Eurozone economy stuttering along as stimulus decision looms

LONDON -- The eurozone economy is stuttering along.

That's the conclusion from economic reports Thursday that are likely to cement expectations that the European Central Bank will bolster its stimulus efforts in a week's time.

See Full Article

Financial information company Markit said its main gauge of business activity across the 19-country single currency bloc showed growth faltering for the second straight month. The so-called purchasing managers' index slipped to 53.0 points in February from 53.6 the month before.

Though the February rate was higher than the 52.7 initial estimate and remains above the 50 level that marks the threshold between expansion and contraction, it points to muted growth, particularly in France, the eurozone's second-largest economy. Markit estimates growth in the first quarter of this year could ease from the already "meagre" quarterly rate of 0.3 per cent at the end of 2015.

"The slowdown in growth of business activity, accompanied by a similar easing in the pace of job creation and the steepest fall in prices charged for a year, suggest that the region's recovery is losing momentum," Williamson said.

"The broad-based disappointment ups the odds of the ECB acting aggressively to avoid another downturn," he added.

Separate figures from the European Union's statistics agency, Eurostat, showed retail sales in the region grew by a monthly rate of 0.4 per cent in January. It's a modest uptick and provides further evidence that the region's consumers won't be driving economic activity enough to quickly reduce the region's unemployment rate, which is still high at 10.3 per cent despite consistent falls over the past two years.

Neither the survey from Markit nor the Eurostat data are likely to ease concerns much about too-low inflation, which is ostensibly the ECB's main concern. Figures this week showed the eurozone's annual inflation rate fell below zero in February, to negative 0.2 per cent, way short of the ECB's target of just below 2 per cent.

ECB President Mario Draghi has consistently hinted at further measures over the past few weeks and the markets now expect some bold action at the central bank's meeting on March 10. Measures being touted include a further cut into negative territory of the rate the ECB pays banks on their deposits at the central bank. It currently stands at minus 0.3 per cent, meaning banks have to pay to keep money at the ECB.

By keeping interest rates low and pumping money into the economy via its bond-buying program worth over a trillion euros, the ECB is hoping to generate enough economic activity to get prices rising.

The great concern is that the clouds over the eurozone, as well as over the global economy as a whole, have darkened over the past couple of months, largely because of unease over the economic slowdown in China.



Advertisements

Latest Economic News

  • Live on TV: Moment of reckoning for S. Korean business elite

    Economic CTV News
    SEOUL, Korea, Republic Of -- It's a rare moment of public reckoning for South Korea's most powerful business leaders, courtesy of the country's biggest political scandal in years. Usually cloistered executives from Samsung, Hyundai Motor and six other companies faced grilling Tuesday as lawmakers looked into their links to prosecution claims that South Korean President Park Geun-hye allowed a corrupt confidante to pull government strings and extort companies. Source
  • Along Trans Mountain pipeline, opinions range from pro to protest

    Economic CBC News
    The Trans Mountain pipeline hasn't changed much since it was built in 1952. Carved out of the land between Alberta's oil country and the B.C. coast, it began moving about 300,000 barrels of crude a day across the Rockies the following year. Source
  • Free speech vs. copyright in Supreme Court battle between Google, B.C. firm

    Economic CTV News
    OTTAWA -- A legal fight between Internet giant Google and a British Columbia technology company unfolds today in the Supreme Court of Canada, where they will duel over competing free speech and copyright infringement issues. Source
  • Asian stocks rise after record day on Wall Street

    Economic CTV News
    HONG KONG - Asian stocks rose Tuesday following another record day on Wall Street as investor optimism bounced back quickly after the Italian referendum. KEEPING SCORE: Japan's benchmark Nikkei 225 index climbed 0.5 per cent to 18,370.83 and South Korea's Kospi jumped 1.2 per cent to 1,985.85. Source
  • Stocks track higher after Wall Street hit another record

    Economic CTV News
    HONG KONG -- Stock markets pushed higher on Tuesday as investors cheered another record day on Wall Street and looked past the political and economic uncertainty buffeting Europe. KEEPING SCORE: France's CAC 40 added 0.5 per cent to 4,596 and Britain's FTSE 100 edged 0.4 per cent higher to 6,771. Source
  • Ikea to offer expanded parental leave

    Economic CTV News
    NEW YORK - Ikea's U.S. division is offering longer parental leave to employees who are new parents, following similar overtures from tech companies like Netflix as it strives to keep good workers in an improving job market. Source
  • Indians look for solutions only when toxic pollution soars

    Economic CTV News
    NEW DELHI -- The truth of New Delhi's toxic air finally hit home for Rakhi Singh when her 3-year-old son began to cough constantly early this year. She bought air purifiers for her home. When a thick, grey haze turned the view outside her home into a scene from a bad science fiction film last month, she bought pollution masks. Source
  • China appeals to U.S. to stop disrupting acquisitions

    Economic CTV News
    BEIJING -- China has urged Washington to stop disrupting its foreign corporate acquisitions after President Barack Obama blocked the purchase of a German maker of semiconductor manufacturing equipment as a security risk. The proposed acquisition of Aixtron SE by China's Fujian Grand Chip was "pure market behaviour," a foreign ministry spokesman, Lu Kang, said Monday. Source
  • Your grocery bill is set to jump — and you can blame Trump

    Economic CBC News
    The average Canadian family may need to dish out as much as $420 more for food next year — and consumers could have president-elect Donald Trump to thank for part of the price bump, the lead author of a new report says. Source
  • Families to spend more on groceries, restaurants in 2017: report

    Economic CTV News
    TORONTO - The typical Canadian family will spend up to $420 more on groceries and dining out next year, getting little relief from a recent drop in the cost of food, suggests a new report released Monday. Source