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Eurozone Labour Costs Fall

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Eurozone Labour Costs Fall

Labour Costs within the Eurozone have fallen back on the quarter, this is unsurprising given the recent across the board drop in inflation figures for the single currency bloc. The Q1 reading has just been released as 0.9%, which represents a significant scaling back from the 1.6% growth experienced in the last quarter of 2013.

The Eurozone’s ZEW survey for the month of June has also just been made public, this is now showing economic sentiment at a reading of 58.4, this is an improvement on the May figure of 55.2 but it does fall short of the 59.6 hoped for by the market.

In keeping with tradition, Germany has also simultaneously announced it’s ZEW numbers for the month. The Economic Sentiment reading, which attempts to predict sentiment on a six month horizon, is continuing to perform poorly, currently this is at just 29.8 in comparison to 33.1 seen in May, this release brought significant disappointment to the market which had been anticipating an increase towards the 35.0 level. The German ZEW Current Situation reading however is faring much better, this has jumped noticeably on the month to 67.7 from 62.1, consensus estimates for 62.6 were easily beaten here.

The enviable German growth story has recently hit a speed bump as price growth activity was recently recorded as slowing in the month of May. It is already being forecast that the 0.8% GDP growth rate experienced during the first quarter of this year is likely not to be reproduced in the two subsequent quarters with any noticeable pick up being held back until the closing stages of the year. A fall off in construction activity is being cited as the prime cause for the moderation of growth in the Eurozone’s largest economy, however this is noted as being cyclical and is expected to show improvement over the coming months.

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