Latest news with #Allen-Reynolds
France 24
03-06-2025
- Business
- France 24
Eurozone inflation slows sharply in May
Year-on-year consumer price increases in the single currency area slowed more than predicted by analysts for FactSet to 1.9 percent, down from 2.2 percent in April, the EU's official statistics agency said. Core inflation -- which strips out volatile energy, food, alcohol and tobacco prices and is a key indicator for the ECB -- also eased more than expected to 2.3 percent in May, down from 2.7 percent a month earlier. The ECB is expected to deliver its seventh-straight interest rate cut Thursday as the United States' volatile trade policies hang over the sluggish eurozone economy. "This won't have much of a bearing on Thursday's ECB decision, which already looked almost certain to be a 25 basis point cut," said Jack Allen-Reynolds, deputy chief eurozone economist at UK-based investment research group Capital Economics. "But May's inflation data strengthen the case for another cut at the following meeting in July," he said. Eurozone inflation is at its lowest point since September last year, when it stood at 1.7 percent. The slowdown in inflation was thanks to prices for services easing to 3.2 percent from 4.0 percent in April, Eurostat said. The ECB closely monitors the sector as it is highly correlated to wage growth. The ECB fears that a vicious cycle between rising wages and prices would make it more difficult to tackle inflation. In energy, the rate was negative 3.6 percent, unchanged from the month before. Food-price inflation accelerated, however, to 3.3 percent last month from 3.0 percent in April. Further drops Inflation has sharply dropped from the record peak of 10.6 percent in October 2022 after Russia's invasion of Ukraine sent energy prices sky-high. Capital Economics' Allen-Reynolds said he expected inflation to fall further in the months ahead, "leaving the headline rate comfortably below two percent in the second half of the year". "Subdued oil prices and a stronger euro will drag down energy inflation and lead to cheaper production inputs and imports. Decelerating wage growth will bring the long-awaited cooling in the sticky services category," said Riccardo Marcelli Fabiani, senior economist at Oxford Economics. Consumer price rises in Europe's two economic powerhouses, Germany and France, slowed in May to 2.1 percent and 0.6 percent, respectively. While the eurozone economy expanded by 0.3 percent over the January-March period from the previous quarter, US President Donald Trump's erratic trade policy, including the potential for steep tariffs, has hurt the region's economic outlook. Trump has put a 50-percent duty on EU goods on ice until July 9 as the two sides chase an agreement but a 10-percent levy remains, alongside 25-percent tariffs on steel, aluminium and auto imports.
Euronews
14-02-2025
- Business
- Euronews
Eurozone records marginal GDP growth after forecasts of stagnation
In the final three months of 2024, seasonally adjusted GDP increased by 0.1% quarter-on-quarter in the eurozone and by 0.2% in the EU, Eurostat said on Friday. In the prior quarter, GDP grew by 0.4% in both areas. The new figures are slight improvements on previous estimates, communicated last month, although they're far below the 0.6% total seen in the US. Quarterly growth in the eurozone was predicted at 0% in January while EU growth was estimated at 0.1%. Compared to the final three months of 2023, GDP grew by 0.9% in the eurozone in the final quarter of last year. In the EU, this total came to 1.1%. These results follow year-on-year growth totals of 0.9% seen in the euro area and 1.0% seen in the EU in the previous quarter. Particularly strong annual rises in Q4 output were seen in Poland, Lithuania and Spain, while Austria and Germany recorded the steepest declines. 'The euro-zone economy performed a little better than previously thought in Q4, but growth was still extremely weak and the early signs are that it got off to a slow start to 2025,' Jack Allen-Reynolds, deputy chief eurozone economist at Capital Economics, said. 'The key point is that a 0.1% expansion is hardly something to get excited about,' he continued. 'Both Germany and France experienced contractions in Q4, while Italy stagnated, leaving it up to Spain and other smaller countries to stop the region's economy from contracting.' In the same release, Eurostat noted that the number of employed persons increased by 0.1% in both the euro area and the EU in the fourth quarter of 2024, compared with the previous quarter. In the third quarter of 2024, employment had increased by 0.2% in the euro area and had remained stable in the EU. Compared with the same quarter of the previous year, employment increased by 0.6% in the euro area and by 0.5% in the EU in the fourth quarter of 2024. 'The flipside of these employment gains is that productivity, measured by GDP per worker, has declined by 1.4% since Q3 2022,' Allen-Reynolds said. 'In turn, this has kept unit labour cost growth and underlying price pressures higher than they would otherwise have been.'
Yahoo
30-01-2025
- Business
- Yahoo
France, Germany stall eurozone growth in fourth quarter
Eurozone growth slowed to a halt in the fourth quarter last year, dragged by contractions in major powers Germany and France which were held back by economic headwinds and political instability. Official data Thursday showed growth stalling in the single-currency area -- disappointing predictions by analysts at Bloomberg and FactSet who forecast a 0.1-percent expansion. The year ended in a marked slowdown compared to the third quarter -- which had exceeded analyst expectations with growth of 0.4 percent. Annual growth for 2024 stood at 0.7 percent in the 20-nation eurozone, after 0.4 percent the previous year -- entrenching Europe's economic stagnation compared to faster growing rivals the United States and China. Jack Allen-Reynolds, chief eurozone economist at Capital Economics, said the fourth-quarter stagnation "supports our view that the region's economic prospects are worse than most think." Allen-Reynolds predicted the lacklustre data could prompt the European Central Bank to accelerate its rate-cutting campaign beyond the reduction it is expected to announce later Thursday. After hiking borrowing costs in 2022 to tame runaway energy and food costs, the ECB has been bringing them steadily back down since the middle of last year, as inflation slows and the eurozone economy looks weak. For the 27-nation EU as a whole, the data painted an only slightly better picture with annual growth of 0.8 percent -- 0.1 point less than forecast by the European Commission in November. Europe has been hobbled by the spike in energy prices since Russia's 2022 invasion of Ukraine -- leading to painful cutbacks in a range of sectors from steel to chemicals to car manufacturing. Germany is additionally suffering from weak demand for the country's exports, combined with a host of structural issues such as labour shortages. The European Commission unveiled a blueprint Wednesday to revamp the bloc's economic model, amid worries that red tape, low productivity and weak investments -- as well as high energy prices -- are leaving it behind the United States and China. The blueprint aims to turn recommendations made last year by former Italian leaders Enrico Letta and Mario Draghi into a tangible plan of action. "The big question remains how successful it can be at implementation," commented ING chief economist Bert Colijn. But even if successful, he argued, "it will only boost the economic outlook for the medium term." - 'In a slump' - Thursday's data confirmed stark disparities between eurozone countries, spelling a potential headache for the ECB as it weighs future rate cuts. At one end of the eurozone spectrum Spain saw its economy expand by 3.2 percent last year -- while at the other Germany endured a 0.2-percent contraction and a second year of recession. Somewhere in between, France leveraged a boost from the Paris Olympic Games to notch annual growth of 1.1 percent -- doing better than Italy on 0.5 percent. But the French economy's fortunes faded at the end of the year -- and it shrank by 0.1 percent in the fourth quarter as the summer Olympic boost gave way to months of political crisis. Italy's economy was flat in the fourth quarter. With France still struggling to push a 2025 budget through its hung parliament, and Germany at a standstill pending the outcome of elections in which the far right is riding high, the prospects for the eurozone's two biggest economies remain glum. "For the moment, the economy seems to be in a slump and we don't expect it to come out of it this winter," warned ING's Colijn. "The first indications for the first quarter are that the economy will hover around stagnation some more." aro-ec/ub/gv Sign in to access your portfolio
