The number of employed in the Eurozone in the fourth quarter of 2020 reached 157.9 million. This represents a loss of 3.1 million jobs compared to the same period in 2019, before the impact of the pandemic, the EU statistics office Eurostat has reported. In the European Union as a whole, the number of employed people in the fourth quarter of 2020 was 206 million, a figure 3.5 million lower than in the same quarter of 2019.
According to an article by the Bloomberg agency, European bond investors want the European Central Bank to bring together all the sovereign debt earmarked for the markets in 2021. Additionally, the European Union is also prepared to be the main issuer to finance the stimulus plan funded by jointly issued debt.
The positive trend in the euro area trade balance increased in October by 10.3% year-on-year, reaching 30 billion euros, according to data on international trade in goods published by Eurostat. By items, exports of goods from the euro area to the rest of the world contracted by 9%, to 199.3 billion euros. The fall was offset by a sharper decline in exports, which fell by 11.7%, to 169.3 billion euros. Commercial activity amongst the euro members fell by 6.8% in the tenth month of the year, to 166.1 billion euros.
Apolline Menut (AXA IM) | For Eurozone economies, 2020 cannot end soon enough. After a 15.1% decline in the first half of the year and a strong, but partial, rebound in the Q3, the euro area economy is set to contract again in Q4 (-4.1%qoq). The autumn lockdowns triggered by the pandemic’s second wave are less restrictive than in the spring (schools, the public sector and industry remain open this time), and so is our assumption of activity hit (-10% in November on average for the euro area versus around -25% in April). But the euro area will finish the year 8.3 percentage points (ppt) below end-2019 levels and with large dispersion across countries. Virus developments, stringency of restrictions, exposures to the most affected sectors (Exhibit 1) and fiscal supports vary across countries. For that reason, we see German growth shrinking by “only” 6%yoy in 2020, half of the contraction we expect in Spain, and much better than the 7.7% decline we project for the euro area as a whole.
The Eurozone economy grew by record high of 12.7% in the third quarter with expansion including the four major countries: Germany by 8.2%, France by 18.2%, Italy by 16.1% and Spain by 16.7%. This rebound reflected the largest increase since statistics started being kept in 1995. Specifically, Spanish historical GDP’s followed a plunge of almost 18% in the previous three months. However, these figures has a sort of bittersweet taste as they coincide with the reintroduction of strict containment measures across the region which are likely to make the expected recovery reverse.
Philippe Waetcher (Natixis AM) | The low inflation observed in the euro zone will translate into very weak wage dynamics. Demand will be weak while health constraints will weigh on activity. A situation that will not make it possible to fix on medium-term prospects compatible with the recovery plans. Inflation is the answer. The government on this point has more power than the central banks.
Santander Corporate & Investment | The ECB published on Tuesday the aggregate results of its vulnerability analysis of the 86 banks directly supervised under the Single Supervisory Mechanism. This shows that “the euro area banking sector can withstand the stress induced by the pandemic but, if the situation worsens, the decline in bank capital would be significant. Furthermore, the ECB has extended its recommendation that banks should not distribute dividends until 2021.
David Kohl (Chief Economist Germany, Julius Baer) | Lower new infection rates in Europe and a swifter recovery of activity are valid reasons to scale back some pessimism regarding the eurozone growth outlook. The eurozone has ramped up its fiscal response to the corona pandemic. We feel comfortable in expecting for the region a more moderate contraction of -7.2% in 2020.
Industrial production in the euro area chalked up a record rise of 12.4% in May, after falls of 18.2% in April and 11.8% in March. However, the figure was still 20.9% below the level recorded in May 2019, according to data published by the EU’s statistics office Eurostat. In the case of Spain, industrial production rebounded 15.1% in May after declines of 22.8% in April and 13.5% in March. The figure was still 24.9% lower than in May 2019.
Yesterday, Eurostat published the Consumer Price Index (CPI) for June, which rose 0.3% year-on-year. This is a rebound in inflation in the region from the 0.1% rate recorded in May. The figures were in line with analysts’ expectations. However, even with the effect of the German VAT cut, European inflation should become negative again in July.