Saturday October 25, 2014 Search
Weather | Athens
19o C
12o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Euro-area confidence falls as low inflation alarms ECB

By Angeline Benoit & Alessandro Speciale

Euro-area economic confidence fell more than forecast, Spanish consumer prices dropped the most in five years and German unemployment unexpectedly rose in a burst of data backing Mario Draghi’s warning that more stimulus may be needed.

An index of executive and consumer sentiment fell to 100.6 this month from 102.1 in July, the European Commission in Brussels said on Thursday. That’s the lowest this year and missed the median estimate in a Bloomberg survey for 101.5. Separately, Spanish consumer prices fell 0.5 percent. While the decline was less than forecast, it’s still the biggest since 2009.

With investors’ price expectations for the euro area sliding, inflation at the weakest since 2009 and unemployment remaining stubbornly high, Draghi has signaled he’s moving closer toward quantitative easing. Manufacturing and services growth slowed in August amid rising political tensions in Ukraine and the Middle East, after the 18-nation economy stagnated in the second quarter.

“Major eurozone countries have seen a classic hit to confidence, even if it is difficult to assess to what extent it is a psychological issue or whether this is more driven by fundamentals,” said Andreas Rees, an economist at UniCredit in Frankfurt. “Still, QE remains unlikely. What’s more likely is a soft patch, as I can’t imagine we’re heading toward a worst case scenario such as outright deflation.”

German unemployment

In the two hours between the release of the Spanish inflation data and euro-region confidence, Germany’s Federal Labor Agency said the number of people out of work unexpectedly climbed a seasonally adjusted 2,000 to 2.901 million in August. Economists forecast a decline of 5,000, according to the median of 30 estimates in a survey.

The adjusted jobless rate was unchanged at 6.7 percent, the lowest level in more than two decades.

Germany's economy shrank last quarter and the Ifo index of business sentiment declined for a fourth month in August. The Bundesbank has warned that an anticipated rebound in the second half of the year is now in doubt.

“The German economy is not in as good a shape as it was at the beginning of the year,” said Michael Holstein, an economist at DZ Bank AG in Frankfurt. “The labor market is still strong but if the economic outlook worsens further, we’ll see the effect on employment later in the year.”

ECB meeting

ECB policy makers meeting next week are set to debate whether the unprecedented range of measures announced in June that included a negative deposit rate and targeted long-term loans are enough to steer the euro area away from deflation and foster growth. One guide the Frankfurt-based central bank can turn to is new economic forecasts to be published on Sept. 4.

The Governing Council will use “all the available instruments needed to ensure price stability” and is “ready to adjust the policy stance further,” Draghi said last week in Jackson Hole, Wyoming. He pointed out that the ECB’s preferred gauge of inflation expectations had fallen below 2 percent.

Companies’ performance and their business outlook have diverged. Adidas AG, the world’s No. 2 sports-gear maker, cut its profit forecast for 2014. Meanwhile, Europe’s largest tiremaker Michelin & Cie. (ML) has said it expects an improvement in European markets in the second half.

Alexandre Ricard, Chief Operating Officer, of Pernod Ricard SA, the world’s second largest distiller, said today he anticipates a “gradual improvement in our sales growth” against a backdrop that will “remain challenging.”

Economic dip

The European Commission said that industrial confidence fell to minus 5.3 in August from minus 3.8 in July and construction sentiment dropped to minus 28.4 from minus 28.2. Sentiment in the services industry declined to 3.1 from 3.6. Consumer confidence was at minus 10, in line with a preliminary reading on Aug. 21.

EU Economic Affairs Commissioner Jyrki Katainen said while the decline wasn’t surprising given weak growth and geopolitical tensions, it “nonetheless is a source of concern.”

“Sentiment has taken some hits in the past months in relation with the conflict in Russia-Ukraine,” said Pernille Bomholdt Nielsen, an analyst at Danske Bank A/S in Copenhagen. “Still, activity in the second half should be supported by private consumption while the negative impact from a strong euro and declines in lending should be less strong.”

The euro-area economy will grow 0.3 percent this quarter and 0.4 percent in the final three months of the year, according to a separate survey of economists. [Bloomberg]

ekathimerini.com , Thursday August 28, 2014 (14:58)  
Nicosia says reforms are bringing results
TAIPED waits for green light from Eurostat
Trade deficit shrinks on big drop in imports
SMEs unable to claim subsidies
Samaras pledges action after flash floods in Athens
Authorities began on Saturday assessing the damage done by flash floods in various parts of Athens a day earlier, with Prime Minister Antonis Samaras pledging that all those affected would b...
No court hearings for civil cases
Greek courts are to stop conducting hearings, which include witness questioning, for civil cases, according to plans drawn up by the Justice Ministry. Kathimerini understands that in a bid t...
Inside News
BASKETBALL
A win is a win is a win for Olympiakos
A bad Olympiakos defeated a worse Laboral Kutxa 63-57 to make it two out of two in the Euroleague on Friday. In a game where the two teams had an overall field goal rate of about one in thre...
SOCCER
Panathinaikos snatches point at Eindhoven
Panathinaikos offered its fans a glimpse of its glorious past in European competitions snatching a draw at PSV Eindhoven, on an otherwise bad night for Greek soccer in the Europa League, as ...
Inside Sports
COMMENTARY
End of reason, end of humanity
The effects of a slew of new and increased taxes introduced since the start of the crisis were first observed in the wages of those still fortunate enough to have jobs, who saw their take-ho...
EDITORIAL
Banks need to step up
What has been leaked so far regarding the results of the stress tests on Greece’s lenders, which are due to be published on Sunday, appears positive. Greece needs a healthy, private banking ...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Nicosia says reforms are bringing results
2. Samaras pledges action after flash floods in Athens
3. No court hearings for civil cases
4. Greece’s lenders seem adamant that gov’t must act on bailout commitments
5. Future of Attica trash set to become clearer
6. Policeman admits to murder of his cousin-in-law
more news
Today
This Week
1. End of reason, end of humanity
2. Banks need to step up
3. Samaras pledges action after flash floods in Athens
4. Nicosia says reforms are bringing results
5. Greece’s lenders seem adamant that gov’t must act on bailout commitments
6. No court hearings for civil cases
Today
This Week
1. The past, present and future of the Greek debt crisis
2. Greece’s closed society is central to its current malaise
3. Greece must stick to reforms, says Schaeuble
4. At least 11 banks to fail European stress tests, three in Greece, report says
5. Cyprus to block Turkey's EU talks after EEZ violation
6. Stop moaning and get in the game
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.