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.




Tuesday March 07 2017
Eurozone Q4 GDP Growth Confirmed At 0.4%
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Euro Area economy advanced 0.4 percent on quarter in the three months to December of 2016, the same as in the previous period and in line with the second estimate. Compared with the same quarter of 2015, the bloc's economy grew 1.7 percent, also in line with earlier estimate.

From the expenditure side, the positive contribution to GDP came mainly from household final consumption expenditure (0.2 percentage points), gross fixed capital formation (0.1 percentage points), changes in inventories (0.1 percentage points), and government spending (0.1 percentage points). In contrast, net trade subtracted 0.1 percentage points from growth.

Household consumption increased by 0.4 percent (0.3 percent in Q3), gross fixed capital formation rose 0.6 percent (-0.7 percent in Q3) and government spending advanced by 0.4 percent (0.1 percent in Q3). Meanwhile, exports rose 1.5 percent (0.3 percent in Q3) and imports increasing at a faster 2 percent (-0.1 percent in Q3).

From the production side, industry grew by 0.4 percent (0.7 percent in Q3), boosted by manufacturing (0.3 percent from 0.7 percent in Q3). Construction advanced by 0.6 percent (0.4 percent in Q3). Among services, output rose for: trade, transport, accommodation and food service activities (0.7 percent from 0.4 percent in Q3); information and communication (0.6 percent from 1.1 percent); administration and other public services (0.2 percent from 0.3 percent in Q3), real estate activities (0.3 percent from 0.2 percent in Q3); professional and support service activities (0.3 percent from 0.4 percent in Q3); and agriculture, forestry and fishing (0.1 percent from -0.7 percent in Q3). By contrast, financial and insurance activities showed no growth (0.1 percent in Q3).

Among countries for which data is already available, GDP expanded at a faster pace in: Germany (0.4 percent from 0.1 percent in Q3); France (0.4 percent from 0.2 percent); Belgium (0.5 percent from 0.2 percent); Estonia (1.9 percent from 0.5 percent); Latvia (1.1 percent from 0.3 percent); Lithuania (1.4 percent from 0.5 percent); Slovakia (0.8 percent from 0.7 percent); and Slovenia (1.2 percent from 1 percent). Meanwhile, GDP growth was unchanged in Spain (at 0.7 percent) and in Austria (at 0.6 percent); and slowed in: Italy (0.2 percent from 0.3 percent in Q3); Cyprus (0.5 percent from 0.8 percent); the Netherlands (0.5 percent from 0.8 percent); and Portugal (0.6 percent from 0.9 percent).

By contrast, the Greek economy contracted 1.2 percent (0.6 percent in Q3) and the Finnish GDP showed no growth (0.6 percent in Q3).

Year-on-year, the economy advanced 1.7 percent, following a 1.8 percent expansion in the previous three months and in line with preliminary figures. 

Over the whole year 2016, GDP advanced by 1.7 percent after growing by 2 percent in 2015.




Thursday March 02 2017
Euro Area Unemployment Rate Steady At Near 8-Year Low
Eurostat | Joana Taborda | joana.taborda@tradingeconomics.com

The jobless rate in the Euro Area was unchanged at 9.6 percent in January of 2017, the same as in December and in line with market expectations. It remains the lowest rate since May of 2009. A year earlier, unemployment was higher at 10.4 percent.

15.620 million people were unemployed in the Euro Area in January, down by 56,000 from Decmeber of 2016 and by 1.101 million from a year earlier. 

Considering the European Union, the unemployment rate decreased to 8.1 percent from 8.2 percent in December and 8.9 percent a year earlier. It is the lowest level since January of 2009. 19.969 million men and women were unemployed, down by 96,000 from the previous month and by 1.733 million from January of 2016.

Among Member States, the lowest unemployment rates were recorded in the Czech Republic (3.4 percent from 3.5 percent in December) and Germany (3.8 percent from 3.9 percent) and the highest in Greece (stable at 23 percent in November 2016) and Spain (18.2 percent from 18.4 percent). The jobless rate was steady in France (10 percent) and in Italy (11.9 percent).




Thursday March 02 2017
Eurozone Inflation Rate Hits 2% In February
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the Euro Area increased by 2 percent year-on-year in February 2017, following an 1.8 percent rise in the previous month and in line with market expectations, the preliminary estimate showed. It was the highest inflation rate since January 2013, on a surge in energy prices.

Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in February (9.2 percent, compared with 8.1 percent in January), followed by food, alcohol and tobacco (2.5 percent, compared with 1.8 percent in January), services (1.3 percent, compared with 1.2 percent in January) and non-energy industrial goods (0.2 percent, compared with 0.5 percent in January).

Annual core inflation, which excludes volatile prices of energy and unprocessed food and at which the ECB looks in its policy decisions, was stable at 0.9 percent.


Wednesday February 22 2017
Eurozone Inflation Rate Confirmed At 1.8% In January
Eurostat | Yekaterina Guchshina | yekaterina@tradingeconomics.com

Consumer prices in the Euro Area increased 1.8 percent year-on-year in January of 2017, following a 1.1 percent rise in December and in line with preliminary estimates. It is the highest inflation rate since February of 2013, boosted by fuel and food prices. Excluding energy, food, alcohol and tobacco, core inflation remained steady at 0.9 percent. On a monthly basis, prices fell 0.8 percent.

The largest upward impacts to euro area annual inflation came from fuels for transport (0.5 percentage points), heating oil and vegetables (+0.14 pp) while gas (-0.08 pp), telecommunications (-0.09 pp) and bread and cereals (-0.05 pp) had the biggest downward impacts.

The highest annual rates were recorded in Belgium (3.1 percent), Latvia and Spain (both 2.9 percent) and Estonia (2.8 percent). By contrast, lowest annual rates were observed in Ireland (0.2 percent), Romania (0.3 percent) and Bulgaria (0.4 percent).

Core inflation which excludes energy, food, alcohol and tobacco was recorded at 0.9 percent, unchanged from the previous month. Excluding energy only, the inflation rate rose to 1.1 percent from 1 percent in the previous month.  

On a monthly basis, consumer prices fell by 0.8 percent after increasing by 0.5 percent in December. 


Thursday February 16 2017
ECB Simulus Still Needed To Support Growth And Inflation
ECB | Joana Ferreira | joana.ferreira@tradingeconomics.com

The ECB's board agreed that the recent trends of a firming economic recovery largely benefited from the current accommodative monetary policy stance and that the central bank’s stimulus was still needed to support growth and inflation, minutes from the ECB's January meeting showed. Policymakers also reiterated that the balance of risks to the economic outlook was seen as remaining on the downside and more decisive contributions from other policy areas were essential to ensure a self-sustaining recovery.

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, 18-19 January 2017:

With regard to the monetary policy stance, members widely shared the assessment provided by Mr Praet in his introduction that, while inflation had increased lately, largely owing to base effects in energy prices, underlying inflation pressures had remained subdued and signs of a convincing upward trend were still lacking. It was broadly agreed that a very substantial degree of monetary accommodation continued to be needed for euro area inflation pressures to build up and to secure a sustained return of inflation rates towards levels below, but close to, 2% over the medium term.

Members agreed on the appropriateness of the current monetary policy stance and recent developments were generally seen to vindicate the decisions taken by the Governing Council at its meeting in early December 2016. While there had been some positive news since that meeting, the fundamental picture remained largely unaltered and there was no room for complacency, as risks and uncertainties had not receded substantially, notably those related to the political environment at the global level and within the euro area. 

In this context, it was recalled that, in line with the Governing Council’s monetary policy strategy and past communication, monetary policy had to be forward-looking and oriented to the medium term, meaning that the Governing Council would look through the volatility in short-term data if judged transient and to have no implication for the medium-term outlook for price stability. Therefore, there was broad agreement to look through recent upturns in headline inflation driven by energy prices, while carefully monitoring potential indirect and second-round effects. This was seen to be fully consistent with the Governing Council’s past decisions and established approach to treating temporary changes in inflation on the upside and on the downside.

Against this background, it was widely agreed that it was imperative to maintain a very substantial degree of monetary accommodation for inflation pressures to build up and durably support headline inflation. Otherwise, recent encouraging developments in inflation expectations and the prospects for a sustained adjustment in inflation towards the Governing Council’s inflation aim could be put at risk. Therefore, the Governing Council was seen as well advised to remain patient and maintain a “steady hand” to provide stability and predictability in an environment that was still characterised by a high level of uncertainty. At the same time, the point was made that the window of opportunity provided by a prolonged period of favourable monetary and financial conditions needed to be used by other policy areas to bolster sustained growth, namely by speeding up structural reforms.


Wednesday February 15 2017
Eurozone Trade Surplus Widens In December
Eurostat | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Eurozone trade surplus rose to €28.1 billion in December 2016 from €24.4 billion in the same month of the previous year and above market consensus of €22.8 billion. Exports increased 6 percent to €178.6 billion while imports went up at a slower 4 percent to €150.5 billion.

Exports of goods to the rest of the world advanced 6 percent to €178.6 billion in December 2016 from €168.7 billion a year earlier; while imports increased at a slower 4 percent to €150.5 billion compared to €144.4 billion in December 2015.

Considering 2016 full year, the trade surplus widened to €273.9 billion from €238.7 billion in 2015, as exports were nearly unchanged at €2,047.8 billion while imports fell 2 percent to €1,774 billion.

Meanwhile, the European Union recorded a €20.9 billion surplus in trade in goods with the rest of the world, compared with a €20.6 billion surplus in December 2015. Exports went up 5 percent to €164.4 billion from €156.1 billion a year earlier; and imports rose 6 percent to €143.5 billion compared to €135.4 billion.

Considering 2016 full year, the European Union recorded a surplus of €39.3 billion, compared with €59.9 billion in 2015. Exports of goods dropped 2 percent to €1,745.7 billion from €1,789.2 trillion a year earlier, led by a fall in sales of energy (-13 percent) and other manufactured goods (-2 percent) while exports of food and drinks rose (2 percent). Imports shrank 1 percent to €1,706.4 billion from €1,729.2 billion, as purchases declined the most for energy (-20 percent) and raw materials (-5 percent). Among trading partners, the biggest decreases in shipments were reported for South Korea (-7 percent) and Switzerland (-5 percent); while the decline in imports mainly reflected the strong fall in purchases from Norway (-15 percent) and Russia (-13 percent).