Eurozone economy
2022-12-01
■ With the peak of natural gas prices and the easing of concerns about power shortages this winter, the sense of economic slowdown has also eased.
■ The European Central Bank turned to the normal pace of interest rate increase
The Eurocoin Index (October: - 0.30), the synchronous index of the euro area, was negative for the second consecutive month, and the comprehensive PMI (early November: 47.8) was also lower than the 50% representing the contraction of enterprise activities for five consecutive months. These leading indicators indicate that the economic downturn will continue beyond October. However, both indexes have risen compared with the previous month. Although the consumer confidence index (November: - 23.9) and Sentix investor confidence index (- 30.9) are still at a negative level, they have risen significantly compared with the previous month. With the peak of European natural gas index (TTF futures of the Netherlands) and Germany's decision to extend the operation of nuclear power plants, concerns about power shortage eased this winter, and the sentiment of enterprises, consumers and investors eased.
In October, the consumer price index (HICP, up 10.6% year on year) continued to hit a record high, but the rise in natural gas prices has stalled, and the inflation caused by energy factors is expected to gradually subside in the future. At the same time, the potential inflationary pressure has not stopped, the price rise has spread to some projects, and the wage growth is also accelerating. The prospect of approaching the 2% inflation target is not obvious. While easing the inflationary pressure, the European Central Bank (ECB) is expected to continue to raise interest rates normally until the stability of basic inflation can be predicted, although there is room to slow the pace of interest rate increase.