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

• Send
• Print
• Add To
• Rss

EMU economic indicators

41622acd-da05-4611-9393-608a132824ba

0

0

M3 growth (July): slowed to 9% yoy

Tue, Sep 23 2008, 09:27 GMT
by BHF-Bank Economics Department

BHF-Bank

• RBS PMI manufacturing indices Germany and EMU (September): down

• German ifo business climate (September): down

Germany: ifo business climate, current assessment and business expectations

In the last few weeks, the US ISM manufacturing index has deteriorated. The DAX performance index has declined and so has the German yield spread, as long-term interest rates have gone down while short-term rates have remained stable. On the other hand, the euro has depreciated and the price for crude oil has fallen. This is probably the reason why the ZEW index has improved. Overall, the evidence is mixed. However, the ifo business climate is generally less susceptible to short-term exchange rate and oil price movements. We therefore expect the index to have decreased from 94.8 to 93.9 in September.

All other September sentiment indicators published this week will probably have deteriorated too: this applies to the RBS purchasing managers’ index for the German and EMU manufacturing sector, Belgian business confidence and Italian business and consumer confidence. The GfK consumer confidence for October is likely to have declined from 1.5 to 1.2.

After the summer break, French business and consumer confidence indicators will be published for July to September. These data are also expected to have worsened. French consumer spending could have remained more or less unchanged from June to August, despite the fact that consumer confidence had deteriorated. Q2 French GDP is not expected to be revised significantly.

EMU industrial new orders are expected to have decreased further in July, just as German industrial new orders did. The EMU current account will probably have deteriorated in July, like the corresponding German figure and the EMU trade balance.

In the course of the week, the German Länder will publish regional CPI data for September. Subsequently, the preliminary results for national German CPI in September will be released. We expect German consumer prices to have decreased by 0.2% mom, which would bring the annual rate down to 2.8%. The negative monthly rate will have been mainly due to marked price reductions for package tours and accommodation. Slightly lower prices for heating oil and gasoline probably slowed monthly inflation as well. On the other hand, many utilities announced higher prices for gas as from September and clothing prices are expected to have risen. Food prices could have remained more or less stable.

In view of high short-term interest rates increasing economic uncertainty, flows into time deposits are expected to have remained strong in August. However, other components of M3 (e.g. overnight and saving deposits, money market funds) are increasing only moderately, if at all. M3 growth is therefore likely to have slowed further, to about 9.0% yoy in August, down from 9.3 % in July. At the same time, demand for loans is decreasing. As consumer confidence is low and housing markets have deteriorated in several eurozone countries, households are holding back on house purchases. Corporate demand is also falling, mainly because of a reduction in fixed investment and a decline in M&A activities. Moreover, banks are tightening their lending standards. Overall, we expect credit growth (“loans to other euro area residents”) to have slowed from 9.4 to 8.9% yoy in August.

• Download Full EMU Economic Indicators

Published on  Tue, Sep 23 2008, 09:36 GMT