EMU economic indicators

German retail sales might have stabilized in March

Mon, Apr 28 2008, 06:01 GMT
by BHF-Bank Economics Department

BHF-Bank


  • CPI inflation in Germany is likely to have decelerated to 2.8 % yoy in April

  • The flash estimate for April could show EMU inflation slowing slightly to 3.5 % yoy

  • EMU industrial confidence and economic sentiment will probably have deteriorated in April

  • German adjusted unemployment could have risen slightly in April

As from Monday, the German Länder are expected to start publishing regional CPI data for April. Subsequently, the preliminary results for national German CPI in April will be released. We expect German consumer prices to have increased by 0.2% mom and 2.8% yoy. The monthly inflation will have been partly due to typical price increases for seasonal food. Energy prices are also likely to have pushed inflation up by about 0.1 percentage points. On the other hand, prices for package tours and accommodation services probably went down because of the Easter holidays falling in March this year.

The Eurostat flash estimate is likely to show that euro area inflation has decelerated slightly to 3.5% yoy in April. This would correspond with a monthly increase of 0.6% in unadjusted terms. As in Germany, the monthly inflation will probably have been mainly due to record high crude oil prices and higher prices for seasonal food. On the other hand, prices for accommodation services and package tours could have had a dampening effect because of the early Easter holidays. But there is a risk that both EMU inflation rates could be slightly higher because of further increases in food prices.

Euro Area

The GfK German consumer confidence for May is expected to have improved, because negotiated wages in several German industries have been raised substantially, but not excessively. German retail sales might have remained more or less unchanged in March, as retailers’ business assessment had deteriorated, but consumer confidence had improved.

The results of the general election might have had a positive impact on Italian business confidence in April, despite the rather unfavourable economic environment. However, French consumer confidence is likely to have deteriorated in April, just as French business confidence did. EMU industrial confidence and economic sentiment will probably have fallen in April too, like most of the corresponding national figures. The RBS purchasing managers’ indices for the German and the EMU manufacturing sector for April are not likely to be revised significantly.

German adjusted unemployment fell again sharply by 55k in March, partly due to robust growth in the first quarter, relatively mild temperatures and the winter short-time allowance. However, as unemployment in outdoor jobs did not go up markedly during the winter months, we expect the normal spring upswing to have been more subdued than usual. Thus for statistical reasons, German adjusted unemployment could have increased in April for the first time since January 2006, by 15k to 3.3m. The adjusted unemployment rate is likely to have remained unchanged at 7.8%. The harmonised EMU unemployment rate could have fallen slightly by 0.1 percentage points to 7.0% in March, due to the favourable development in Germany.

Published on  Mon, Apr 28 2008, 06:11 GMT

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