Thursday December 08 2016
ECB Extends QE Until December 2017
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

The ECB held its benchmark refinancing rate at 0 percent for the seventh straight time on December 8th, as widely expected, and extended its programme of quantitative easing until December 2017. Policymakers decided to continue its purchases under the asset purchase programme at the current monthly pace of €80 billion until the end of March 2017. From April 2017, the net asset purchases are intended to continue at a monthly pace of €60 billion until the end of December 2017, or beyond, if necessary.

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

As regards non-standard monetary policy measures, we will continue to make purchases under the asset purchase programme (APP) at the current monthly pace of €80 billion until the end of March 2017. From April 2017, our net asset purchases are intended to continue at a monthly pace of €60 billion 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. If, in the meantime, the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment of the path of inflation, the Governing Council intends to increase the programme in terms of size and/or duration. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the APP.

To ensure the continued smooth implementation of the Eurosystem’s asset purchases, the Governing Council decided to adjust the parameters of the APP as of January 2017 as follows. First, the maturity range of the public sector purchase programme will be broadened by decreasing the minimum remaining maturity for eligible securities from two years to one year. Second, purchases of securities under the APP with a yield to maturity below the interest rate on the ECB’s deposit facility will be permitted to the extent necessary.

The key ECB interest rates were kept unchanged and we continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases.  

Today’s extension of the asset purchase programme has been calibrated to preserve the very substantial degree of monetary accommodation necessary to secure a sustained convergence of inflation rates towards levels below, but close to, 2% over the medium term. Together with the sizeable volume of past purchases and forthcoming reinvestments, it ensures that financial conditions in the euro area will remain very favourable, which continues to be crucial to achieve our objective. In particular, the extension of our purchases over a longer horizon allows for a more sustained market presence and, therefore, a more lasting transmission of our stimulus measures. This calibration reflects the moderate but firming recovery of the euro area economy and still subdued underlying inflationary pressures. The Governing Council will closely monitor the evolution of the outlook for price stability and, if warranted to achieve its objective, will act by using all the instruments available within its mandate.





Tuesday December 06 2016
Eurozone Q3 GDP Growth Confirmed At 0.3%
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Euro Area economy advanced 0.3 percent on quarter in the three months to September of 2016, the same as in the previous period and in line with earlier estimates. Household consumption and public spending were the main drivers of growth while fixed investment slowed sharply and net external demand contributed negatively.

On the expenditure side, household consumption increased by 0.3 percent (+0.2 percent in Q2) and government spending advanced by 0.5 percent (+0.4 percent in Q2). Meanwhile, gross fixed capital formation rose at a slower 0.2 percent (+1.2 percent in Q2), and changes in inventories added 0.1 p.p. to expansion (-0.2 p.p. in Q2). The contribution of external trade was negative, with exports rising 0.1 percent (+1.2 percent in Q2) and imports increasing at a faster 0.2 percent (+1.2 percent in Q2).

On the production side, industry grew by 0.4 percent (+0.1 percent in Q2), boosted by manufacturing (+0.3 percent from -0.1 percent in Q2). Construction advanced by 0.5 percent (-0.1 percent in Q2). Among services, output rose for: trade, transport, accommodation and food service activities (+0.4 percent, the same as in Q2); administration and other public services (+0.3 percent from +0.2 percent in Q2), real estate activities (+0.1 percent from +0.2 percent in Q2); professional and support service activities (+0.3 percent from +1 percent in Q2); and financial and insurance activities (+0.1 percent from -0.4 percent in Q2). By contrast, output fell for agriculture, forestry and fishing (-0.6 percent, after showing no growth in Q2).

Year-on-year, the economy advanced 1.7 percent, following a 1.6 percent expansion in the previous three months and better than preliminary figures of 1.6 percent. 




Thursday December 01 2016
Euro Area Unemployment Rate Falls to 7-Year Low
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

The unemployment rate in the Eurozone declined to 9.8 percent in October of 2016 from a downwardly revised 9.9 percent in September. It is the lowest jobless rate since July of 2009 and below market expectations of 10 percent. Unemployment has been falling since a record high of 12.1 percent in April of 2013 but remains above a record low of 7.2 percent in March of 2008.

Considering the European Union, the jobless rate fell to 8.3 percent in October from 8.4 percent in September, reaching the lowest since February of 2009.
 
20.448 million people were unemployed in the EU28, of whom 15.908 million in the Euro Area. Compared with September, the number of persons unemployed decreased by 190 000 in the EU28 and by 178 000 in the Euro Area.
 
Among Member States, the lowest unemployment rates were recorded in the Czech Republic (3.8 percent) and Germany (4.1 percent) and the highest in Greece (23.4 percent in August 2016) and Spain (19.2 percent).




Wednesday November 30 2016
Eurozone Inflation Rate Rises To Fresh 2-1/2-Year High
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the Euro Area are expected to increase by 0.6 percent year-on-year in November 2016, following a 0.5 percent growth in the previous month and in line with market consensus. It was the highest inflation rate since April 2014, as prices for services and food continued to grow.

Services is expected to have the highest annual rate in November (+1.1 percent, stable compared with October), followed by food, alcohol and tobacco (+0.7 percent, compared with +0.4 percent in October), non-energy industrial goods (+0.3 percent, stable compared with October) and energy (-1.1 percent, compared with -0.9 percent in October).

Core inflation rate, which excludes prices of energy, food, alcohol and tobacco, is expected to be unchanged for the third straight month at 0.8 percent.

Excluding energy only, the inflation rate was estimated at 0.8 percent, higher than 0.7 percent in the previous month.




Thursday November 17 2016
ECB Points to Further Stimulus at December Meeting
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

ECB policymakers agreed on the need to execute its asset purchases in line with its past decisions and to adopt further measures, if needed, to support the Eurozone's recovery and bring inflation back to target, minutes from ECB's November meeting showed. ECB officials also agreed that in December they would be in a better position to form a firmer view on the inflation outlook, as they would have access to the latest incoming data, the new Eurosystem staff macroeconomic projections and the results of the work of the Eurosystem committees on the options to ensure the smooth implementation of the APP until March 2017, or beyond, if necessary.

There was wide agreement among members that it was premature to make a firm assessment of the outlook for price stability and to discuss its implications for the monetary policy stance at the current meeting. While the recovery of the euro area economy appeared to be on track, underlying inflation still lacked a convincing upward trend and the scenario for growth and inflation continued to be predicated on the prevailing very favourable financing conditions, which to a large extent reflected the current accommodative monetary policy stance. In this context, it was recalled that patience continued to be warranted as the full effects of the monetary policy measures were still unfolding, given the transmission lags with which policy was feeding through to the ultimate objective, and which, in the wake of private and public sector balance sheet adjustments, were likely to be longer than usual.

Members widely agreed that in December the Governing Council would be in a better position to form a firmer view on the inflation outlook and the progress being made in achieving a sustained adjustment in the path of inflation, with a view to considering the appropriate implications for the monetary policy stance. In December the Governing Council would have the benefit of the latest incoming data, the new Eurosystem staff macroeconomic projections extending through to 2019 and the results of the work of the Eurosystem committees on the options to ensure the smooth implementation of the APP until March 2017, or beyond, if necessary.

The view was widely shared among members that a discussion on the changes to the technical parameters of the APP should not be separate from an assessment of the medium-term inflation outlook and the implications this might have for the appropriate monetary policy stance. The questions of how to ensure the smooth implementation of the APP until March 2017, or beyond, if necessary, and how to preserve the very substantial monetary support that was necessary in order to secure a return of inflation rates towards levels below, but close to, 2% were seen to be closely linked. Members took note of the ongoing technical work of the committees that was designed to ensure a smooth execution of the programme until March 2017, or beyond, if necessary.

All in all, members widely shared the view that it was imperative to remain fully committed to preserving the very substantial degree of monetary accommodation that was necessary to secure a sustained convergence of inflation towards levels below, but close to, 2% over the medium term. Financing conditions had to remain supportive to underpin the recovery in growth and inflation, also in the face of weak underlying price pressures and prevailing uncertainties. The Governing Council had to remain fully determined to execute its asset purchases in line with its past decisions and to adopt further measures, if needed, to put inflation back on a sustainable path towards levels compatible with its inflation aim.


Thursday November 17 2016
Eurozone Inflation Rate Confirmed at 28-Month High
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Eurozone's consumer prices increased 0.5 percent year-on-year in October 2016, following a 0.4 percent gain in the previous month and in line with preliminary estimate. It was the highest inflation rate since June 2014, boosted by higher cost of restaurants and cafés, rents and tobacco.

The largest upward impacts to euro area annual inflation came from restaurants and cafés (+0.07 percentage points), rents and tobacco (both +0.04 pp); while gas (-0.12 pp), vegetables (-0.06 pp) and milk, cheese and eggs (-0.05 pp) had the biggest downward impacts.

Compared with September 2016, annual inflation rose in twenty-one Member States, remained stable in one and fell in six. The highest annual rates were recorded in Belgium (1.9 percent) and Austria (1.4 percent). The lowest annual rates were registered in Bulgaria and Cyprus (both -1 percent).

Core inflation which excludes energy, food, alcohol and tobacco was recorded at 0.8 percent, the same as in September. Excluding fuel only, the inflation eased to 0.7 percent from 0.8 percent the previous month.  

On a monthly basis, consumer prices increased by 0.2 percent, easing from a 0.4 percent growth in September and missing market expectations of a 0.2 percent rise.


Tuesday November 15 2016
Eurozone Trade Surplus Widens in September
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Eurozone trade surplus rose 37.8 percent to €26.5 billion in September 2016 compared to a €19.2 billion in the same month of the previous year, above market consensus of €22.5 billion. Exports increased 2 percent while imports dropped 2 percent. Considering the first nine months of the year, the trade surplus increased to €204.8 billion, compared with €169.1 billion in the same period of 2015.

Exports of goods to the rest of the world advanced 2 percent to €176.7 billion from €173.2 billion a year earlier; while imports declined 2 percent to €150.2 billion compared to €154 billion.

In January to September 2016, exports were nearly unchanged at €1,512 billion and imports dropped 3 percent to €1,307.1 billion, resulting in a surplus of €204.8 billion, compared with €169.1 billion in the same period a year earlier. 

The European Union recorded a €0.5 billion surplus in trade in goods with the rest of the world, compared with a €3.7 billion surplus in September 2015. Exports went down 1 percent to €147.2 billion from €148.9 billion a year earlier; while imports rose 1 percent to €146.7 billion compared to €145.2 billion.

In January to September 2016, the European Union recorded a surplus of €12.7 billion, compared with €31.6 billion in the same period a year ago. Exports of goods dropped 4 percent to €1,277.4 billion from €1,330.5 billion in the same period a year earlier, led by a fall in sales of energy (-20 percent), raw materials (-5 percent), food and drink (-2 percent), machinery and vehicles (-2 percent), other manufactured goods (-2 percent) and chemicals (-1 percent). Imports contracted 3 percent to €1,264.6 billion from €1,298.9 billion, as purchases declined the most for energy (-27 percent) and raw materials (-8 percent). Among trading partners, the biggest decreases in shipments were reported for South Korea (-10 percent) and Switzerland (-8 percent); while the decline in imports mainly reflected the strong fall in purchases from Norway (-20 percent) and Russia (-19 percent).




Tuesday November 15 2016
Euro Area GDP Growth in Line With Estimates at 0.3%
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

The Eurozone economy expanded 0.3 percent on quarter in the three months to September of 2016, the same as in the previous period and in line with preliminary figures, the second estimate showed. GDP growth slowed in most countries including Germany and Spain but picked up in France and Italy.

Among countries for which data is already available, GDP growth slowed in Germany (0.2 percent compared to 0.4 percent in Q2), Belgium (0.2 percent compared to 0.5 percent in Q2), Estonia (0.2 percent compared to 0.5 percent), Spain (0.7 percent compared to 0.8 percent), Cyprus (0.7 percent compared to 0.8 percent), Latvia (0.5 percent compared to 0.6 percent), Lithuania (0.1 percent compared to 0.4 percent) and Slovakia (0.7 percent compared to 0.9 percent). 

In contrast, economic growth accelerated in France (0.2 percent compared to -0.1 percent), Italy (0.3 percent compared to 0.0 percent), Greece (0.5 percent compared to 0.3 percent), Austria (0.5 percent compared to 0.1 percent), Portugal (0.8 percent compared to 0.3 percent), Finland (0.5 percent compared to 0.0 percent) and in Netherlands, GDP growth was steady at 0.7 percent. 

Year-on-year, the Euro Area economy expanded 1.6 percent, the same as in the previous period and also in line with earlier estimates.

Considering the European Union, the GDP growth was steady at 0.4 percent quarter-on-quarter and at 1.8 percent year-on-year. 


Monday November 14 2016
Euro Area Industrial Production Rises More than Expected
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Industrial production in the Euro Area increased 1.2 percent year-on-year in September of 2016, following an upwardly revised 2.2 percent gain in August and better than market expectations of a 1 percent rise. On a monthly basis, production declined 0.8 percent, compared to forecasts of a 1 percent drop and mostly due to a fall in durable goods.

Year-on-year, production went up for non-durable consumer goods (1.9 percent); intermediate goods (1.3 percent); capital goods (1.2 percent) and energy (0.7 percent) but fell for durable consumer goods (-0.2 percent). 

Considering the EU28, output went up 1.2 percent, due to intermediate goods (1.6 percent); capital goods (1.5 percent); durable consumer goods (0.9 percent) and non-durable consumer goods (0.8 percent) while production of energy fell 0.1 percent. Among Member States for which data are available, the highest increases were registered in Lithuania (+7.9 percent), Slovenia (+7.4 percent) and Estonia (+6.5 percent) while decreases were seen in Denmark (-3.2 percent), France (-1.0 percent) and Ireland (-0.9 percent).

On a monthly basis, Eurozone industrial output fell 0.8 percent, dragged down by production of durable consumer goods (-5.6 percent); capital goods (-2.2 percent); intermediate goods (-0.7 percent) and energy (-0.2 percent) while production of non-durable consumer goods rose by 0.3 percent. 

In the EU28, the decrease of 0.7 percent is due to production of durable consumer goods falling by 3.7 percent; capital goods by 1.6 percent; energy by 0.6 percent; non-durable consumer goods by 0.4 percent and intermediate goods by 0.1 percent. Among Member States for which data are available, the largest decreases were registered in Denmark (-8.1 percent); Germany (-1.9 percent) and Greece (-1.8 percent), and the highest increases in Sweden (+7.6 percent); Ireland (+6.4 percent) and Estonia (+5.2 percent).




Thursday November 03 2016
Eurozone Jobless Rate Steady at 10% in September
Eurostat | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The seasonally adjusted unemployment rate in the Euro Area stood at 10 percent in September 2016, unchanged from a downwardly revised August rate and lower than 10.6 percent a year earlier. The figure came in line with market expectations and hit its lowest level since June 2011.

The EU28 unemployment rate was 8.5 percent, stable compared to August 2016 and down from 9.2 percent in September 2015. This was the lowest rate recorded in the EU28 since February 2009.

Eurostat estimates that 20.789 million men and women in the EU28, of whom 16.181 million were in the euro area, were unemployed. Compared with August 2016, the number of persons unemployed decreased by 150 000 in the EU28, and by 101 000 in the euro area. Compared with September 2015, unemployment fell by 1.596 million in the EU28 and by 905 000 in the euro area. 

Among the Member States, the lowest unemployment rates in September 2016 were recorded in the Czech Republic (4.0%) and Germany (4.1%). The highest unemployment rates were observed in Greece (23.2% in July 2016) and Spain (19.3%). Compared with a year ago, the unemployment rate in September 2016 fell in twenty-four Member States, while it increased in Estonia (from 5.4% to 7.6% between August 2015 and August 2016), Austria (from 5.7% to 6.3%), Denmark (from 6.0% to 6.3%) and Italy (from 11.4% to 11.7%). The largest decreases were registered in Croatia (from 16.4% to 12.6%), Cyprus (from 14.3% to 12.0%) and Spain (from 21.4% to 19.3%).

There were 4.125 million young persons (under 25) unemployed in the EU28, of whom 2.875 million were in the euro area. Compared with September 2015, youth unemployment decreased by 425 000 in the EU28 and by 243 000 in the euro area. In September 2016, the youth unemployment rate was 18.2% in the EU28 and 20.3% in the euro area, compared with 20.0% and 22.2% respectively in September 2015. In September 2016, the lowest rate was observed in Germany (6.8%), and the highest were recorded in Greece (42.7% in July 2016), Spain (42.6%) and Italy (37.1%)