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. 




Tuesday May 16 2017
Euro Area Trade Surplus Hits Record High
Eurostat | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Eurozone trade surplus widened to a record high of €30.9 billion in March 2017 from €28.2 billion surplus in the same month of the previous year and above market expectations of €17.8 billion. Exports increased 13 percent to €202.3 billion and imports went up 17 percent to €171.4 billion.

Considering the first three months of the year, the trade surplus narrowed to €46.7 billion from €51.1 billion a year ago, as exports were up by 10 percent to €536.5 billion while imports rose 12 percent to €489.9 billion.

Meanwhile, the European Union recorded a €10.5 billion surplus in trade in goods with the rest of the world, compared with a €5.9 billion surplus in March 2016. 

In January to March 2017, the trade gap rose to €5.7 billion, compared with €3.7 billion in the same period a year earlier, as exports went up by 13 percent to €462.5 billion and imports jumped 13 percent to €468.2 billion.

Exports of primary goods surged 27 percent to €66.9 billion, led by an increase in sales of energy (62 percent), raw materials and (27 percent) and food and drink (7 percent). Also, manufactured goods rose 11 percent to €379.5 billion, driven by chemicals (14 percent), machinery and vehicles (11 percent) and other manufactured goods (8 percent). Among trading partners, the biggest increases in exports were reported for Russia (28 percent), the US (11 percent), China (22 percent), South Korea (12 percent), Switzerland (12 percent) and Japan (14 percent).

Imports of primary goods rose 38 percent to €138.9 billion, led by energy (60 percent), raw materials (20 percent) and food and drink (6 percent). Imports of manufactured goods increased 6 percent to €314.7 billion, driven by machinery and vehicles (7 percent) and other manufactured goods (5percent) and chemicals (6 percent). Among trading partners, the biggest increases in imports were reported for Russia (47 percent), Norway (43 percent); South Korea (30 percent) and  Canada (13 percent).




Friday May 12 2017
Eurozone Industrial Output Rises 1.9% YoY In March
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Industrial output in the Euro Area increased by 1.9 percent year-on-year in March 2017, following an upwardly revised 1.4 percent rise in February but below market expectations of 2.3 percent gain. it was the sharpest increase in industrial output in three months boosted by higher production of consumer, intermediate and capital goods.

Year-on-year, the increase of 1.9 percent in industrial production was due to higher production of durable consumer goods (4.1 percent from 1.7 percent in February), intermediate goods (3.2 percent from 2 percent), capital goods (2.7 percent from 1.5 percent) and non-durable consumer goods (1.7 percent from -2.3 percent), while production of energy fell sharply (-4.8 percent from 2.5 percent).

Among EA Member States for which data are available, the highest increases in industrial production were registered in Estonia (14.8 percent) and Latvia (10 percent). A decrease was observed in the Netherlands (-2.2 percent).

In the EU28, production rose 2.4 percent, following a 2.1 percent gain in the previous month and boosted by strong production of intermediate, consumer and capital goods, while production of energy contracted.

On a monthly basis, industrial output in the Euro Area edged down 0.1 percent in March 2017, the same pace as a downwardly revised 0.1 percent fall in February and below market expectations of 0.3 percent gain. The decline was led by a 3.2 percent drop in energy production, following a contraction of 4.9 percent in the previous month. Meanwhile, output rose for non-durable consumer goods (2.1 percent from -1.3 percent in February), durable consumer goods (0.9 percent from 0.5 percent), intermediate goods (0.3 percent from 1.2 percent) and capital goods (0.2 percent from 1 percent). In the first quarter of the year, industrial production showed no growth after expanding by 1.1 percent in the previous period.

Among EA Member States for which data are available, the largest decreases in industrial production were registered in Lithuania (-3.1 percent), Greece (-2 percent) and the Netherlands (-1.7 percent), and the highest increases in Estonia (2.4 percent) and France (2 percent).

In the EU28, indsutrial production showed no growth for the second consecutive period.




Wednesday May 03 2017
Eurozone Economy Grows 0.5% In Q1
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Eurozone economy advanced 0.5 percent on quarter in the three months to March of 2017, the same pace as in the previous period and in line with market expectations, the preliminary flash estimate showed. Among countries for which data is already available, GDP growth picked up in Spain, Austria, Belgium and Latvia but eased in France and Lithuania.

Among countries for which data is already available, GDP expanded at a faster pace in: Spain (0.8 percent from 0.7 percent in Q4); Austria (0.6 percent from 0.5 percent); Belgium (0.5 percent from 0.4 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) and Lithuania (1.4 percent from 1.5 percent). 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 expanded 1.7 percent, easing from an upwardly revised 1.8 percent growth in the previous period and also in line with market consensus. 

Considering the European Union, the GDP growth eased to 0.4 percent (0.6 percent in Q4) quarter-on-quarter and was steady at 1.9 percent year-on-year. 


Tuesday May 02 2017
Eurozone Unemployment Rate Unchanged At 8-Year Low
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The unemployment rate in the Euro Area came in at 9.5 percent in March 2017, unchanged from the previous month's figure and slightly above market expectations of 9.4 percent. It was the lowest jobless rate since April 2009. A year earlier, the unemployment was higher at 10.2 percent.

Compared with February 2017, the number of unemployed decreased by 5,000 to 15.515 million in the Euro Area. Compared with the previous year, it fell by 991,000.

Considering the European Union, the unemployment rate was 8 percent in March 2017, down from 8.1 percent in February and from 8.7 percent a year ago. This remains the lowest rate recorded in the EU28 since January 2009. There were 19.716 million people unemployed, a decrease of 56,000 from the previous month and of 1.647 million from March 2016.

Among EU Member States,  the lowest unemployment rates in March 2017 were recorded in the Czech Republic (3.2 percent), Germany (3.9 percent) and Malta (4.1 percent). The highest unemployment rates were observed in Greece (23.5 percent in January 2017) and Spain (18.2 percent). Compared with a year ago, the unemployment rate in March 2017 fell in twenty-three Member States, remained stable in France and Austria, while it increased in Denmark (to 6.2 percent from 6 percent), Italy (to 11.7 percent from 11.5 percent) and Lithuania (to 8.1 percent from 8 percent). The largest decreases were registered in Croatia (to 11.3 percent from 14 percent), Portugal (to 9.8 percent from 12 percent), Spain (to 18.2 percent from 20.3 percent) and Ireland (to 6.4 percent from 8.3 percent).




Friday April 28 2017
Eurozone Inflation Rate Rises To 1.9% In April
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the Euro Area are expected to increase by 1.9 percent year-on-year in April 2017, following a 1.5 percent rise in the previous month and beating market expectations of 1.8 percent gain, a flash estimate showed. Prices rose at a faster pace for energy and services.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in April (7.5 percent, compared with 7.4 percent in March), followed by services (1.8 percent, compared with 1 percent in March), food, alcohol and tobacco (1.5 percent, compared with 1.8 percent in March) and non-energy industrial goods (0.3 percent, stable compared with March).

Annual core inflation, which excludes volatile prices of energy and unprocessed food and tobacco and at which the ECB looks in its policy decisions, rose to 1.2 percent from 0.7 percent in March.


Thursday April 27 2017
ECB Leaves Monetary Policy Unchanged
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

The European Central Bank held its benchmark refinancing rate at 0 percent for the tenth consecutive meeting and left the pace of its bond-purchases unchanged on April 27th, as widely expected. Policymakers confirmed the monthly asset purchases will run at the current monthly pace of €80 billion until March, and from April, they are intended to continue at a monthly pace of €60 billion until the end of the year. Both the deposit rate and the lending rate were also left steady at -0.4 percent and 0.25 percent, respectively.

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 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. Regarding non-standard monetary policy measures, we confirm that our net asset purchases, at the new 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. The net purchases will be made alongside reinvestments of the principal payments from maturing securities purchased under the asset purchase programme.

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. Incoming data since our meeting in early March confirm that the cyclical recovery of the euro area economy is becoming increasingly solid and that downside risks have further diminished. At the same time, underlying inflation pressures continue to remain subdued and have yet to show a convincing upward trend. Moreover, the ongoing volatility in headline inflation underlines the need to look through transient developments in HICP inflation, which have no implication for the medium-term outlook for price stability.

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.

Headline inflation has been recovering from the very low levels seen in 2016, largely owing to higher energy price increases. After reaching 2.0% in February 2017, euro area annual HICP inflation stood at 1.5% in March. This reflected mainly lower energy and unprocessed food price inflation, but also a decline in services price inflation. Looking ahead, on the basis of current futures prices for oil, headline inflation is likely to increase in April and thereafter to hover around current levels until the end of this year. However, as unutilised resources are still weighing on domestic wage and price formation, measures of underlying inflation remain low and are expected to rise only gradually over the medium term, supported by our monetary policy measures, the expected continuing economic recovery and the corresponding gradual absorption of slack.



Wednesday April 19 2017
Euro Area Trade Surplus Narrows In February
Eurostat | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Eurozone trade surplus declined to €17.8 billion in February 2017 from €18.2 billion surplus in the same month of the previous year while above market expectations of €16.2 billion. Exports increased 4 percent to €163.2 billion while imports went up at a faster 5 percent to €152.6 billion.

Considering the first two months of the year, the trade surplus narrowed to €17.3 billion from €23 billion a year ago, as exports were up by 8 percent to €333.7 billion while imports rose 11 percent to €316.4 billion.

Meanwhile, the European Union recorded a €1.7 billion surplus in trade in goods with the rest of the world, compared with a €2.6 billion gap in February 2016. 

In January to February 2017, the trade gap rose to €14.8 billion, compared with €9.6 billion in the same period a year earlier, as exports went up by 11 percent to €287.6 billion and imports jumped 13 percent to €302.4 billion.

Exports of primary goods surged 27 percent to €42.9 billion, led by an increase in sales of energy (67 percent), raw materials and (26 percent) and food and drink (5 percent). Also, manufactured goods rose 9 percent to €233.4 billion, driven by chemicals (13 percent), machinery and vehicles (9 percent) and other manufactured goods (5 percent). Among trading partners, the biggest increases in exports were reported for Russia (30 percent), the US (10 percent), China (19 percent) and South Korea (15 percent). 

Imports of primary goods rose 39 percent to €91.2 billion, led by energy (64 percent), raw materials (16 percent) and food and drink (3 percent). Imports of manufactured goods increased 4 percent to €202.4 billion, driven by machinery and vehicles (7 percent) and other manufactured goods (2 percent). Among trading partners, the biggest increases in imports were reported for Russia (55 percent), Norway (44 percent); South Korea (31 percent) and  Canada (16 percent).