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Eurocoin Indicator Rises For Eighth Month
An indicator of the current economic situation in Eurozone increased for the eighth successive month in February, and remained in the positive territory for the sixth month in a row, a report released by the Bank of Italy revealed Friday.
The eurocoin indicator, which estimates quarterly GDP growth in the currency bloc, moved up to 0.35 in February from 0.31 in January, marking the eighth successive monthly growth. The index has now stayed in the positive territory for the sixth straight month.
The upturn was supported mainly by the overall performance of household and business confidence and of share prices, the report said.
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German Retail Sales Growth At 7-year High
German retail sales grew at the fastest pace in seven years in January, staging a strong recovery from the slump in the final month of 2013.
Retail sales were up a calendar and seasonally adjusted 2.5 percent, representing the biggest increase since February 2007, data from Destatis showed Friday. Economists expected a 1 percent increase for January compared to the 2.1 percent drop in December, which was upwardly revised from the 2.5 percent decline estimated initially.
Year-on-year, sales rose 0.9 percent in January, after a 1.5 percent slump in the previous month. Economists had forecast a 1.7 percent decline.
Falling unemployment, rising consumer confidence and low inflation has supported the rebound in consumer spending. The recovery in spending also suggests that activity is gaining momentum in the biggest Eurozone economy.
Data released by the Federal Labor Agency yesterday showed that unemployment eased further in February and hit the lowest level in nearly one-and half years.
This week, the European Commission has forecast German jobless rate to ease to 5.2 percent in 2014 from 5.3 percent in 2013. The figure expected to drop further to 5.1 percent next year.
Lower unemployment and better income expectations have boosted consumer confidence, which is set to hit a seven-year high in March, according to the market research group GfK. The firm has predicted 1.5 percent growth in total private consumption during 2014.
Inflation unexpectedly eased to 1.2 percent in February, slowing for a second straight month, preliminary data from Destatis showed yesterday.
The German economy expanded 0.4 percent in the December quarter, slightly faster than the 0.3 percent expansion seen in the third quarter. The government projects 1.8 percent growth for 2014.
The European Commission also raised its 2014 growth forecast for Germany to 1.8 percent from 1.7 percent and its projection for 2015 was lifted to 2 percent from 1.9 percent.
Highlighting the hugely divergent trends in two of the leading Eurozone economies, French consumer spending fell much more-than-expected in January, according to figures released by INSEE today.
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Spanish Manufacturing Sector Continues To Expand In February
Spain's manufacturing sector registered another month of improvement in February as output and new orders logged further solid rises, data from Markit Economics showed Monday.
The seasonally adjusted Markit Purchasing Managers' Index, a composite indicator designed to measure the performance of the manufacturing economy, rose to 52.5 in February from 52.2 in January.
The score signaled a solid growth in business conditions and the strongest since April 2010. A third monthly rise in new orders was recorded in February. Higher new orders led manufacturers to increase their production. Manufacturing firms upped their rate of job creation in February.
"The Spanish manufacturing sector maintained its recent run of growth in February and has posted back-to-back rises in employment for the first time since mid-2007," Andrew Harker, senior economist at Markit and author of the report, said.
Although input prices rose in February following a fall in January, the rate of inflation was only slight and well below the series average. Meanwhile, firms lowered their output prices for the second month running.
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Manufacturing growth in the eurozone eases in February
Manufacturing growth in the eurozone slowed for the first time in five months in February, a closely-watched survey has suggested.
The latest Markit's Eurozone Manufacturing Purchasing Managers' Index (PMI) dipped to 53.2 from 54.0 in January. A figure above 50 indicates expansion.
However, for the first time in almost three years output rose in the bloc's four biggest economies.
The Netherlands performed the best.
"The dip in the manufacturing PMI, its first fall for five months, is a disappointment and a reminder of the hesitant nature of the region's nascent recovery." said Chris Williamson, chief economist at Markit.
However, Mr Williamson emphasised that the overall reading was the "second-strongest" that it had seen for almost three years.
The biggest four economies of Germany, France, Spain and Italy all saw output rise.
And three countries - the Netherlands, Republic of Ireland and Spain all reported a faster rate of expansion compared to January.
Markit said all seven of the nations for which it had February data reported higher levels of production and new export orders.
"Policymakers will nonetheless be reassured that the...recovery is broadening out," added Mr Williamson.
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Draghi Sees Some Progress on Euro-Area Bank Lending
European Central Bank President Mario Draghi said that officials are seeing “progress” in lending as a slump in credit eases and surveys signal improvement in loan demand.
We are “seeing some progress now,” Draghi told lawmakers at the European Parliament in Brussels today. “Credit flows are still subdued, but they decline at a lower rate. We also see from the bank lending survey, we see progress on that front. It’s still limited.”
Draghi’s comments break his silence before the March 6 decision this week, when policy makers will come armed with updated quarterly forecasts after a month of studying new economic data from the region. Officials have struggled to revive lending at a time when the euro area remains hampered with the legacy of the debt crisis and a record-long recession.
“It may be difficult for a bank to give credit to a company which doesn’t have clients,” Draghi said. “So fortunately this picture is in a sense, it’s improved a lot, it’s improved a lot. We start seeing better signs both from the surveys and to some timid extent from the data as well on credit and M3 data that seem to indicate some improvement.”
Lending to companies and households in the euro region contracted for a 21st month in January. It fell 2.2 percent from a year earlier, after shrinking 2.3 percent in December, according to data released by the ECB last week.
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German plant, machinery orders rise
German machine and plant builders got off to a strong start in the new year, data from industry group VDMA showed Tuesday.
The data showed that in January total plant and machinery orders rose 6% on the year in inflation-adjusted terms, after a 6% decline in December. Domestic orders were up 2% and foreign orders were up 7% in January. The less-volatile three-month comparison showed total orders up 2% on the year in November to January, with domestic orders down 3% and foreign orders up 5%.
In a press release, VDMA chief economist Ralph Wiechers said that a "clearly risen" business climate in the euro zone and good demand from non-euro states were positive factors. He said, however, that some developing countries were generating uncertainty, as well as the current crisis in Crimea. "A political solution of this conflict is more than desirable" with regard to ensuring a sustainable recovery of the world economy, he said.
The data come two days ahead of German industrial orders data. On the month, experts expect orders to have increased 0.8% in January.
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Euro higher vs. dollar as market tensions ease
The euro was higher against the dollar on Tuesday as tensions over the crisis in Ukraine eased after Russian President Vladimir Putin said there is "no need yet" to use military force in Ukraine.
EUR/USD hit session highs of 1.3774 and was last up 0.18% to 1.3759.
The pair was likely to find support at 1.3700 and resistance at 1.3791, Monday’s high.
Market sentiment was boosted after President Putin said a Russian military deployment in Ukraine is not needed now but the “possibility” still remains, and added that if Russia takes action it will be legitimate.
The euro built on earlier gains that came after the Russian defense minister ordered troops engaged in military exercises close to Ukraine’s borders to return to their bases.
Market sentiment remained fragile, with Russian forces still maintaining a military presence in Ukraine’s Crimea region. Meanwhile, the U.S. was likely to impose economic sanctions on Russia later in the week, following its military incursion into Crimea.
The common currency continued to remain supported after better-than-expected euro zone inflation data late last week eased pressure on the European Central Bank to tighten monetary policy at its upcoming meeting on Thursday.
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Eurozone Producer Prices Fall More Than Forecast
Eurozone producer prices declined more than expected in January due to a fall in energy prices, official data revealed Tuesday.
Producer prices were down 0.3 percent from December, Eurostat said. The decline reversed 0.2 percent rise posted in December and exceeded the 0.1 percent fall forecast by economists.
Excluding energy, producer prices gained 0.1 percent after staying flat in December. Energy prices declined 1.4 percent in January, versus 0.5 percent increase a month ago.
On a yearly basis, the decline in producer prices deepened to 1.4 percent from 0.8 percent in December. Prices were forecast to fall by 1.3 percent.
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ECB To Launch QE Thursday: Here's Why
Growing disinflationary headwinds are likely to push the European Central Bank (ECB) toward launching a 300-500 billion euro asset purchase program on Thursday morning. Such a monumental shift in monetary policy posture from the ECB could deliver an outsized impact to global financial markets (although we have clearly seen some front running of this announcement in recent weeks).
An announcement at the upper end of the 300-500 billion euro range along with open ended language (alluding to the possibility that the ECB could increase asset purchases past the 1 trillion market if needed) from ECB President Draghi could send global stocks and precious metals skyward. A few key charts from BNP Paribas help to illustrate why a QE announcement from the ECB on Thursday is quite likely:
“Asset purchases are increasingly necessary in order for the ECB to meet its primary objective of maintaining price stability. Inflation in the euro area has persistently surprised to the downside, eroding the safety margin against deflation. Additional conventional policy easing will not deliver sufficient monetary accommodation for the price stability mandate to be met. Thus, the ECB will reluctantly have to follow other central banks into balance sheet expansion via asset purchases.”
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Euro zone retail sales rise 1.6% in January
Retail sales in the euro zone rose more-than-expected in January, easing concerns over the region’s economic outlook, official data showed on Wednesday.
In a report, Eurostat said retail sales increased by a seasonally adjusted 1.6% in January, easily surpassing expectations for a 0.8% gain. Retail sales fell 1.3% in December, whose figure was revised from a previously reported drop of 1.6%.
Year-over-year, retail sales in the euro zone rose at an annualized rate of 1.3% in January from a year earlier, compared to expectations for a 0.4% decline, after dropping 0.4% in December.
Following the release of the data, the euro remained modestly lower against the U.S. dollar, with EUR/USD shedding 0.08% to trade at 1.3731.
Meanwhile, European stock markets held on to mild losses. The EURO STOXX 50 dipped 0.15%, France's CAC 40 slumped 0.3%, Germany's DAX edged down 0.2%, while London’s FTSE 100 shed 0.45%
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