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Industrial Producer Prices up by 0.3% in Euro Area

By:
Peter Taberner
Published: May 3, 2016, 09:57 UTC

In March industrial producer prices rose by 0.3% compared for February according to Eurostat. Across the European Union (EU), there was similar positive

Industrial Producer Prices Rise

In March industrial producer prices rose by 0.3% compared for February according to Eurostat.

Across the European Union (EU), there was similar positive news as prices increased by 0.4%.

The European Central Bank (ECB) will welcome the news, in their battle to fight against deflationary conditions in the euro area.

Annual inflation in the 19 member states if the euro area is minus 0.2%, despite the raft of measures that the ECB has used to combat deflation; including an extended quantitative easing programme to 80 billion euros a month, and the lowering of the bank deposit facility rate to minus 0.4%.

Although In March this year, compared with March 2015, industrial producer prices decreased by 4.2% in the euro area and by 4.1% in the EU.

The increase in producer prices was mainly due to a 1.2% rise in energy sector prices, and 0.2% for durable consumers goods in the euro area

Whereas prices remained stable for capital goods, they fell by 0.1% for both intermediate goods and non-durable consumer goods. Prices in total industry excluding energy decreased by 0.1%.

A 1.9% rise in the energy sector was the main reason why prices had increased in the EU, an the cost of durable consumer goods matched the  0.2% figure for the euro area.

The highest increases in industrial producer prices were found  in Greece 1.8%, Estonia 1.6%, Belgium 1.4%, and the United Kingdom  on 1.2%.

While the largest  decreases were  in Cyprus minus 1.6%, Lithuania and Slovakia both on minus 0.7%.

UK Manufacturing PMI Falls

 Markit’s latest UK manufacturing PMI  has fallen to 49.2, its lowest level since the survey was taken in February 2013.

The figure was below the no change mark of 50, the first time that there has been a figure below the neutral level since March three years ago.

The main reasons for the decline in the manufacturing sector, was attributed to lacklustre trends in production, and new orders and declines in both employment and stocks of purchases.

This was mainly felt in the consumer and the investment goods sectors, with both registering declines in production and new work received.

Although the investment goods sector managed to stave off some of the negative traits, as growth of output was maintained, and new order inflows, but the volume of expansion was slower compared to the previous month.

Companies said that operating conditions had deteriorated due to a combination of a reduction in growth in domestic demand, and the easing of new business in overseas markets.

There was also reports from the respondents in the survey that the prospect of an exit from the European Union is effecting business adversely.

Other issues that were thought to have damaged business prospects, included the uncertainties surrounding the oil and gas industry and the retail sector, which has led to clients becoming more cautious in their spending.

New export orders also fell for the fourth consecutive month, albeit by a slender margin, as growth internationally continued to slowdown.

Investment goods producers reported a sharp drop in new export business, this was in contrast to the mild improvements that have been seen in the consumer and immediate goods section.

The GBP/USD rate has continued to favour sterling despite yesterday’s public holiday in the UK.

The pound is currently buying $1.47, rising from just over the $1.465 at the beginning of the day GMT.

Despite the ongoing ‘Brexit ‘ fears, the pound has enjoyed a much improved performance against the greenback, since the first week in April.

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