During the first half of 2017, the employment level in the Eurozone came back at its pre-crisis peak level. This was already the case for the first quarter but it has been confirmed for the three months to June, which reflects a catch up when growth is more robust and with less uncertainty”, says Philippe Waetcher, chief economist at Natixis AM.
While the euro area managed to sustain its upbeat momentum over the summer months , market doubt s about the trajectory of the US recovery have started to deepen. As economic growth becomes less dependent on accommodative monetary policy, markets are increasingly focusing on politics and the ability of governments to implement fiscal and structural reforms.
This was heard at Jackson Hole: “The cyclical recovery was gathering both pace and geographical breadth, thanks in part to the stimulus efforts of central bankers, the European Central Bank president said, adding that even if inflation remained low, the euro area economy was “gaining ground”. The Fed and the ECB feel they have done all they could. What a cop-out!
CaixaBank Research | Spain’s property sector is on the up and up again, as can be seen from the trend in housing purchases over the last two years. These have been rising at double digit rates, fuelled by a recovery in the jobs market combined with favourable financial conditions.
The minutes of the ECB’s July meeting published on Thursday reflected the central bank’s concern about the strength of the euro, but also a degree of caution regarding continued weak inflation data, analysts say.
The summer lull may continue to dampen stock market activity during the month of August, but there are two key events on the investor agenda this week. German GDP figures for Q2 and the minutes of the Fed’s late July meeting.
The latest batch of economic growth numbers corroborate a picture which we started to see last year, namely that the extent of the Eurozone recovery is widening. Germany is no longer the sole growth driver. Countries like Spain are catching up.
José Luis M. Campuzano (Spanish Banking Association) | The markets are discounting that in the next few months we will see greater certainty in monetary normalisation strategy. The start of the Fed’s balance sheet adjustment can also provide the rest of the central banks with information on the reversion of quantitative measures.
Ecofin agreed last week on a set of actions to be undertaken between now and end-2018 to reduce EU banks’ amounting €921 billion in September 2016 (almost 9% of the euro area’s GDP. At last the EU finance ministers acknowledged that possible “negative cross-border spillovers” from high NPL ratios in some member states require a common EU strategy to address the problem.
Suprising as it may be, 18 of the 19 members of the Eurozone saw an increase in GDP in Q1’17 with respect to Q4’16. Spain’s GDP improved by 0.6%; Italy managed to grow (0.2%); Germany and France clocked up a 0.4% rise. Only Greece remained in the red. The unemployment rate in the region has officially fallen to 9.6%…there is growth.