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).




Wednesday April 19 2017
Euro Area Inflation Rate Confirmed At 3-Month Low
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the Euro Area rose 1.5 percent year-on-year in March of 2017, easing from a 2 percent increase in the previous month and matching preliminary estimates. It is the lowest inflation rate in three months, due to a slowdown in prices of fuels for transport, heating oil and vegetables and a drop in cost of package holidays, final figures showed.

Year-on-year, prices rose less for fuels for transport (13.1 percent from 16.7 percent in February), heating oil (20.8 percent from 30 percent) and vegetables (5.8 percent from 16.2 percent). In addition, prices fell faster for telecommunication (-1.4 percent from -1.1 percent) and declined for package holidays (-3.9 percent). In contrast, prices of garments rebounded (0.4 percent from -0.1 percent).

By country, the highest annual rates were recorded in Latvia (3.3 percent from 3.2 percent), Lithuania (3.2 percent, the same as in February) and Estonia (3 percent from 3.4 percent in February). Inflation eased in Germany (1.5 percent from 2.2 percent), Italy (1.4 percent from 1.6 percent) and Spain (2.1 percent from 3 percent) and was steady in France (1.4 percent). 

Excluding energy, food, alcohol and tobacco, consumer prices increased 0.7 percent, below 0.9 percent in each of the previous three months and the lowest since April of 2016. Excluding energy only, inflation also slowed to 0.9 percent from 1.2 percent in February.

The monthly inflation rate was 0.8 percent, compared to 0.4 percent in February.

Considering the European Union, prices rose 0.6 percent on the month (0.3 percent in February) and 1.6 percent on the year (2 percent in February).




Tuesday April 11 2017
Euro Area Industrial Output Below Expectations
Eurostat | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Industrial production in the Euro Area increased 1.2 percent year-on-year in February of 2017, following a downwardly revised 0.2 percent rise in January while below market expectations of 2 percent.

Year-on-year,output rose at a faster pace for intermediate goods (2 percent from 0.7 percent in January) and durable goods (2 percent from 1.1 percent), and rebounded for capital goods (1.2 percent from -1.7 percent). Meanwhile, production of energy went up at a slower 2.4 percent (7.8 percent in January) and fell for non-durable goods (-2.4 percent compared to -3 percent).

The highest increases in industrial production were registered in Greece (11.2 percent from 7.3 percent), Latvia (10.6 percent from 4.7 percent) and Estonia (9 percent from 6.9 percent). Meanwhile, decreases were observed in Ireland (-10 percent from -8.5 percent) and France (-0.8 percent from 0.5 percent)

In the EU 28, production rose 2.1 percent, accelerating from a 1.2 percent gain in January.  

On a monthly basis, industrial output in the Euro Area fell 0.3 percent, following from a downwardly revised 0.3 percent rise in the previous period and below market expectations of 0.1 percent gain. Production dropped for energy (-4.7 percent compared to 2 percent in January) and non-durable (-1.1 percent, at the same pace as in January) and rose at a slower pace for capital goods (0.9 percent from 1.6 percent). In contrast, output of intermediate goods rebounded (1 percent from -0.8 percent).

The largest decreases in industrial production were registered in Ireland (-15.5 percent from 3.4 percent), France (-1.6 percent from -0.2 percent) and Croatia (-1.5 percent from -6.8 percent). In contrast, the highest increases were in Bulgaria (3.6 percent from -3.1 percent) and Slovenia (3.6 percent from -2.5 percent)

In the EU 28, production went down 0.2 percent, following a 0.3 percent rise in January. 




Thursday April 06 2017
ECB Stimulus Still Needed Despite Economic Recovery: Minutes
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

ECB's policymakers widely agreed that a very substantial degree of monetary accommodation continued to be needed to support growth and inflation, while acknowledging that the economic expansion in the Euro Area had become more robust and that the risks to the economic outlook had become less pronounced, minutes from the ECB's March meeting showed. Still, views were exchanged on whether conditions had already improved to an extent that would allow for an attenuation of the “easing bias” embodied in the ECB's forward guidance while remaining uncertainties continued to call for caution.

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, 8-9 March 2017:

As regards communication, members generally agreed with the proposals made by Mr Praet in his introduction to keep the communication with respect to the Governing Council’s monetary policy stance and its forward guidance unchanged, while acknowledging that the economic expansion in the euro area had become more robust as the recovery was firming and broadening further, and that the risks to the economic outlook had become less pronounced, though they still remained tilted to the downside. At the same time, remaining uncertainties and fragilities, notably related to the external environment but also to political developments in the euro area, continued to call for caution.

In this context, views were also exchanged on whether conditions had already improved to an extent that would allow for an attenuation of the “easing bias” embodied in the Governing Council’s forward guidance.

Against this background, the view was put forward that removing the downward bias regarding interest rates would be in line with a gradual and cautious adjustment of the Governing Council’s forward guidance, in step with changes in the Governing Council’s assessment. Keeping the Governing Council’s forward guidance well aligned with its evolving assessment was seen to underpin the consistency and credibility of the Governing Council’s communication, as both deflationary risks and associated market expectations of further rate cuts had largely vanished.

At the same time, it was recalled that the easing bias was an integral part of the Governing Council’s forward guidance and of the monetary policy stance, which contained an important forward-looking signalling component. Changes in the formulation at the current juncture could lead to an undue upward shift in market interest rates and tighten financial conditions to an extent that was not warranted by the prevailing outlook for price stability.

On balance, removing the downward bias on interest rates in the present formulation of the Governing Council’s forward guidance at the current meeting was seen as premature, as there was still considerable uncertainty surrounding the economic outlook and the robustness of inflation convergence.

At the same time, economic conditions and the balance of risks had clearly improved, and, notably, deflationary risks had largely disappeared. As had been suggested by Mr Praet in his introduction, nuances in the communication could convey a more positive tone on the state of the euro area economy, while signalling less urgency for further monetary policy action. In particular, it was felt that there was no longer a need to emphasise the Governing Council’s readiness to act by using all the instruments available within its mandate, reflecting that negative scenarios, which could trigger further monetary policy action, were assessed to have become less likely, even if they could not be fully excluded.

Looking ahead, it was recalled that, if the euro area economy were to recover further and as inflation proceeded further on its path towards the Governing Council’s inflation aim in a sustained manner, a discussion on policy normalisation would become warranted in the future.




Monday April 03 2017
Eurozone Jobless Rate Falls To Near 8-Year Low Of 9.5%
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The unemployment rate in the Euro Area dropped to 9.5 percent in February 2017 from 9.6 percent in January and in line with market expectations. It was the lowest level since May 2009. A year earlier, the unemployment was higher at 10.3 percent.

Compared with January 2017, the number of unemployed decreased by 140,000 to 15.439 million in the Euro Area. Compared with the previous year, it fell by 1.246 million.

Considering the European Union, the unemployment rate was 8 percent in February 2017, down from 8.1 percent in January and from 8.9 percent a year ago. This remains the lowest rate recorded in the EU28 since January 2009. There were 19.750 million people unemployed, a decrease of 153,000 from the previous month and of 1.852 from February 2016.

Among EU Member States, the lowest unemployment rates were recorded in the Czech Republic (3.4 percent), Germany (3.9 percent) and Malta (4.1 percent). The highest unemployment rates were observed in Greece (23.1 percent in December 2016) and Spain (18 percent). Compared with a year ago, the unemployment rate in February 2017 fell in twenty-six Member States, while it increased in Denmark (6.4 percent from 6 percent) and Lithuania (8.3 percent from 8 percent). The largest decreases were registered in Croatia (11.6 percent from 14.4 percent), Spain (18 percent from 20.5 percent), Portugal (10 percent from 12.2 percent) and Ireland (6.6 percent from 8.4 percent). 




Friday March 31 2017
Euro Area Inflation Rate Slows More Than Expected
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the Euro Area are expected to rise 1.5 percent year-on-year in March of 2017, easing from a 2 percent increase in the previous month and below market expectations of 1.8 percent. It is the lowest inflation rate in three months, preliminary estimates showed.

Most CPI components eased in March: energy (7.3 percent in March, compared with 9.3 percent in February); food, alcohol & tobacco (1.8 percent, compared with 2.5 percent); services (1 percent, compared with 1.3 percent) and non-energy industrial goods (0.2 percent, stable compared with February). 

Annual core inflation, which excludes volatile prices of energy, food, alcohol and tobacco slowed to 0.7 percent from 0.9 percent, reaching the lowest since April last year.


Friday March 17 2017
Eurozone Posts Biggest Trade Gap Since 2013
Eurostat | Yekaterina Guchshina | yekaterina@tradingeconomics.com

The Eurozone trade balance shifted to €0.6 billion deficit in January 2017 from €4.8 billion surplus in the same month of the previous year. It was the first trade gap since January of 2014 and the biggest since January of 2013. Exports increased 13 percent to €163.9 billion while imports went up at a faster 17 percent to €164.5 billion.

Meanwhile, the European Union recorded a €16.2 billion deficit in trade in goods with the rest of the world, compared with a €12.1 billion gap in January 2016. 

Exports went up 16 percent to €141.2 billion from €121.4 billion a year earlier. Exports of primary goods surged 33 percent to €21.7 billion, led by an increase in sales of energy (67 percent) raw materials and (34 percent) and food and drink (11 percent). Also, manufactured goods rose 13 percent to €112.6 billion, driven by chemicals (16 percent), machinery and vehicles (15 percent) and other manufactured goods (8 percent). Among trading partners, the biggest increases in exports were reported for Russia (45 percent), the US (19 percent), China (18 percent) and South Korea (22 percent). 

Imports rose 18 percent to €157.4 billion compared to €133.5 billion. Purchases of primary goods rose 10 percent to €15.3 billion, led by energy (13 percent), raw materials (4 percent) and food and drink (8 percent). Imports of manufactured goods increased 35 percent to €49 billion, driven by chemicals (60 percent), machinery and vehicles (23 percent) and other manufactured goods (5 percent). Among trading partners, the biggest increases in imports were reported for Russia (59 percent), Turkey (48 percent), South Korea (45 percent) and Switzerland (16 percent).






Thursday March 16 2017
Euro Area Inflation Rate Confirmed At 4-Year High Of 2%
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the Euro Area increased 2 percent year-on-year in February of 2017, up from 1.8 percent in January and in line with preliminary figures. It is the highest inflation rate since January of 2013, due to a rise in energy prices.

The largest upward impacts came from fuels for transport (prices rose 16.7 percent), vegetables (16.2 percent) and heating oil (30 percent). In contrast, biggest downward pressure came from telecommunication (-1.1 percent), garments (-0.1 percent) and gas (-1.3 percent). 

By country, the highest annual rates were recorded in Estonia (3.4 percent from 2.8 percent in February), Belgium (3.3 percent from 3.1 percent), Latvia (3.2 percent from 2.9 percent) and Lithuania (3.2 percent from 2.5 percent). Inflation also accelerated in Germany (2.2 percent from 1.9 percent) and Italy (1.6 percent from 1 percent) but slowed in France (1.4 percent from 1.6 percent). 

Excluding energy, food, alcohol and tobacco, consumer prices increased 0.9 percent, the same as in the previous two months. Excluding energy only, prices went up at a faster 1.2 percent (1.1 percent in January).

The monthly inflation rate was 0.4 percent, compared to -0.8 percent in January.

Considering the European Union, prices rose 0.3 percent on the month (-0.6 percent in January) and 1.9 percent on the year (1.7 percent in January).


Tuesday March 14 2017
Euro Area Industrial Output Growth Slows For 2nd Month
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

Industrial production in the Euro Area increased 0.6 percent year-on-year in January of 2017, following an upwardly revised 2.5 percent rise in December and below market expectations of 0.9 percent. It is the lowest gain in six months as output slowed for intermediate and durable goods and fell for capital and non-durables.

Year-on-year, energy went up 6.9 percent, following a 7 percent rise in December; output also slowed for intermediate goods (0.8 percent compared to 3.6 percent) and durable goods (1.5 percent compared to 4.3 percent) and shrank for capital goods (-0.8 percent compared to 0.4 percent) and non-durable goods (-2.6 percent compared to 1.4 percent).

The highest increases were registered in Lithuania (8.4 percent compared to 6 percent in December), Greece (7.4 percent compared to 2.7 percent) and Estonia (6.7 percent compared to 9 percent), and the largest decreases in Ireland (-8.6 percent compared to 0.8 percent) and Luxembourg (-0.9 percent compared to 3 percent). Production in Germany rose 0.6 percent, following a flat reading in December while France slowed (0.4 percent compared to 1.2 percent) and Italy fell 0.5 percent (6.8 percent in December). 

In the EU 28, production rose 1.3 percent, easing from a 3.3 percent gain in December.  

On a monthly basis, industrial production in the Euro Area went up 0.9 percent, rebounding from a downwardly revised 1.2 percent fall in the previous period. Production recovered for capital goods (2.8 percent compared to -2.8 percent in December) and energy (1.9 percent compared to -1.2 percent) but fell for non-durable (-0.7 percent compared to -0.2 percent), intermediate (-0.4 percent compared to -0.1 percent) and durable goods (-0.4 percent compared to 3 percent).

The highest increases were registered in Ireland (3.4 percent compared to -9.6 percent in December), Germany (3.3 percent compared to -2.4 percent) and Greece (2.5 percent compared to 2.7 percent), and the largest decreases in Latvia (-2.8 percent compared to 0.2 percent), Italy (-2.3 percent compared to 1.4 percent) and Luxembourg (-2.3 percent compared to 5.7 percent). French output declined 0.3 percent (-1.1 percent). 

In the EU 28, production went up 0.5 percent, following a 0.7 percent drop in December. 


Thursday March 09 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 ninth consecutive meeting and left the pace of its bond-purchases unchanged on March 9th, 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:

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. Their ongoing pass-through to the borrowing conditions for firms and households benefits credit creation and supports the steadily firming recovery of the euro area economy. Sentiment indicators suggest that the cyclical recovery may be gaining momentum. Headline inflation has again increased, largely on account of rising energy and food price inflation. However, underlying inflation pressures continue to remain subdued. The Governing Council will continue to look through changes in HICP inflation if judged to be transient and to 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.

Euro area real GDP increased by 0.4%, quarter on quarter, in the fourth quarter of 2016, following a similar pace of growth in the third quarter. Incoming data, notably survey results, increase our confidence that the ongoing economic expansion will continue to firm and broaden. The pass-through of our monetary policy measures is supporting domestic demand and facilitates the ongoing deleveraging process. The recovery in investment continues to be promoted by very favourable financing conditions and improvements in corporate profitability. Moreover, rising employment, which is also benefiting from past structural reforms, is having a positive impact on households’ real disposable income, thereby providing support for private consumption. Also, there are signs of a somewhat stronger global recovery and increasing global trade. However, economic growth in the euro area is expected to be dampened by a sluggish pace of implementation of structural reforms and remaining balance sheet adjustment needs in a number of sectors.

Euro area annual HICP inflation increased further to 2.0% in February, up from 1.8% in January 2017 and 1.1% in December 2016. This reflected mainly a strong increase in annual energy and unprocessed food price inflation, with no signs yet of a convincing upward trend in underlying inflation. Headline inflation is likely to remain at levels close to 2% in the coming months, largely reflecting movements in the annual rate of change of energy prices. Measures of underlying inflation, however, have remained 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.

The March 2017 ECB staff macroeconomic projections for the euro area foresees annual real GDP increasing by 1.8% in 2017, by 1.7% in 2018 and by 1.6% in 2019. Also, annual HICP inflation is expected at 1.7% in 2017, 1.6% in 2018 and 1.7% in 2019.