent). Meantime, cost of food, alcohol and tobacco is expected to advance to 2 percent from 1.6 percent in June, boosted by processed food, alcohol and tobacco (2 percent from 1.9 percent) and unprocessed food (1.7 percent from 0.7 percent). Also, prices of non-energy industrial goods are seen rising further (0.4 percent from 0.3 percent). 

The annual core inflation, which excludes volatile prices of energy, food, alcohol & tobacco and at which the ECB looks in its policy decisions, is likely to slow to 0.9 percent in July from 1.1 percent in the prior month and below market expectations of 1 percent.


Wednesday July 31 2019
Eurozone GDP Growth Slows in Q2
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Eurozone economy grew 0.2 percent on quarter in the three months to June 2019, easing from a 0.4 percent expansion in the previous period and matching market expectations, a flash estimate showed.

Among countries for which data is already available, Italy's economy stagnated in the second quarter, following a 0.1 percent growth in the previous three-month period; while GDP growth slowed in France (0.2 percent vs 0.3 percent), Spain (0.5 percent vs 0.7 percent), Austria (0.3 percent vs 0.4 percent), Belgium (0.2 percent vs 0.3 percent), and Lithuania (0.9 percent vs 1.2 percent). By contrast, Latvia's economy expanded 0.8 percent in the second quarter, recovering from a 0.1 percent contraction in the previous period. Germany, the biggest economy in the Euro Area, is expected to release preliminary GDP estimates in two weeks.

Compared with the same quarter of the previous year, the Euro Area economy grew 1.1 percent in the second quarter, easing from 1.2 percent expansion in the previous period and compared to market expectations of 1 percent. That was the weakest growth rate since the last quarter of 2013.

Considering the European Union as a whole, GDP growth eased to 0.2 percent quarter-on-quarter (vs 0.5 percent in Q1); and to 1.3 percent year-on-year (vs 1.6 percent in Q1).


Thursday July 25 2019
ECB Leaves Rates Unchanged but Hints at Future Action
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

The ECB said it will keep interest rates at their present or lower levels at least through the first half of 2020 during its July meeting, amid concerns about global growth and inflation outlook. The central bank also said it is preparing options for more policy easing, suggesting a rate cut and more bond buying are on the table as soon as September.

Excerpts from the ECB introductory statement:

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 or lower levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to our aim over the medium term.

We intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time past the date when we start raising the key ECB interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation.

The Governing Council also underlined the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim. Accordingly, if the medium-term inflation outlook continues to fall short of our aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim. It therefore stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner.

In this context, we have tasked the relevant Eurosystem Committees with examining options, including ways to reinforce our forward guidance on policy rates, mitigating measures, such as the design of a tiered system for reserve remuneration, and options for the size and composition of potential new net asset purchases.

Incoming information since the last Governing Council meeting in early June indicates that, while further employment gains and increasing wages continue to underpin the resilience of the economy, softening global growth dynamics and weak international trade are still weighing on the euro area outlook. Moreover, the prolonged presence of uncertainties, related to geopolitical factors, the rising threat of protectionism, and vulnerabilities in emerging markets, is dampening economic sentiment, notably in the manufacturing sector. In this environment, inflationary pressures remain muted and indicators of inflation expectations have declined. Therefore, a significant degree of monetary stimulus continues to be necessary to ensure that financial conditions remain very favourable and support the euro area expansion, the ongoing build-up of domestic price pressures and, thus, headline inflation developments over the medium term.

Our monetary policy measures, including the forthcoming new series of targeted longer-term refinancing operations (TLTRO III), will help to safeguard favourable bank lending conditions and will continue to support access to financing, in particular for small and medium-sized enterprises.

To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.


Wednesday July 17 2019
Eurozone June Inflation Rate Revised Up to 1.3%
Eurostat | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in the Euro Area rose to 1.3 percent in June 2019, slightly above a preliminary and market expectations of 1.2 percent. Cost advanced at a faster pace for food, alcohol & tobacco and services.

Prices increased further for food, alcohol & tobacco (1.6 percent from 1.5 percent in May), of which unprocessed food (0.7 percent from 0.4 percent) and processed food, alcohol & tobacco (1.9 percent, the same as in May); and services (1.6 percent from 1.0 percent). In contrast, cost eased for energy (1.7 percent from 3.8 percent); while inflation was steady for non-energy industrial goods (at 0.3 percent, the same as in May).

Among Eurozone's largest economies, the highest annual rate was recorded in Germany (1.5 percent), followed by France (1.4 percent), Spain (0.6 percent) and Italy (0.8 percent).

The annual core inflation, which excludes volatile prices of energy, food, alcohol & tobacco and at which the ECB looks in its policy decisions, was confirmed at 1.1 percent, up from 0.8 percent in the prior month and in line with market consensus.

On a monthly basis, consumer prices went up 0.2 percent, after a 0.1 percent increase in May, above a preliminary and market forecasts of 0.1 percent, boosted by services (0.8 percent).