venerdì 30 agosto 2013

Euro zone CPI calls for an ECB rate cut

Flash August Euro CPI decelerated from 1.6% y/y to 1.3% y/y, lower than market expectations at 1.4% y/y. Looking at the details of the release, most of the fall can be attributed to the energy component which decelerated from 1.6% y/y to -0.4% y/y while the remaining components remained broadly stable. Core CPI remained unchanged at 1.1% y/y.
With energy slowdown likely to be temporary, CPI could rebound to 1.5% y/y by year-end.
However, inflationary pressures are likely to remain subdued in the months ahead as indicated by latest ECB monetary aggregates figures. Money supply M1 growth rate fell from 7.5% to 7.1% and M3 2.4% to 2.2% y/y. The following data suggest that CPI should remain weak in the next few months.
Low inflationary pressures should push the ECB to further ease monetary policy as soon as next week. Indeed ECB is missing both the target of CPI below but close to 2% and on M3 growth rate of 4.5%.
However we do not expect the ECB to ease monetary policy unless Euro zone economy falls back in recession.

giovedì 29 agosto 2013

Italian confidence indices improve in August. Will the positive trend continue?

Both business and consumer confidence indices improved in August, suggesting that economic outlook is slightly improving also in Italy.
1) manufacturing confidence index rose from 91.8 to 92.9 - the highest since November '11. Despite remaing at value in line with a contraction of industrial output in the next 2/3 months, it signalled that industrial sector could find a bottom soon;
2) Consumer confidence index rose from 97.4 to 98.9. It is a sign that consumer spending could improve in H2 '13 even if at modest pace due to high unemployment rate.
The two data strengthened the view that - absent other negative shocks - Italian economy could stabilize in Q3 and return to growth in Q4