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Eurozone PPI Numbers Gradually Improving

James Boston
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Eurozone PPI Numbers Gradually Improving

Final Eurozone GDP figures have just been published by Eurostat, these relate to Q1 of this year and are not showing any changes to the previously released preliminary numbers. Year on year growth is still showing at 0.9% while the quarter on quarter reading is static at 0.2% expansion.

May’s Producer Price Index, which was released in the same data batch, is however showing a glimmer of improvement. The year on year reading is still contractionary but has picked up from -1.2% to -1.0% as anticipated. Month on month data didn’t reveal any noticeable change, this is still running at -0.1% as per expectations.

The European Central Bank (ECB) has a lot to consider as it enters into it’s deliberations ahead of tomorrow’s policy announcement and press conference. Economic feedback from the Eurozone as a whole as well as from the individual member states over the past couple of week’s has been very uninspiring. Yesterday’s negligible employment growth coupled with very soft manufacturing data bodes particularly badly in light of the persistently low inflation readings and faltering GDP growth rates.

However if currency strength is anything to go by then there still exists a large amount of faith that the ECB will be able to steer the zone back onto the recovery track. Last month’s package of measures by the Governing Council were well received by the markets despite the fact that they were generally considered too moderate to directly impact the zone’s economic situation. Simply by taking concrete action, the ECB reinforced their mantra of ‘doing everything necessary’ to ensure growth and stability within the Eurozone. There is on this basis now an almost unanimous belief that the Bank will embark on the much heralded quantitative easing program sooner rather than later, there is no certainty that this will be tomorrow but clear guidance as to when this will take place would be a welcome outcome of tomorrow’s policy press conference.

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