• Home ::
• Fundamental ::
• Economic Calendar ::
• EMU economic indicators

• Send
• Print
• Add To
• Rss

EMU economic indicators

CPI inflation in Germany is likely to have accelerated to 3.0 % yoy in May

Mon, May 26 2008, 08:40 GMT
by BHF-Bank Economics Department

BHF-Bank

• The flash estimate for May could show EMU inflation increasing to 3.6 % yoy

• German adjusted unemployment could have remained stable in May

• M3 growth probably stayed at 10.3% yoy in April

• German retail sales might have rebounded in April

• EMU industrial confidence and economic sentiment will probably have improved in May

As from Tuesday, the German Länder will start publishing regional CPI data for May. Subsequently, the preliminary results for national German CPI in May will be released. We expect German consumer prices to have increased by 0.5% mom and 3.0% yoy. The acceleration in the monthly inflation rate will have been mainly due to the sharp price increases for gasoline and heating oil. These products are likely to have pushed inflation up by about 0.3 percentage points. Prices for package tours and accommodation services probably went up again after their marked decrease in April. On the other hand, clothing is likely to have had a dampening effect on inflation.

The Eurostat flash estimate is likely to show that euro area inflation has accelerated to 3.6% yoy in May. This would correspond with a monthly increase of 0.5% in unadjusted terms. As in Germany, the acceleration in the monthly inflation rate will have been mainly due to record high crude oil prices. Prices for accommodation services and package tours might also have increased, whereas clothing prices could have gone down.

M3 growth fell from to 11.3 to 10.3% yoy in March, supporting the view that the pace of monetary expansion is slowing in the euro area. Especially over the past five months, the monthly increases have been quite moderate: monetary expansion was driven primarily by funds flowing into time deposits and similar interest bearing assets, whereas M1 growth almost came to a standstill. We expect the downward trend to continue in the coming months. At the current pace, M3 growth is likely to have remained unchanged in April at 10.3% yoy. However, the 3 months moving average of annual growth rates is likely to decline somewhat further, from 11.1 to 10.7 %. Credit growth has been strong generally, as non-financial corporations and “other financial institutions” draw on bank loans to fulfill their funding needs. In contrast, funding of households, especially for house purchases, has been drying up. Overall, we expect MFI loans to the domestic private sector to have grown by 10.7% in April, slightly less than in March.

The GfK German consumer confidence for June will probably have deteriorated, after its unexpected improvement in May. After having plummeted unexpectedly in March, German retail sales might have increased slightly in April, as consumer confidence had improved. However, retailers’ business assessment had deteriorated.

Q1 German GDP is not expected to be revised substantially. The detailed breakdown of the components will show that the exceptional surge in growth was driven mainly by investment in buildings and changes in inventories. Investment in machinery and equipment and private consumption are likely to have had a favourable impact on overall GDP, unlike net exports.

French and Italian business confidence and French consumer confidence are all likely to have at least remained stable or even improved in May, as they had plummeted the previous month. The same applies to EMU industrial confidence and economic sentiment. Contrary to its usual seasonal pattern, the EMU current account is likely to have decreased in March, just like the EMU trade balance.

German adjusted unemployment fell by a mere 7k in April, because the spring upswing on the labour market was more subdued than usual, given that unemployment in outdoor jobs had not gone up markedly during the relatively warm winter months. However, the April decline would have been about 15k higher if it had not been for a computer malfunction on the day of the count. Adjusted unemployment might only have remained stable in May. It could even have risen slightly, if the fact that the April figures are likely to be revised is taken into account. The special seasonal effects described above could have prevented unemployment from falling in the spring months, despite the fact that the acceleration in the economic growth rate to a hefty 1.5% qoq in the 1st quarter indicates that labour market conditions developed favourably. The harmonised EMU unemployment rate could have remained stable at 7.1% in April.

• Download Full EMU Economic Indicators

Published on  Mon, May 26 2008, 08:58 GMT

Archive

• German ZEW economic sentiment (August): down again, but not as sharply as in July
  Published On Mon, Aug 18 2008, 08:45 GMT
• EMU industrial production (June): more or less unchanged
  Published On Mon, Aug 11 2008, 11:06 GMT
• German industrial new orders (June): down
  Published On Mon, Aug 4 2008, 06:28 GMT
• EMU industrial confidence and economic sentiment (July): down
  Published On Mon, Jul 28 2008, 06:53 GMT
• German ifo business climate (July): down
  Published On Mon, Jul 21 2008, 10:20 GMT

[ View All ]

• More Reports from this Author
• More Reports from this Contributor

BHF-BANK Aktiengesellschaft  | Bockenheimer Landstrasse 10 60323 Frankfurt am Main
http://www.bhf-bank.com/w3/index.en.jsp | corp-comm@bhf-bank.com