Euro-area economic situation in January 2019: analysis

Posted 28 January, 2019

The European Statistical Office released the data on the EU trade balance and retail sales last November in January. Unlike the previous three-month period, the balance showed improvements reaching EUR 19 billion over the period under review, while the October figures were at EUR 14 billion. These results can indicate stronger demand for the European products and services. Still, it is too early to speak about better demand, since the important issue now is that the trade balance stays steadily high for a long period of time, and the rate should be mostly related to expanded export shipments rather than imports.

According to the released statistics, the November retail sales were 0.6% above the anticipated levels. Speaking about the unemployment report, the rate was near the 10-year bottom staying at 7.9%. For reference, this level was observed before the 2008 crisis. At the same time, better performance of the labour market gives reasons for the European Central Bank to tighten monetary policy.

The European regulator also pays attention to inflation. The December inflation report released in mid-January showed that the rate was at 1.6% y-o-y, which is not a positive sign as the ECB believes. Specifically, an optimal level should be 2%. This means that the interest rate increase can be delayed till late 2019 in case of steadily low inflation.

With the economic data covering November and December, it becomes clear that the EU economy is in a good state now. Nevertheless, further sliding of the manufacturing and service sector PMI raises certain concerns. Some market analysts believe that the January levels kept going down.

Previous forecast

30 January, 2019 13:48

← Oil price now depends on US-China talks progress

The oil market showed more clear price trend yesterday. The quotes managed to post some gains in the second half of Tuesday. According to the available statistics, the Brent prices moved up above $61/bbl. The market players mostly believe that the observed strengthening is related to the restrictions that were launched against Venezuela. However, some market analysts think that the hikes should be connected with better market stance towards the risk.

Oil price now depends on US-China talks progress

Next forecast

25 January, 2019 16:22

Oil generally survives amid political issues →

At the Thursday trading, Brent oil did not decline but even inched up getting support from the market fundamentals. The quotes were recorded near $60 per bbl and took roots at around $61 per bbl. However, oil prices have slackened today staying at some $61 handle today.

Oil generally survives amid political issues
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