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Eurozone growth rises to 0.5%, but inflation surges to 1.8% – business live Eurozone growth rises to 0.5%, but inflation surges to 1.8% – business live
(35 minutes later)
10.59am GMT
10:59
The eurozone didn’t manage to match Britain’s economy, though.
UK GDP grew by 0.6% in the last three months of 2016, and by 2.2% during the year.
10.45am GMT
10:45
The eurozone outperformed the United States last year.
Today’s growth figures show that the eurozone expanded by 1.7% in 2016; last Friday, we learned that America only grew by 1.6%.
This is the first time the Eurozone has grown faster than the US in a calendar year since 2008, when the financial crisis struck.
One for the record:2016 real GDP growthUS: 1.60%Euro area: 1.70%
10.32am GMT
10:32
Eurozone unemployment falls: the details
Eurozone politicians will be delighted to see the region’s jobless rate fall to 9.6% (not 9.8% as I mistyped earlier, sorry).
This is the lowest rate recorded in the euro area since May 2009.
The jobless rate across the European Union came in at 8.2%, unchanged from November, and the lowest since February 2009.
The lowest rates were recorded in the Czech Republic and Germany, while Greece suffered the worst jobless rate (23.0% in October 2016) followed by Spain (18.4%).
There are still 20.065 million men and women out of work in the EU, including 15.571 million in the euro area.
And young people are still finding it hard to find work; in December 2016, the youth unemployment rate was 18.6% in the EU28 and 20.9% in the euro area, compared with 19.5% and 21.8% respectively in December 2015.
10.24am GMT10.24am GMT
10:2410:24
Important point: eurozone core inflation (which strips out food and energy) was only 0.9% this month, rather than the headline figure of 1.8%.Important point: eurozone core inflation (which strips out food and energy) was only 0.9% this month, rather than the headline figure of 1.8%.
That’s little comfort to households facing a cash squeeze, but it does give the European Central Bank a good reason not to be bounced into changing monetary policy.That’s little comfort to households facing a cash squeeze, but it does give the European Central Bank a good reason not to be bounced into changing monetary policy.
Julien Lafargue, European equities strategist at JP Morgan, explains:Julien Lafargue, European equities strategist at JP Morgan, explains:
“Headline inflation is clearly picking up in the Eurozone, but a lot of that is linked to energy price base effects (+8.1% compared with +2.6% in December). As highlighted in their most recent press conference, the ECB itself is willing to look through these transient gains.“Headline inflation is clearly picking up in the Eurozone, but a lot of that is linked to energy price base effects (+8.1% compared with +2.6% in December). As highlighted in their most recent press conference, the ECB itself is willing to look through these transient gains.
As such, we believe that it is too early to call for any sort of further “tapering” in the region, especially ahead of a very busy political agenda.As such, we believe that it is too early to call for any sort of further “tapering” in the region, especially ahead of a very busy political agenda.
The eurozone's headline inflation rate is at a 4-year high but core inflation is still lagging behind. https://t.co/eB5pQv6Z0T pic.twitter.com/csR7WN8nXRThe eurozone's headline inflation rate is at a 4-year high but core inflation is still lagging behind. https://t.co/eB5pQv6Z0T pic.twitter.com/csR7WN8nXR
10.18am GMT10.18am GMT
10:1810:18
Growth up, inflation up, unemployment down....Growth up, inflation up, unemployment down....
The Euro Area economy right now. pic.twitter.com/1xzCmF443VThe Euro Area economy right now. pic.twitter.com/1xzCmF443V
10.07am GMT10.07am GMT
10:0710:07
On an annual basis, the eurozone grew by 1.8% last year - up from 1.5% in 2015.On an annual basis, the eurozone grew by 1.8% last year - up from 1.5% in 2015.
Euro area GDP +0.5% in Q4 2016, +1.8% compared with Q4 2015: preliminary flash estimate from #Eurostat https://t.co/8krAFeAw45 pic.twitter.com/yyci1wEQU7Euro area GDP +0.5% in Q4 2016, +1.8% compared with Q4 2015: preliminary flash estimate from #Eurostat https://t.co/8krAFeAw45 pic.twitter.com/yyci1wEQU7
10.05am GMT10.05am GMT
10:0510:05
Eurozone growth jumps to 0.5%; inflation leapsEurozone growth jumps to 0.5%; inflation leaps
My Reuters machine is gasping for air as a burst of newsflashes ripple out from the eurozone, giving new insights into the European economy.My Reuters machine is gasping for air as a burst of newsflashes ripple out from the eurozone, giving new insights into the European economy.
New growth figures show that the euro area grew by 0.5% in the last three months of 2016, up from 0.4% in the previous quarter.New growth figures show that the euro area grew by 0.5% in the last three months of 2016, up from 0.4% in the previous quarter.
That’s an encouraging sign, suggesting the region’s recovery is picking up pace.That’s an encouraging sign, suggesting the region’s recovery is picking up pace.
But inflation has jumped by more than expected, to 1.8% in January. That’s the highest in almost four-years, driven by a steep rise in energy prices.But inflation has jumped by more than expected, to 1.8% in January. That’s the highest in almost four-years, driven by a steep rise in energy prices.
Euro area inflation up to 1.8% in January 2016; the highest since February 2013: see flash estimate from #Eurostat https://t.co/X0q2tkKeDb pic.twitter.com/C3KvvIEnqnEuro area inflation up to 1.8% in January 2016; the highest since February 2013: see flash estimate from #Eurostat https://t.co/X0q2tkKeDb pic.twitter.com/C3KvvIEnqn
The European Central Bank’s target is to keep inflation just below 2% - these figures are surely going to fuel calls for the ECB to stop its bond-buying stimulus programme, and consider pushing interest rates up.The European Central Bank’s target is to keep inflation just below 2% - these figures are surely going to fuel calls for the ECB to stop its bond-buying stimulus programme, and consider pushing interest rates up.
And the unemployment rate across the region has dropped to 9.6% in December, a new seven-year low. And the unemployment rate across the region has dropped to 9.6% in December , a new seven-year low.
Wow - Eurozone inflation jumps to 1.8% in Jan, near ECB target of 2%. Unemployment also at seven year low - @AFPWow - Eurozone inflation jumps to 1.8% in Jan, near ECB target of 2%. Unemployment also at seven year low - @AFP
Details and reaction to follow....Details and reaction to follow....
UpdatedUpdated
at 10.12am GMT at 10.28am GMT
9.47am GMT9.47am GMT
09:4709:47
The latest unemployment news from Italy is rather disappointing.The latest unemployment news from Italy is rather disappointing.
The Italian jobless rate came in at 12% in December, higher than expected, while November’s reading has been revised up from 11.9% to 12%.The Italian jobless rate came in at 12% in December, higher than expected, while November’s reading has been revised up from 11.9% to 12%.
These are the highest readings since July 2015.These are the highest readings since July 2015.
9.23am GMT9.23am GMT
09:2309:23
Dollar on track for worst January since 2008Dollar on track for worst January since 2008
The US dollar is poised to suffer its worst start to any year since 2008.The US dollar is poised to suffer its worst start to any year since 2008.
The greenback has fallen by 1.9% against a basket of currencies this month, partly thanks to yesterday’s selloff as Donald Trump’s flurry of executive orders alarmed traders.The greenback has fallen by 1.9% against a basket of currencies this month, partly thanks to yesterday’s selloff as Donald Trump’s flurry of executive orders alarmed traders.
The pound, for example, has gained over 1.5 cents against the US dollar this month, from $1.233 to $1.25.The pound, for example, has gained over 1.5 cents against the US dollar this month, from $1.233 to $1.25.
Kit Juckes, currency expert at Societe Generale, says it’s very hard to know how the markets will react to Trump.Kit Juckes, currency expert at Societe Generale, says it’s very hard to know how the markets will react to Trump.
President Trump’s travel ban - and his associated decision to fire the acting Attorney General - dominates sentiment and remains good for Treasuries, the yen (and gold), but bad for bonds and the dollar.President Trump’s travel ban - and his associated decision to fire the acting Attorney General - dominates sentiment and remains good for Treasuries, the yen (and gold), but bad for bonds and the dollar.
How long will market sentiment to be affected? How far can the dollar and yields fall on this? I’m not sure serious analysis is possible, and I don’t trust my gut instincts on something as far from the usual state of affairs, but my bias is still that we’ll get back to the Trump economic program, and the implications for Fed policy, before too long.How long will market sentiment to be affected? How far can the dollar and yields fall on this? I’m not sure serious analysis is possible, and I don’t trust my gut instincts on something as far from the usual state of affairs, but my bias is still that we’ll get back to the Trump economic program, and the implications for Fed policy, before too long.
More prosaically, markets will focus on the US jobs data due Friday.More prosaically, markets will focus on the US jobs data due Friday.
8.59am GMT8.59am GMT
08:5908:59
German unemployment rate falls to 5.9%German unemployment rate falls to 5.9%
Newsflash: Germany’s jobs market remains as strong as ever.Newsflash: Germany’s jobs market remains as strong as ever.
The unemployment total in Europe’s largest economy has fallen again this month, by 26,000 people, to 2.605m.The unemployment total in Europe’s largest economy has fallen again this month, by 26,000 people, to 2.605m.
That takes Germany’s jobless rate down to 5.9%.That takes Germany’s jobless rate down to 5.9%.
*GERMAN JAN. UNEMPLOYMENT FALLS ADJUSTED 26,000; EST. 5,000 DROP*GERMAN JAN. UNEMPLOYMENT FALLS ADJUSTED 26,000; EST. 5,000 DROP
*GERMAN JAN. ADJUSTED JOBLESS RATE AT 5.9%; EST. 6.0%*GERMAN JAN. ADJUSTED JOBLESS RATE AT 5.9%; EST. 6.0%
8.42am GMT
08:42
UK online supermarket group Ocado is the best performing stock across Europe, jumping by 6.5%.
It posted a 21% jump in pre-tax profits this morning, to £14.5m, and told shareholders it was busier than ever, in its long-running attempt to sign an overseas deal.
The only problem is that we’ve been waiting YEARS for Ocado to team up with an international partner. The company insists there are plenty of suiters in the wings, but there’s still no actual agreement.
Retail analyst Nick Bubb predicts:
Management will have to put up with more questions from the City today about the failure to deliver an Overseas deal in the analysts meeting at 9.30am…
Updated
at 8.43am GMT
8.35am GMT
08:35
European stock markets have opened nervously, following those losses in Asia overnight.
Britain’s FTSE 100 has inched up by 0.2%, while the French CAC and German DAX are both flat.
Kathleen Brooks of City Index says investors are juggling political and economic concerns right now.
It’s been an interesting start to the week, with protests against President Trump’s immigration ban dominating market news and reaction. Trump’s use of executive power has not stopped with immigration; on Monday he signed a new order that will cap business regulation.
While politics took centre stage at the start of the week, earnings from Apple and Exxon on later today, along with a flurry of central bank meetings this week will be critical for determining what matters more to markets right now: politics or economics.
8.19am GMT
08:19
Back to GDP....and Austria has posted another quarter of solid growth.
Austrian GDP expanded by 0.5% in the last three months of 2016, matching the (upwardly revised) growth in July-September.
Austria’s statistics body said that consumer spending and investment were the main factors behind the growth, as in France.
#Austria: Economy ends 2016 on a solid footing. 4Q16 GDP growth at 0.5% QoQ
8.08am GMT
08:08
Inflation leaps in Spain and France
Newsflash: Inflation in Spain has surged this month, to 3% on an EU-harmonised basis.
The cost of living in France has accelerated too, jumping from 0.8% to 1.6% .
The rises are mainly due to higher energy prices, and it suggests the eurozone inflation rate, due in two hour’s time, has also risen sharply this month.
If so, there’ll be a lot more pressure on the European Central Bank to consider tightening its stimulus programme, especially from Germany (where inflation jumped to 1.9%, according to figures released on Monday).
*FRENCH JAN. EU-HARMONIZED CPI RISES 1.6% Y/Y; EST 1.2%
French HICP inflation jumps to 1.6% YoY in January (from 0.8%), adding upside risks to the euro area figure to be released this morning.
7.54am GMT
07:54
Asian stock markets have had another poor day, as fears about Donald Trump’s actions continue to rile investors.
Japan’s Nikkei fell by 1.7%, its biggest drop since October, while Australia’s S&P/ASX 200 lost 0.7%.
On Monday, global markets suffered their biggest one-day drop in six weeks, amid global condemnation of the US president’s travel ban on seven countries in the Middle East.
The news that Trump had fired attorney general Sally Yates after she instructed lawyers not to defend the ban has added to the nervous mood, and fears that Trump is destabilising the world order.
Yoshinori Shigemi, global market strategist at JPMorgan Asset Management, says (via Reuters):
Investors are becoming worried as it appears as if he was setting fire to geopolitical risks that already exist.
Updated
at 7.54am GMT
7.31am GMT
07:31
We don’t have any growth figures from Germany today. Instead, we’ve got a nasty fall in retail spending.
German retail sales fell by 0.9% month-on-month in December, dashing hopes of a recovery after a 1.7% drop in November.
These figures are often volatile, but it could suggest consumers in Europe’s largest economy were cautious in the run-up to Christmas.
7.19am GMT
07:19
Outgoing French president Francois Hollande will surely be pleased that the economy is growing, but his successor still faces a big challenge:
The problem with the French economy? Not growing fast enough to close its output gap. It's all positive but also weak. Same old, same old.
7.11am GMT
07:11
French GDP: instant reaction
German journalist Gesche Wüpper points out that France’s growth during 2016 was weaker than hoped, at just 1.1% for the year.
France: GDP growth only 1,1% in 2016, below expectations of French government which predicted 1,4%. https://t.co/pvaKVVE9cF via @Boursorama
Bloomberg’s Maxime Sbaihi tweets this graph, showing how France’s growth has been volatile and unspectacular over the last few years:
FRANCE: GDP up 0.4% in 4Q, but overall 2016 performance (+1.1%) is weaker than 2015 (+1.2%). Same for 2017. My take: https://t.co/59iVCDd9l9 pic.twitter.com/eq6SOQVUlv
Arne Petimezas, analyst at AFS Group, shows how France (in green) has lagged behind Sweden, the US, Germany and the UK over the last decade.
Sweden, US stellar performers. Dutch growth accelerating, French GDP growth stays mediocre. Suspiciously little volatility in Spain GDP. pic.twitter.com/AX09AcnclR
Updated
at 7.11am GMT
6.49am GMT
06:49
French GDP rises by 0.4%
France has got Eurozone GDP Day off to a good start, by reporting that its economy accelerated in the last three months of 2016.
French GDP expanded by 0.4% in the October-December quarter, twice as fast as in July-September. This suggests that France’s recovery from the financial crisis continues, despite the uncertainty created by the Brexit vote last summer.
The figures also show that France’s economy grew by 1.1% during 2016.
Statistics body INSEE says that consumer and business spending drove the recovery.
“Household consumption expenditures” rose by 0.6% during the month. while “gross fixed capital formation” jumped by 0.8%.
Exports were “more dynamic”, rising by +1.1% during the quarter while imports grew by 0.8%. And that means foreign trade balance contributed slightly to GDP growth: +0.1 points after −0.7 points in the previous quarter.
I’ll pull some reaction together now....
Updated
at 7.03am GMT
6.39am GMT
06:39
The agenda: It's eurozone GDP Day
Good morning, and welcome to our rolling coverage of the world economy, the financial market, the eurozone and business.
We’ll be looking at Europe’s economy this morning, as new data are released showing how the eurozone is performing.
The first estimate of eurozone GDP for the last quarter of 2016, due at 10am GMT, may show that growth picked up to +0.4%, from +0.3%. We’ll also get some figures from individual countries, including France.
The latest eurozone unemployment figures are also due at 10am GMT; economists reckon the jobless rate will stick at 9.8% again, the lowest since 2009. But Italy’s figures, due at 9am GMT, will surely show that its recovery is lagging behind.
Plus, the latest estimate of eurozone inflation is released (yup, also at 10am GMT).
We also get German retail sales figures for December at 7am; they’re expected to bounce back by around 0.6% after shrinking by 1.8% in November.
And at 8am, European Central Bank chief Mario Draghi is giving speech on “Into the future: Europe’s digital integrated market” in Frankfurt, Germany.
Europe’s financial markets are expected to be subdued, following yesterday’s losses as investors watched the backlash against Donald Trump’s travel ban.
Our European opening calls:$FTSE 7112 -0.09%$DAX 11669 -0.11%$CAC 4785 +0.01%$IBEX 9359 -0.03%$MIB 18770 +0.06%
We’ll be tracking all the action through the day...
Updated
at 7.40am GMT