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Qatar Tribune
24-06-2025
- Business
- Qatar Tribune
Eurozone business activity flatlines again in June, PMI shows
Agencies The eurozone economic activity flatlined for a second month in June, barely expanding as the bloc's dominant services industry showed only a minimal sign of improvement and manufacturing displayed none at all, a top survey showed on Monday. HCOB's preliminary composite eurozone Purchasing Managers' Index (PMI), compiled by S&P Global and seen as a good guide to growth, held steady this month at May's 50.2. That was barely above the 50 mark separating growth from contraction and below expectations in a Reuters poll for 50.5. 'June's flash PMI survey for the eurozone was consistent with the economy flat-lining,' said Jack Allen-Reynolds at Capital Economics. 'The weakness in activity was broad-based, with the services index edging up to just 50.0 while the manufacturing index edged down.' Business activity in Germany, Europe's largest economy, returned to growth as its recovering manufacturing sector saw its strongest increase in new orders in more than three years. But in France, activity contracted further as weakness in both manufacturing and services hit the eurozone's second-biggest economy, S&P Global said earlier on Monday. In the U.K., outside the currency union, business activity expanded modestly as new orders grew for the first time this year, but employers cut jobs more quickly and worried about the conflict in the Middle East. Overall demand in the bloc fell for a 13th month, albeit only mildly, with the new business index rising to 49.7 from 49.0. The services PMI nudged up to sit right on the break-even mark, up from May's final reading of 49.7, as the Reuters poll had predicted. But optimism among services firms increased and the business expectations index bounced to a four-month high of 57.9 from 56.2. The headline manufacturing index, which has been sub-50 since mid-2022, held steady at May's 49.4, defying expectations for a lift to 49.8. An index measuring output that feeds into the composite PMI fell to 51.0 from 51.5. Factories reduced their selling prices for a second month. The output prices index remained at 49.2. Eurozone inflation fell below the European Central Bank's (ECB) 2% target in May and the central bank signalled a pause in policy easing after cutting its deposit rate for an eighth time this month. One of the ECB's top policymakers, Bundesbank President Joachim Nagel, said last week that the bank will keep doing all that is necessary to complete its nearly accomplished mission on inflation.
Business Times
23-06-2025
- Business
- Business Times
Eurozone growth stalls in June with sluggish services, manufacturing
[LONDON] The eurozone economy flatlined for a second month in June, barely expanding as the bloc's dominant services industry showed only a small sign of improvement and manufacturing displayed none at all, a survey showed on Monday (Jun 23). HCOB's preliminary composite eurozone Purchasing Managers' Index, compiled by S&P Global and seen as a good guide to growth, held steady this month at May's 50.2. That was barely above the 50 mark separating growth from contraction and below expectations in a Reuters poll for 50.5. 'June's flash PMI survey for the eurozone was consistent with the economy flat-lining,' said Jack Allen-Reynolds at Capital Economics. 'The weakness in activity was broad-based, with the services index edging up to just 50.0 while the manufacturing index edged down.' Business activity in Germany, Europe's largest economy, returned to growth as its recovering manufacturing sector saw its strongest increase in new orders in more than three years. But in France activity contracted further as weakness in both manufacturing and services hit the eurozone's second-biggest economy, S&P Global said earlier on Monday. In Britain, outside the currency union, business activity expanded modestly as new orders grew for the first time this year but employers cut jobs more quickly and worried about the conflict in the Middle East. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Overall demand in the bloc fell for a 13th month, albeit only mildly, with the new business index rising to 49.7 from 49.0. The services PMI nudged up to sit right on the break-even mark, up from May's final reading of 49.7, as the Reuters poll had predicted. But optimism among services firms increased and the business expectations index bounced to a four-month high of 57.9 from 56.2. The headline manufacturing index, which has been sub-50 since mid-2022, held steady at May's 49.4, defying expectations for a lift to 49.8. An index measuring output that feeds into the composite PMI fell to 51 from 51.5. Factories reduced their selling prices for a second month. The output prices index remained at 49.2. Eurozone inflation fell below the European Central Bank's 2 per cent target in May and the central bank signalled a pause in policy easing after cutting its deposit rate for an eighth time this month. One of the ECB's top policymakers, Bundesbank president Joachim Nagel, said last week that the bank will keep doing all that is necessary to complete its nearly accomplished mission on inflation. REUTERS
CNBC
04-06-2025
- Business
- CNBC
The European Central Bank is almost guaranteed to cut rates. Here's what could happen next
The European Central Bank is all but guaranteed to trim its key interest rate on Thursday. Markets were last pricing in an around 99% chance of a 25-basis-point cut, according to LSEG data. That would take the deposit facility rate to 2% — half of the mid-2023 high of 4%. But Europe faces a highly uncertain economic outlook, raising the question of what the ECB could do beyond Thursday's meeting. Inflation is now hovering around the central bank's 2% target again, with flash data on Tuesday showing consumer prices in the euro zone rose just 1.9% in May. Meanwhile, economic growth has still been sluggish: the gross domestic product in the euro zone grew by 0.3% in the first quarter of 2025, according to the latest estimate. The bloc faces many unknowns, both at home and abroad. That includes U.S. President Donald Trump's tariff agenda — widely regarded as having a negative impact on growth — and potential retaliatory moves from the European Union, as well as how the EU's major rearmament plans and Germany's big fiscal shift could play out. Here's what analysts say about the central bank's potential next steps, and what they might mean for consumers. Analysts and economists are widely expecting more interest rate cuts from the ECB later in the year, but aren't counting on the bank to give a strong indication of where exactly rates could be headed. Tuesday's inflation figures increased chances that, after this week, the next rate trim could come as soon as July, said Jack Allen-Reynolds, deputy chief euro zone economist. Others struck a more cautious tone, with Barclays economists suggesting in a note last week that rate cuts are on the horizon but won't be implemented as soon. "We believe the ECB will remain non-committal on its policy path and continue to follow a meeting-by-meeting approach to maintain flexibility and optionality in policy calibration," they said. They're also expecting more rate cuts from the ECB, forecasting two more 25-basis-point reductions in September and December — meaning the ECB would hold rates steady over the summer months. Elsewhere, a BofA Global Research report published earlier this week said the ECB was now "running out of reasons not to go below 2%," echoing the suggestion of further rate cuts on the horizon. But, it noted, the ECB is unlikely to give hints about just how low it could go. "We expect some acknowledgment that door is open to move rates below 2%, but a very explicit signal is unlikely. Uncertainty on tariffs will give the Governing Council enough cover to not pre-commit to more," the report said. Crucially, the ECB will also publish its latest staff projections this week, highlighting what it expects for inflation and economic growth. That comes after the Organisation for Economic Co-operation and Development's latest Economic Outlook report, which forecast 1% growth and 2.2% inflation for the euro area this year. For consumers, more ECB rate cuts would mainly affect borrowing and savings rates. Exactly how it plays out for them depends on what type of products they hold, and how long the rates on them are set for, Bas van Geffen, senior macro strategist at RaboResearch, told CNBC. For example, he said, a 10-year fixed mortgage and a demand deposit would be affected in different ways. "The interest rate on short-term deposits tends to follow the deposit rate quite closely," he said. "A week after the ECB meeting, the policy rate goes into effect. So, if the ECB cuts the deposit rate Thursday, banks will receive 0.25% lower interest on their deposits with the central bank. This may cause them to lower the interest rate they pay on savings accounts as well," van Geffen explained. Products with fixed longer-term rates have a more complicated relationship with central bank interest rates, he said, as they're not only determined by the current policy rate — which often changes — but also by future expectations. "The market has long been expecting the ECB to cut rates this week. So, that may already be included in long-term interest rates to some extent. That also means that these long-term rates do not necessarily change after this week's policy decision," van Geffen said.
Qatar Tribune
03-06-2025
- Business
- Qatar Tribune
Eurozone inflation slows to 1.9% in May, below ECB target
Agencies Eurozone inflation eased in May to its lowest level in eight months, official data showed on Tuesday, falling back below the target of 2% set by the European Central Bank (ECB), further raising expectations for another interest rate cut this week. Year-over-year consumer price increases in the single currency area slowed more than predicted by analysts for FactSet to 1.9%, down from 2.2% 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% in May, down from 2.7% 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 U.K.-based investment research group Capital Economics. 'But May's inflation data strengthens 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%. The slowdown in inflation was thanks to prices for services easing to 3.2% from 4.0% 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%, unchanged from the month before. Food-price inflation accelerated, however, to 3.3% last month from 3.0% in April. Inflation has sharply dropped from the record peak of 10.6% 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 2% 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% and 0.6%, respectively. While the eurozone economy expanded by 0.3% over the January-March period from the previous quarter, U.S. 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% duty on EU goods on ice until July 9 as the two sides chase an agreement, but a 10% levy remains, alongside 25% tariffs on steel, aluminum and auto imports. Trump now also plans to raise duties on steel and aluminum to 50%.
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.
