Thursday January 17 2019
Eurozone December Inflation Confirmed at 8-Month Low
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The annual inflation rate in the Euro Area came in at 1.6 percent in December 2018, unchanged from the preliminary estimate and below November's final reading of 1.9 percent. It was the lowest rate since April.

Prices increased at a slower pace for energy (5.4 percent vs 9.1 percent in November) and processed food, alcohol & tobacco (1.7 percent vs 2 percent). Meanwhile, inflation was unchanged for services (at 1.3 percent) and non-energy industrial goods (at 0.4 percent); and picked up for unprocessed food (1.9 percent vs 1.8 percent).

Among Eurozone's largest economies, the highest annual rate was registered in France (1.9 percent), followed by Germany (1.7 percent), Spain (1.2 percent) and Italy (1.2 percent).

Annual core inflation, which excludes volatile prices of energy, food, alcohol & tobacco and at which the ECB looks in its policy decisions, stood at 1 percent, the same as in November and in line with early estimates.

On a monthly basis, consumer prices were unchanged in December as widely expected by markets, after a 0.2 percent drop in November. A firm increase in prices of services (0.9 percent) and unprocessed food (0.4 percent) was offset by declines in costs of energy (-3.2 percent), processed food, alcohol & tobacco (-0.2 percent) and non-energy industrial goods (-0.2 percent).




Tuesday January 15 2019
Eurozone Trade Surplus Larger than Expected
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Euro Area trade surplus narrowed to EUR 19.0 billion in November 2018 from EUR 23.4 billion in the same month of the previous year, still comfortably above market expectations of EUR 13.7 billion.

Exports of goods to the rest of the world rose 1.9 percent to EUR 203.0 billion in November from last year's EUR 199.2 billion, while imports jumped 4.7 percent to EUR 184.0 billion from EUR 175.7 billion. Intra-euro area trade increased 1.5 percent year-on-year to EUR 170.5 billion in November.

Considering January to November, the trade surplus narrowed to EUR 175.2 billion from EUR 210.4 billion in the same period of 2017, as exports grew 4.2 percent to EUR 2,098.4 billion and imports increased at a faster 6.6 percent to EUR 1,923.2 billion.

Meanwhile, the European Union posted a EUR 3.2 billion trade deficit in November, compared to a 4.9 billion surplus a year ago. Imports rose 7.6 percent to EUR 175.9 billion from EUR 163.4 billion in November 2017, while exports went up at a much softer 2.6 percent to EUR 172.7 billion from EUR 168.4 billion.

In the first eleven months of the year, the EU recorded a EUR 25.2 billion trade deficit, compared to a EUR 9.0 billion surplus in the same period of 2017. Imports rose 6.7 percent to EUR 1,825.3 billion, boosted by purchases of energy (25.3 percent), raw materials (3.6 percent), machinery and vehicles (3.8 percent), chemicals (3.6 percent), other manufactured goods (3.7 percent), and food and drink (0.1 percent). Imports rose mainly from the US (3.3 percent), China (5.2 percent), Russia (16.9 percent), Turkey (9.3 percent) and Norway (15.1 percent), but declined from Switzerland (-1.8 percent). Exports went up at a softer 4.7 percent to EUR 1,800.0 billion, boosted by sales of energy (17 percent), chemicals (7.8 percent), other manufactured goods (3.9 percent), raw materials (3.1 percent), machinery and vehicles (2.1 percent), and food and drink (0.2 percent). Exports grew to the US (8.5 percent), China (7.3 percent), Switzerland (5.6 percent) and Norway (7.3 percent), but dropped to Russia (-0.8 percent) and Turkey (-6.7 percent).




Monday January 14 2019
Eurozone Industrial Output Falls More than Anticipated
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Industrial production in the Euro Area went down 3.3 percent year-on-year in November of 2018, following a 1.2 percent rise in October and worse than market expectations of a 2.3 percent drop. It is the first annual fall in industrial output since January of 2017 and the biggest since November of 2012.

Declines were seen in production of energy (-5.2 percent compared to -3 percent in October); capital goods (-4.5 percent compared to +3.7 percent); durable consumer goods (-3.5 percent compared to +0.3 percent); intermediate goods (-3 percent compared to -0.1 percent); and non-durable consumer goods (-0.1 percent compared to +0.8 percent).

In the EU28, industrial production fell by 2.2 percent, after a 1.3 percent rise in October. Output went down for energy (-4.3 percent compared to -2.1 percent); capital goods (-3 percent compared to +3.2 percent); intermediate goods (-2.2 percent compared to +0.5 percent); durable consumer goods (-1.4 percent compared to +1.3 percent) while production of non-durable consumer goods rose by 0.7 percent (+1.5 percent in October). Among Member States for which data are available, the largest decreases in industrial production were observed in Ireland (-9.1 percent), Germany (-5.1 percent), Portugal (-2.9 percent), Spain (-2.8 percent), Italy (-2.6 percent) and France (-1.9 percent). The highest increases were registered in Estonia (+7.9 percent), Poland (+5.3 percent) and Hungary (+3.5 percent).

On a monthly basis, industrial production in the Euro Area fell 1.7 percent in November of 2018, following a downwardly revised 0.1 percent gain in October and worse than market expectations of a 1.5 percent drop. It is the biggest decline in industrial output since February of 2016, amid declines in all segments: intermediate goods (-1.2 percent vs 0.1 percent in October); capital goods (-2.3 percent vs 0.7 percent); durables (-1.7 percent vs 0.5 percent); non-durables (-1 percent vs -0.1 percent) and energy (-0.6 percent vs -1.4 percent). Considering the EU28, production went down 1.3 percent after a 0.1 percent gain in October.




Thursday January 10 2019
ECB Warns of Economic Risks, Uncertain Outlook
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

ECB officials agreed that the risks to the Euro Area outlook could still be assessed as broadly balanced, but that the balance of risks was moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial volatility, minutes of the ECB's December meeting showed. Policymakers also suggested revisiting the contribution of TLTRO to the monetary policy stance moving ahead.

Excerpts of 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, 12-13 December 2018:

Members discussed in greater detail the risks to the euro area growth outlook. Uncertainties and risks related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial volatility had remained prominent. It was widely considered that uncertainty persisted or had increased, with risks to activity moving to the downside. It was also argued that, even though certain downside risks – regarding trade tensions, emerging markets, US monetary policy and developments in sovereign bond markets in the euro area – had receded, the continually changing nature of risks would sustain – or even increase – general uncertainty.

In this context, it was underlined that the situation remained fragile and fluid, as risks could quickly regain prominence or new uncertainties could emerge. The situation in emerging markets was cited as an example, with vulnerability related to some countries becoming less of a concern (notably with Turkey and Argentina stabilising), while vulnerability related to others was already looming. Other examples were the frequently changing state of discussion on trade issues and the withdrawal of the United Kingdom from the European Union. Against this background, it was argued that the current environment could be described as one of “risk rotation” in a state of generally heightened uncertainty.

As regards the balance of risks, on the one hand, the view was expressed that a case could be made for assessing risks to activity as tilted to the downside. Prevailing uncertainty appeared to have affected confidence, although the latter was coming down from high levels. Reference was made to a recent deterioration in business confidence, with PMI survey data related to production and exports again disappointing. This was seen as affecting business investment and cautioned against being complacent about downside risks to growth. Regarding the Eurosystem staff macroeconomic projections, it was noted that there had now been three successive downward revisions to the short-term euro area baseline growth outlook over the past half-year. The latest revisions essentially reflected the incorporation of new data regarding the short term but had no bearing on the growth path for the remainder of the projection horizon. Therefore, it was argued that, unless all shocks affecting the latest figures were considered to be of a purely temporary nature, this should have moved the balance of risks to the downside.

On the other hand it was argued that, while there had recently been somewhat more negative news than positive news, this had been incorporated in the downward revision to the baseline Eurosystem staff projection, such that the balance of risks pertaining to this new projection could be maintained as fairly balanced. It was also remarked that the assessment of still balanced risks to growth was supported by the emergence of new upside risks, namely a further decline in oil prices since the cut-off date for the projections and the likelihood of more stimulus coming from fiscal measures. Against this background, caution was expressed against moving the balance of risks to the downside.




Wednesday January 09 2019
Eurozone Jobless Rate Drops to Over 10-Year Low
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Euro Area seasonally-adjusted unemployment rate fell to 7.9 percent in November 2018 from a downwardly revised 8 percent in the previous month and below market expectations of 8 percent. It was the lowest jobless rate since October 2008 as the number of unemployed continued to decline.

Compared with October, the number of unemployed in the Euro Area decreased by 90,000 to 13.040 million. Compared with the previous year, it fell by 1.135 million.

Considering the European Union as a whole, the unemployment rate stood at 6.7 percent in November, unchanged from previous month and down from 7.3 percent a year ago. This remained the lowest rate recorded in the EU28 since the start of the EU monthly unemployment series in January 2000. There were 16.491 million people unemployed, a decrease of 107,000 from the previous month and of 1.489 million from November 2017.

Among EU Member States, the lowest unemployment rates in November were recorded in Czechia (1.9 percent), Germany (3.3 percent) and the Netherlands (3.5 percent). The highest unemployment rates were observed in Greece (18.6 percent in September 2018) and Spain (14.7 percent). Compared with a year ago, the largest decreases were registered in Croatia (7.8 percent from 10 percent), Greece (18.6 percent from 20.8 percent between November 2018 and November 2017) and Spain (14.7 percent from 16.5 percent).

The youth unemployment rate was 15.2 percent in the EU28 and 16.9 percent in the Euro Area, compared with 16.1 percent and 17.8 percent respectively in November 2017. The lowest rates were observed in Czechia (4.9 percent), Germany (6.1 percent) and the Netherlands (6.9 percent), while the highest were recorded in Greece (36.6 percent in September 2018), Spain (34.1 percent) and Italy (31.6 percent).




Friday January 04 2019
Eurozone December Inflation Rate at 8-Month Low
Eurostat | Stefanie Moya | stefanie.moya@tradingeconomics.com

Annual inflation rate in the Euro Area is expected to ease to 1.6 percent in December of 2018 from 1.9 percent in the previous month and below market expectations of 1.8 percent. It was the lowest inflation rate since April, mainly due to a slowdown in cost of energy and food, alcohol & tobacco.

Looking at the main components of euro area inflation, prices are expected to increase at a softer pace for energy (5.5 percent compared to 9.1 percent in November); food, alcohol & tobacco (1.8 percent compared to 1.9 percent) mostly due to processed food, alcohol & tobacco (1.7 percent compared to 2.0 percent). On the other hand, inflation should remained unchanged for services (1.3 percent, the same as in November) and non-energy industrial goods (0.4 percent). 

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 remain steady at 1 percent, unchanged from the prior month and in line with market consensus.


Monday December 17 2018
Euro Area Trade Surplus Narrows in October
Eurostat | Stefanie Moya | stefanie.moya@tradingeconomics.com

The Euro Area narrowed to EUR 14.0 billion in October 2018 from EUR 17.8 billion in the same month a year earlier. Exports rose 11.4 percent year-on-year while imports increased at a faster 14.8 percent.

Exports of goods to the rest of the world advanced 11.4 percent in October to EUR 209.7 billion compared to EUR 188.3 billion in October 2017. Meantime, imports of goods to the rest of the world jumped 14.8 percent to EUR 195.8 billion in October from last year’s EUR 170.5 billion. Intra-euro area trade surplus increased 8.7 percent year-on-year to EUR 175.8 billion in October.

In the first ten months of the year, exports rose 4.4 percent year-on-year to EUR 1896.0 billion and imports went up 6.9 percent to EUR 1740.0 billion. As a result the Euro Area recorded a surplus of EUR 156.0 billion from EUR 187.0 billion. Intra-Euro area trade advanced to EUR 1625.3 billion, up by 6.0 percent compared with the same period of 2017.

Considering the European Union, exports increased 13.4 percent to EUR 180.7 billion from EUR 159.4 billion in October 2017, and imports jumped 16.8 percent to EUR 188.4 billion from EUR 161.3 billion, posting a EUR 7.7 billion trade deficit. 

In January to October 2018, EU28 exports of goods went up by 5.0 percent year-on-year to EUR 1627.9 billion and imports rose by 6.7 percent to EUR 1650.3 billion. As a result, the EU28 trade balance shifted to a EUR 22.4 billion deficit from a EUR 4.1 billion surplus in the same period of 2017. Higher imports were boosted by purchases of primary goods (17.0 percent), namely energy (26.2 percent) and manufactured goods (3.7 percent), mainly machinery and vehicles (3.9 percent), chemicals (3.6 percent) and other manufactured goods (3.5 percent). On the other hand, purchases of food and drink fell (-0.2 percent). China was the biggest import parnter, with purchases rising 4.8 percent; the US was the second highest import partner increasing 3.2 percent; Russia (+16.5 percent) and  Norway (+15.5 percent). Higher exports were driven by sales of primary goods (7.1 percent), mostly due to energy (17.5 percent) and raw materials (3.4 percent). Also, sales of manufactured goods rose 4.0 percent, namely chemicals (8.2 percent), other manufactured goods (4.1 percent) and machinery and vehicles (2.2 percent). The US was the most important export partner, with sales advancing 8.2 percent), followed by China (+7.3 percent) and Switzerland (+6.9 percent).


Monday December 17 2018
Eurozone Inflation Rate Revised Down to 1.9%
Joana Taborda | joana.taborda@tradingeconomics.com

Annual inflation rate in the Euro Area was revised lower to 1.9 percent in November of 2018 from a preliminary of 2 percent and 2.2 percent in October. It is the lowest inflation rate in six months amid a broad-based price slowdown, final figures showed.

Year-on-year, the highest contributions came from energy (+0.88 percentage points), followed by services (+0.57 pp), food, alcohol & tobacco (+0.38 pp) and non-energy industrial goods (+0.11 pp). Prices rose less for services (1.3 percent compared to 1.5 percent in October); energy (9.1 percent compared to 10.7 percent); processed food, alcohol & tobacco energy (2 percent compared to 2.2 percent); and unprocessed food (1.8 percent compared to 2.1 percent). Meanwhile, non-energy industrial goods inflation was unchanged at 0.4 percent.

Among major economies, inflation eased in Germany (2.2 percent compared to 2.4 percent), France (2.2 percent compared to 2.5 percent), Italy (1.6 percent compared to 1.7 percent) and Spain (1.7 percent compared to 2.3 percent).

Annual core inflation, which excludes volatile prices of energy, food, alcohol & tobacco and at which the ECB looks in its policy decisions, edged down to 1 percent from 1.1 percent in October, in line with earlier estimates. 

On a monthly basis, consumer prices fell 0.2 percent, after rising 0.2 percent in October and matching market expectations. 

Considering the European Union, annual inflation fell to 2 percent from 2.2 percent. The lowest annual rates were registered in Denmark (0.7 percent), Ireland (0.8 percent) and Portugal (0.9 percent). The highest annual rates were recorded in Estonia, Hungary and Romania (all 3.2 percent). 


Thursday December 13 2018
ECB Holds Rates, Confirms End of QE
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

The European Central Bank held its benchmark refinancing rate at 0 percent on December 13th and confirmed the end of its €2.6 trillion bond purchase scheme later this month, while it will keep reinvesting cash from maturing bonds for an extended period of time. Policymakers also reiterated they expect key interest rates to remain at record low levels at least through the summer of 2019.

The deposit facility rate and the marginal lending facility rate were also left unchanged at -0.4 percent and 0.25 percent, respectively.

Excerpts from the ECB Introductory Statement:

While incoming information has been weaker than expected, reflecting softer external demand but also some country and sector-specific factors, the underlying strength of domestic demand continues to underpin the euro area expansion and gradually rising inflation pressures. This supports our confidence that the sustained convergence of inflation to our aim will proceed and will be maintained even after the end of our net asset purchases. At the same time, uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility remain prominent. Significant monetary policy stimulus is still needed to support the further build-up of domestic price pressures and headline inflation developments over the medium term. Our forward guidance on the key ECB interest rates, reinforced by the reinvestments of the sizeable stock of acquired assets, continues to provide the necessary degree of monetary accommodation for the sustained convergence of inflation to our aim. In any event, the Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation continues to move towards the Governing Council’s inflation aim in a sustained manner.

This assessment is broadly reflected in the December 2018 Eurosystem staff macroeconomic projections for the euro area. These projections foresee annual real GDP increasing by 1.9% in 2018, 1.7% in 2019, 1.7% in 2020 and 1.5% in 2021. Compared with the September 2018 ECB staff macroeconomic projections, the outlook for real GDP growth has been revised slightly down in 2018 and 2019.

The risks surrounding the euro area growth outlook can still be assessed as broadly balanced. However, the balance of risks is moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.

According to Eurostat’s flash estimate, euro area annual HICP inflation declined to 2.0% in November 2018, from 2.2% in October, reflecting mainly a decline in energy inflation. On the basis of current futures prices for oil, headline inflation is likely to decrease over the coming months. Measures of underlying inflation remain generally muted, but domestic cost pressures are continuing to strengthen and broaden amid high levels of capacity utilisation and tightening labour markets, which is pushing up wage growth. Looking ahead, underlying inflation is expected to increase over the medium term, supported by our monetary policy measures, the ongoing economic expansion and rising wage growth.

This assessment is also broadly reflected in the December 2018 Eurosystem staff macroeconomic projections for the euro area, which foresee annual HICP inflation at 1.8% in 2018, 1.6% in 2019, 1.7% in 2020 and 1.8% in 2021. Compared with the September 2018 ECB staff macroeconomic projections, the outlook for HICP inflation has been revised slightly up for 2018 and down for 2019.


Wednesday December 12 2018
Eurozone Industrial Output Growth Above Forecasts
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Industrial output in the Euro Area rose 1.2 percent from a year earlier in October 2018, following a downwardly revised 0.8 percent growth in the previous month and easily beating market consensus of a 0.7 percent increase.

Production of capital goods posted the biggest increase (3.7 percent vs 2.2 percent in September), followed by non-durable consumer goods (1.2 percent vs 1.3 percent) while durable consumer goods output was unchanged (vs -2.3 percent in September). On the other hand, enery production slumped 3.1 percent, after a 1 percent fall in the previous month, and intermediate goods output shrank 0.4 percent, the same pace as in September.

In the EU28, industrial production went up 1.3 percent in October, following a 1 percent gain in September, as output increased for capital goods (3.3 percent vs 2.1 percent), non-durable consumer goods (1.5 percent vs 1.6 percent), durable consumer goods (1.2 percent vs -1.4 percent), and intermediate goods (0.1 percent, the same as in September). Energy output, however, continued to contract (-1.7 percent vs -0.5 percent).

Among Member States for which data are available, the highest increases in industrial production were registered in Lithuania (9.2 percent), Ireland (6.1 percent) and Poland (5 percent), and the largest decreases in Croatia (-2.4 percent), Latvia (-1.9 percent) and Greece (-1 percent).

On a monthly basis, industrial output grew 0.2 percent in October, reversing a 0.6 percent decline in September and matching market expectations. Output rose for: capital goods (1 percent vs -0.3 percent); durable consumer goods (0.4 percent vs unchanged); and intermediate goods (0.2 percent vs -0.3 percent). However, non-durable consumer goods output showed no growth (vs -1.6 percent in September) and energy production dropped 1.7 percent (-1.9 percent in September).

In the EU28, output rose 0.2 percent in October, following a decline of 0.4 percent in September, due to production of capital goods (0.8 percent vs -0.4 percent), durable consumer goods (0.6 percent vs -0.2 percent), intermediate goods (0.3 percent vs -0.2 percent) and non-durable consumer goods (0.3 percent vs -1.2 percent). On the other hand, energy output decreased 1.4 percent, after a 0.8 percent decline in the previous month.

Among Member States for which data are available, the largest increases in industrial production were registered in Lithuania (7.4 percent), Slovenia (2.5 percent), Hungary and Sweden (both 2.1 percent), and the highest decreases in Finland (-2.6 percent), Greece (-1.5 percent), Latvia (-1.2 percent) and Czechia (-1.1 percent).