Friday, 23 February, 2018

Euro Mixed Ahead Of Eurozone Inflation, Unemployment Data

German workers such as these from Porsche are being bullish with pay demands German workers such as these from Porsche are being bullish with pay demandsTHOMAS KIENZLE AFP GETTY IMAGES
Nellie Chapman | 31 January, 2018, 16:57

Eurozone inflation data was mixed on Wednesday morning, with the headline consumer prices falling less than expected but the core number strengthening in line with forecasts.

In December, the European Central Bank lifted its growth estimates for the eurozone, predicting growth of 2.3% in 2018, up from a previous estimate of 1.8%, while 2019's forecast was increased to 1.9% from 1.7%.

Food, alcohol and tobacco prices rose by 1.9 per cent in January, followed by smaller price increases in services and non-energy industrial goods.

Eurostat reported that with just over 14 million people out of work in the euro area in December, the unemployment rate of 8.7 per cent was the lowest since January 2009.

With the crisis abating, the eurozone is growing strongly - figures Tuesday showed that the bloc expanded by 2.5 percent in 2017, its highest rate for a decade.

"If current oil prices are sustained, however, energy inflation is set to increase significantly starting in Q2", said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.

"In any case, the rise in core inflation is consistent with the underlying trend in unemployment and GDP growth".

The Office for National Statistics last week put the UK's quarterly growth rate for the final three months of the year at 0.5 per cent, ahead of City analysts' expectations of 0.4 per cent growth.

Marking the lowest rate of inflation since July, the outcome suggests euro strength has pushed down the cost of imports to the eurozone bloc.

Vistesen was surprised to see the unchanged unemployment rate given that the rate of joblessness appears to have declined in nearly all the key members of the bloc. For a variety of reasons, including the eurozone's strong growth, the euro has been hugely in demand.

The European Central Bank has been carrying out a huge stimulus programme in an attempt to drive eurozone growth.