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Eurozone Construction Weakness Begins To Show

James Boston
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Eurozone Construction Weakness Begins To Show

The European construction industry has taken a step backward according to the latest figures released by Eurostat. The key year on year Construction Output figure for the Eurozone has contracted -2.3% compared to the 3.5% growth that the sector produced last month, there was no consensus estimate available but one survey projected this metric to produce growth of up to 8% this month. Construction Output on a month on month basis fell by 0.7%, this is a reversal of the expansion of 1.5% seen the previous month.

Earlier this morning the German Producer Price Index (PPI) was made available for the month of July. This showed a further contraction on the cost of inputs, the reading fell to -0.8% when measured year on year from -0.7% in the month of June, analysts were not expecting an improvement and predicted the rate of declining prices to remain at -0.7% for another month. Markets also looked from growth in the month on month PPI figure of approximately 0.1%, instead this number contracted by -0.1% following on from Junes flat 0.0% reading.

The summer of troubling economic data for the Eurozone is on going. The Netherlands this morning posted a sharp reversal in it’s headline Consumer Confidence number. The publication of the August number showed a fall back in the confidence indicator to -6.0, this number had consistently, if gradually, been improving month on month over the past two years. For comparison purposes last month’s reading was -2.0 and whereas analysts had not necessarily been anticipating any further improvement there was surprise at the sudden reversal in the trend of this indicator.

In fact the only positive piece of news out of the Eurozone this morning is coming from Greece. For the first time in almost one year this recovering economy has produced a positive monthly budget figure. The €1.37Bn surplus posted for June represents a welcome turnaround from a series of monthly deficits, the latest being May’s -€0.246Bn

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