A woman shops at a market in Rome, Italy, on June 15, 2022.GUGLIELMO MANGIAPANE/Reuters
The euro zone economy rebounded in the first quarter from a mild recession as Germany returned to growth and expansion accelerated elsewhere, while inflation steadied to reinforce the case for the European Central Bank to cut interest rates.
Gross domestic product in the 20-country bloc increased by 0.3 per cent quarter-on-quarter in January-March for a 0.5 per cent year-on-year rise, official data showed on Tuesday, compared with market expectations that both would expand by 0.2 per cent.
The fourth quarter GDP figure was also revised down to a negative 0.1 per cent from a previous 0.0 per cent, meaning that the euro zone was in a technical recession in the second half of 2023. GDP shrank by 0.1 per cent in the third quarter.
The figures reflect general expectations of a slow recovery in the euro zone. The IMF forecast earlier this month that the bloc’s GDP would rise by 0.8 per cent this year, double the rate of 2023, and by a healthier 1.5 per cent in 2025
Euro zone inflation steadied at 2.4 per cent in April, data showed. However, a crucial indicator of underlying price pressures slowed, solidifying the case for the European Central Bank to cut interest rates at its meeting on June 6, just as the EU public starts voting in the European Parliament election.
Bank of France governor and ECB policy-maker Francois Villeroy de Galhau said the data boosted confidence that inflation would return to the ECB’s 2 per cent target by next year and so the bank should be able to start cutting rates in June.
“The speed of cuts should afterwards be set pragmatically depending on the inflation outlook beyond the month-to-month results, which could show a certain volatility,” he said on social network Linkedin.
Figures from EU statistics agency Eurostat showed growth in all 10 countries from which it compiles data for a flash estimate for the bloc. Growth rates were at least equal to those of the fourth quarter.
Germany, the euro zone’s largest economy, returned to growth in the first quarter with a bigger than expected 0.2 per cent expansion from the previous quarter due to exports and construction investment, which were boosted by unusually mild winter weather. However, fourth quarter numbers were revised to show a deeper dip at the end of 2023.
“The worst is finally behind us,” was UniCredit’s assessment, saying rising trade and lower inflation would likely lead to moderate German growth in the coming quarters.
Spain’s economy grew by 0.7 per cent quarter on quarter, beating analysts’ forecasts for 0.4 per cent growth, due to a boost in investment and private consumption. Investment growth had been weak in previous quarters despite the deployment of European recovery funds. Industry and construction expanded in the quarter.
The French economy also gained momentum in January-March, growing slightly faster than expected thanks to a pickup in consumer spending and business investment.
The growth is good news for the French government which drew fierce opposition criticism for its handling of the economy after it revised down its 2024 growth forecast in February.
“To all of those who were wanting to think our economy has stalled out, the facts are stubborn, French growth is improving,” Finance Minister Bruno Le Maire said.
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.
