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Tag: euro zone

  • Euro zone economy started Q4 on back foot, stoking recession fears -PMI

    Euro zone economy started Q4 on back foot, stoking recession fears -PMI

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    LONDON (Reuters) – The downturn in euro zone business activity accelerated last month as demand in the dominant services industry weakened further, a survey showed on Monday, suggesting there is a growing chance of a recession in the 20-country currency union.

    The economy contracted 0.1% last quarter, official data has shown, and Monday’s final Composite Purchasing Managers’ Index (PMI) for October indicated the bloc entered this quarter on the back foot.

    HCOB’s PMI, compiled by S&P Global and seen as a good guide of overall economic health, fell to 46.5 in October from September’s 47.2, its lowest reading since November 2020 when COVID-19 restrictions were tightened on much of the continent.

    That was below the 50 mark separating growth from contraction for a fifth consecutive month and matched a preliminary estimate.

    The PMI for the services sector dropped to 47.8 from 48.7, also matching its flash estimate.

    “It looks like the service sector in the euro zone is stumbling out of the gates for this final quarter. With new business diving steeply, it is not painting a rosy picture for what is ahead,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.

    “GDP of the euro zone may well fall in the fourth quarter,” he added, saying France was the bloc’s worst-performing major economy with Germany and Italy trailing close behind.

    Manufacturing activity took a further step back in October, according to a sister survey last week which showed new orders contracted at one of the steepest rates since the data was first collected in 1997.

    It was a similar picture for services and the new business index, a gauge of demand, was its lowest since early 2021 at 45.6 from 46.4 as indebted consumers feeling the pinch from price rises and increased borrowing costs kept their hands in their pockets.

    Last month the European Central Bank left interest rates unchanged at record highs, ending an unprecedented streak of 10 consecutive rate hikes, but it insisted that growing market talk of rate cuts was premature.

    Policymakers there, who have failed to get inflation to target, will likely take some cheer from easing price pressures shown in the PMI survey, as both the input and output prices indexes fell from their September readings.

    The composite output prices index eased down to 52.0 from 52.2, its lowest reading since early 2021.

    (Reporting by Jonathan Cable; Editing by Hugh Lawson)

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  • Eurozone Unemployment Rate Remained at Record Low in November Despite Slowing Economy

    Eurozone Unemployment Rate Remained at Record Low in November Despite Slowing Economy

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    By Xavier Fontdegloria

    The eurozone jobless rate was stable in November at its record low, highlighting resilience in the labor market despite slowing economic growth.
    

    The eurozone unemployment rate stood at 6.5% in November, unchanged from October, data from the European Union’s statistics agency Eurostat showed Monday. This is the lowest level of the historical series, which dates back to 1998.
    

    

    The reading is in line with economists’ forecasts in a poll by The Wall Street Journal.
    

    The number of unemployed people was 10.97 million in November, also broadly unchanged from October, the statistics agency said.
    

    Eurozone unemployment is expected to increase slightly in the first half of 2023 as the economy falls into recession, economists say. The jobless rate is expected to increase to 7.0% in mid-2023, according to a consensus provided by FactSet.
    

    Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
    

    

    

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    Eurozone Inflation Sharply Slowed in December as Energy Prices Dropped
    
			
    Eurozone Inflation Sharply Slowed in December as Energy Prices Dropped
    
			
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    By Xavier Fontdegloria
    

    Eurozone inflation eased by more than expected in December, reaching a four-month low, driven by moderating energy prices and action from governments to cushion households from rising utility bills.
    

    Consumer prices rose 9.2% on year in December, easing from a 10.1% increase in November and the lowest level since August, according to preliminary data from the European Union’s statistics agency Eurostat published Friday.
    

    

    The reading is below economists’ forecasts, who expected a 9.7% inflation rate in a poll by The Wall Street Journal.
    

    Inflation reached 10.6% in October, the highest level since records began in 1997, but has fallen since then driven by lower energy prices amid unusually warm weather in most of Europe. Moreover, some countries such as Germany implemented in December a one-off subsidy for household energy bills, pushing down headline inflation further.
    

    Energy prices in the eurozone moderated significantly in December, but were still 25.7% higher than the same month a year earlier, compared with a 34.9% increase in November. Food, alcohol and tobacco price inflation accelerated slightly to 13.8% from 13.6% a month earlier.
    

    However, there were signs that price pressures persisted at year-end. The core inflation rate–which strips out the more volatile categories of food and energy–rose to 5.2% from 5.0% in November.
    

    The European Central Bank raised interest rates at an unprecedented pace in 2022 in order to tame high inflation. Despite the recent slowdown in inflation, the bank said it expects to increase rates further in 2023 to ensure inflation falls back to its 2% medium-term target.
    

    Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
    

    

    

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    Eurozone economic activity contracted for fifth straight month in November, PMIs signal
    
			
    Eurozone economic activity contracted for fifth straight month in November, PMIs signal
    
			
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    November saw business activity fall across the eurozone for the fifth consecutive month, adding to fears of a recession, the latest flash purchasing managers indexes showed.
    

    The S&P Global eurozone composite PMI rose to 47.8 in November from 47.3 in October, according to the preliminary reading. This is above the forecast of 47.0 of economists polled by The Wall Street Journal.
    

    

    “The PMI data for the fourth quarter so far put the eurozone economy on course for its steepest quarterly contraction since late-2012, excluding pandemic lockdown months,” S&P Global said in the report.
    

    Manufacturing continued to lead the downturn, with factory output dropping for a sixth consecutive month, although the rate of decline eased, the report said. Service sector output also fell, down for the fourth consecutive month.
    

    The November PMI data also bring some tentative good news, Chris Williamson, chief business economist at S&P Global Market Intelligence, said. The economist pointed out that the overall rate of decline has eased compared to October thanks to some easing in supply constraints and the warm weather easing fears regarding energy shortages.
    

    Price pressures are showing signs of cooling, which should contain inflation. However, both manufacturing and services sectors are still under severe pressure, the economist said in the report.
    

    “A recession therefore looks likely, though the latest data provide hope that the scale of the downturn may not be as severe as previously feared,” Mr. Williamson said.
    

    Write to Maria Martinez at maria.martinez@wsj.com
    

    

    

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    Eurozone inflation hits 10.7% in October
    
			
    Eurozone inflation hits 10.7% in October
    
			
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    Inflation in the eurozone accelerated in October, reaching double digits, with increasing signs that price pressures are broadening beyond food and energy.
    

    The consumer price index–a measure of what consumers pay for goods and services–increased 10.7% in October on year, accelerating from 9.9% in September, preliminary data from the European Union’s statistics agency Eurostat showed Monday.
    

    

    Economists polled by The Wall Street Journal expected inflation to come in at 10.0%.
    

    The acceleration in inflation was led by higher energy prices, which rose 41.9% on year in October compared with the 40.7% gain registered in September. Food, alcohol and tobacco prices also gained pace, increasing 13.1% on year from an 11.8% rise in September. Price of non-energy industrial goods and of services also accelerated, the data showed.
    

    The core consumer price index–which excludes the more volatile categories of food and energy–increased 5% on year in October, up from 4.8% in September.
    

    The European Central Bank raised interest rates by 75 basis points for the second time in a row on Thursday, but signaled mounting concerns about economic growth in the region.
    

    Data released Friday showed the eurozone economy expanded by 0.2% in the third quarter, beating economists’ expectations but slowing from the 0.8% expansion registered in the previous three-month period.
    

    Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
    

    

    

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    Eurozone Inflation posts new record high of 10.0% in September
    
			
    Eurozone Inflation posts new record high of 10.0% in September
    
			
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    Eurozone inflation hit a new record in September and is expected to rise further in the coming months amid higher energy prices, increasing the likelihood of a lengthier and deeper economic contraction at year-end.
    

    The consumer price index–a measure of what consumers pay for goods and services–increased 10.0% in September compared with the same month a year earlier after climbing 9.1% in August, according to preliminary data from Eurostat, the European Union’s statistics agency.
    

    

    The reading beats the 9.7% consensus forecast from economists polled by The Wall Street Journal.
    

    September’s rise in the inflation rate was driven by energy prices, with prices up 40.8% year-on-year in September after a 38.6% increase in August.
    

    There was also an acceleration of food, alcohol and tobacco prices, which rose 11.8% on year compared with a 10.6% rise in August, data from Eurostat showed.
    

    The core consumer price index–which excludes the more volatile categories of food and energy–rose 4.8% on year in September, up from 4.3% in August.
    

    Economists expect eurozone inflation to increase further in the coming months, remaining above double digits. Elevated inflation adds pressure on the European Central Bank, which raised key interest rates by 75 basis points in September and is expected to increase rates again by 75 basis points at its next meeting in October.
    

    Write to Maria Martinez at maria.martinez@wsj.com
    

    

    

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