(Bloomberg) — The euro-area economy looks set to avoid the six-month downturn that had been expected as recently as late last year, according to European Central Bank Vice President Luis de Guindos.
“Growth in the first quarter of the year, according to the leading indicators, is going to be possible,” Guindos told a panel discussion Wednesday in Delphi, Greece. “This is good news, because only in December last year, our baseline was that we could have a technical recession. This is not going to take place.”
While activity in the bloc dipped by 0.1% in the final three months of 2022, recent data signals improving conditions after the energy crisis sparked by Russia’s war in Ukraine eased. Guindos also cited a strong labor market with all-time low unemployment.
ECB officials are parsing such data to determine how high to take interest rates, with a first estimate of first-quarter economic growth due Friday. The outcome of their next meeting, on May 4, remains open as they await figures on prices and bank lending.
Guindos reiterated that core inflation, which strips out volatile components and is closely watched by policymakers, is “much more sticky than headline inflation.”
“Core inflation is sending the correct signal about the medium-term underlying tendencies in terms of inflation,” the ECB vice president said in an ERT TV interview aired late on Wednesday.
Turning to bank lending, Guindos said that the tightening of credit standards seen in the final quarter of 2022 — and the resulting impact on households and companies’ demand for credit — probably continued into in the first three months of this year.
Speaking at the same event in Delphi, Cypriot central-bank chief Constantinos Herodotou highlighted the importance of financing conditions in deciding the next policy steps.
Recent financial-market tensions “may have an additional impact on financing conditions, in addition to our monetary policy, so we need to gauge that and see how it could potentially complement or at least how it contributes to the monetary-policy stance,” he said.
But Herodotou also cautioned that other factors, including rising wages and trade frictions as a result of geopolitics, may contribute to price pressures, so the challenges faced by the ECB “may act in opposite ways.”
(Updates with TV interview comments starting in sixth paragraph)
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
