Eurozone April inflation matched the increase the market was expecting, notably core which now stands at its highest level in 43 months. But this really flatters the overall picture given the increase in package holiday prices (notably in Germany) which lifted the recreation component of core this month, alongside an overall uptick in corresponding services.
Tags: Eurozone
This morning completed the March industrial production and orders reports for Germany. Although the m/m bounce in industrial production extended, the prior month’s downward revision took some of the gloss off this and the y/y comparison still looks gloomy.
Money supply growth has picked up again but it’s being driven by a rise in M1, specifically overnight money. Velocity continues to fall. Credit growth meanwhile remains in the doldrums.
Unsurprising to see overall loan demand and supply conditions little changed with weaker corporate demand offset by stronger demand on the consumer side. While banks expect corporate loan demand to pick up in the second quarter looking at underlying economic conditions this seems quite optimistic,
Eurozone February money supply & credit chart pack.
While there looks to have been an improvement in March it’s generally led by a better services performance. Looking at industry the trajectory remains weak with the ‘IFO clock’ remaining in downswing territory amid a further mild deterioration in expectations. This continues to suggest ongoing manufacturing weakness, confirming the deterioration seen in the manufacturing PMI.
Faltering growth and undershooting inflation expose the contradictions of the ECB’s current policy approach. Despite Draghi’s insistence, they remain well…
Eurozone January money supply & credit chart pack
January Germany factory orders and auto production data
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