Status Quo in the Eurozone ...
(From the FT - bold parts are my emhasis)
'Eurozone manufacturing growth slowed only slightly in the third quarter, with job creation – and inflation pressures – picking up last month, according to a closely watched survey.
In a clear sign that growth remained robust, the manufacturing purchasing managers’ index for September was unchanged at 56.6.
Overall in the three months to September, the index was “very slightly” lower than the previous quarter, according to Kevin Gaynor, economist at the Royal Bank of Scotland, which publishes the index with NTC Economics. That pointed to “sustained buoyant business conditions consistent with annual industrial production growth of approximately 3 per cent,” Mr Gaynor said.
Economists still expect an economic slowdown in the months ahead and in 2007, as Germany raises VAT and interest rate increases begin to bite. But Jonathan Loynes, economist at Capital Economics, said “there are few signs from the survey that the industrial recovery is about to run out of steam” . He expected “solid GDP growth in the second half of this year”.
The data were some of the last available before Thursday’s meeting of the European Central Bank’s governing council, which is expected to announce another quarter percentage point rise in its main interest rate, to 3.25 per cent.
Tumbling oil prices have meant eurozone headline inflation has fallen back within the ECB’s target – an annual rate “below but close” to 2 per cent. But the central bank is worried that underlying inflationary pressures are building on the back of stronger growth.
The PMI data showed both input and output price inflation accelerated in September. Output prices rose for the 14th consecutive month as companies sought to pass higher costs on to customers.
But employment growth also recovered pace after having dipped in August. September saw the strongest rise in staff levels in almost six years and the seventh consecutive monthly increase.