Eurozone Construction Output Falls Significantly
Despite yesterday’s strong sentiment figures from the Eurozone, there remains little signs of any positive shift in the fundamentals. The latest data today is in the form the Construction Output figures and these are showing further deterioration from their already low base. The September Construction Output number shrank by -1.8% month on month, this more than reverses August’s 1.5% growth figure, furthermore this number is seasonally adjusted which eliminates any possibility that the slide is anything other than a manifestation of the softness in the underlying economy. The year on year Construction Output number is now showing a contraction of -1.7%, this follows the August figure of -0.3% and there was some hope in the markets that this may rise to 0.1% expansion today.
On a slightly more positive note the latest Current Account numbers for the Eurozone are looking a little healthier in September. The Seasonally Adjusted balance is presenting a surplus of €30.0Bn, this is a clear widening from the August number which has been revised to read at €22.8Bn. On a Non Seasonally Adjusted basis the situation has shown an even greater improvement, August’s revised figure of a €17.4Bn surplus has grown to €31.0Bn in the month of September. A weakening of the Euro throughout this period has no doubt contributed to positive trade balances, which in turn is buoying the Current Account numbers.
The magnitude of the fall in the single currency, which has dropped nearly 10% against the US Dollar is just external factor. This must be considered in combination with significant drops in energy prices, particularly oil which is now trading 20% cheaper than six months ago. These two factors appear to be outweighing the detrimental impact on trade being presented by both a general slowing in the global economy and the effects of the geopolitically inspired sanctions against Russia.
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