In recent months, the greater EMEA region’s economic outlook has been quite unpredictable. At times, it has appeared that economic recovery is occurring within the region, as unemployment has dropped, confidence levels have risen, and producer prices have increased. Unfortunately, one month of positive economic indicators has soon been followed by a month of adverse data, completely puzzling even the most renowned financial experts.
So, were July’s figures negative or positive? Did unemployment fall – or rise? Did monetary units continue to depreciate? And, were businesses and consumers more confident in June than they were in May?
As a result of the Euro Zone’s ongoing recession and depreciating monetary units, the European Central Bank decided to lower all three of its monetary policy rates in July, for the first time in 2012. During its monthly policy board meeting, held on July 5th, European leaders agreed to reduce the Bank’s main refinancing rate to an all-time record low of 0.75 percent, a 0.25 percent drop from June to July. Regional leaders also cut the Bank’s marginal lending and deposit rates, by 0.25 percent each – the largest reductions of 2012. As of mid-July, the Bank’s marginal lending rate was measured at 1.75 percent, while its deposit rate was 0.00 percent; both rates were yearly lows.
For the third straight month, French manufacturers’ confidence levels declined in June, as the nation’s composite indicator dropped from 93 to 92. As recently as March, the indicator had been measured at 98, but, due to the deterioration of the indicator’s recent changes in output sub-index, confidence has remained well below the norm. In fact, the indicator has not risen above 100, its long-term average, since September 2011. Four of the indicator’s other five sub-indices also depreciated last month, including total demand and order levels, export demand and order levels, and the general outlook for manufacturing production. Unfortunately, there is presently no indication that confidence levels will rise above 100 before the end of 2012.
Last month, Italy’s consumer confidence measurement dropped to an all-time record low of 85.3, as all four of the measurement’s sub-indices declined from May to June. Due to rising unemployment and depreciating monetary units, the country’s national economic climate index fell from 64.2 to 59.7 in June, as Europe’s double-dip recession continued. According to the Italian Statistics Office, the current climate index also declined last month, dropping from 96.4 to 95.5, while the personal index fell from 95.2 to 94.8. As a result of the nation’s rising forecast on unemployment indicator, which augmented from 114 to 121, the national future climate index also deteriorated, signifying that confidence levels will likely remain below average throughout the coming months.
As a surprise to some global economists, Russia’s Consumer Price Index rose by 4.3 percent from June 2011 to June 2012, an increase of 0.7 percent, when compared to May’s annual inflation rate. The noticeable upturn was most likely caused by an unexpected acceleration in food prices, which augmented by 1.6 percent from May to June and by 3.6 percent on a year-ago basis. Despite the rise in inflation, the Russia Central Bank’s refinancing, overnight deposit, and overnight auction-based repurchase rates remained unchanged last month, at eight, four, and 5.25 percent, respectively. None of the rates have been raised or lowered since December 2011.
During the first week of June, the Office for National Statistics released the United Kingdom’s latest Producer Price Index (PPI) statistics. According to the Office, national, year-ago manufacturing output prices declined for the fourth successive month in June, dropping from 2.9 to 2.3 percent, the nation’s weakest annual price growth since October 2009. Year-ago manufacturing input prices also dropped for the fourth straight month, declining to -2.3 percent, while the annual growth of food, beverage, and tobacco output prices dropped from 4.4 percent in May to 4.1 percent in June. Prior to the release of June’s PPI data, economists had predicted annual price growth of 2.4 to 2.5 percent.