adminSales adjusted for inflation and seasonal swings climbed 0,8 percent from April, when they fell 0,1 percent, less than originally estimated, the Federal Statistics Office in Wiesbaden said last week. Economists had predicted a May increase of 0,4 percent, according to the median of 23 forecasts in a Bloomberg News survey. The consumer price index rose more than forecast, climbing 1,9 percent this month, separate data showed.
German unemployment unexpectedly declined in June, business confidence climbed and ZEW’s investor sentiment index increased, according to reports last month. Consumer price gains nationally probably accelerated for a second month, figures from the Federal Statistics Office are forecast to show today. Chancellor Angela Merkel, who faces elections in September, warned last week that the European Union must improve competitiveness rather than print more money.
“On the basis of sound fundamentals such as the resilient labour market, rising wages and low inflation, German consumers have become more confident,” said Christian Schulz, an economist at Berenberg Bank in London.
“Robust domestic demand, of which consumption is an important part, may prove to be crucial for gross domestic product growth this year.”
Expanding Economy
The euro rose as much as 0,3 percent to US$1,3079 on Friday and was at US$1,3070 as of 2:01pm Frankfurt time. The currency is poised for its biggest quarterly gain since December 2008, gaining 5 percent against a basket of 10 major currencies since the end of March, Bloomberg Correlation-Weighted Indexes show.
The Bundesbank said last month that German GDP should have improved “markedly” this quarter, while warning of a potential slowdown in coming months. It expects growth of 0,3 percent this year and 1,5 percent in 2014.
The German economy is growing as the European Central Bank holds its benchmark interest rate at a record low of 0,5 percent to try to end the euro area’s longest-ever recession.
Germany’s consumer price index, calculated using a harmonised European Union method, rose 1,9 percent in June from a year ago, compared with 1,6 percent in May. Economists forecast an inflation rate of 1,8 percent, according to the median of 24 estimates in a Bloomberg survey.
Inflation in North-Rhine Westphalia quickened to 2,1 percent from 1,7 percent in May, the statistics office said. Annual price gains accelerated to 1,8 percent in Bavaria, 1,6 percent in Hessen and 1,7 percent in Brandenburg.
The Bundesbank forecasts German inflation will average 1,6 percent this year and 1,5 percent in 2014.
ECB policymakers including President Mario Draghi said last week they will maintain a loose monetary stance for as long as needed and that the central bank stands ready to act if economic conditions worsen.
Merkel told reporters on June 27 that it’s “not a question of creating more and more pots” of money. “It’s a matter of improving our competitiveness, including in light of global pressures,” she said.
ECB Executive Board member Joerg Asmussen played down a report in Sueddeutsche Zeitung today that said officials are considering a policy of quantitative easing to spur growth in the euro region.
“I can’t rule out that inside a large organisation, someone is thinking about something, but that’s not policy-relevant,” he said in an e-mail to Bloomberg News.
Italian Prices
Italy’s inflation rate unexpectedly rose to 1,4 percent this month from 1,3 percent in May, according to a separate release. That was more than the median forecast of 1,3 percent in a Bloomberg survey. Inflation (ECCPEST) in the euro area accelerated to 1,4 percent in May from 1,2 percent the previous month, the EU’s statistics office in Luxembourg said on June 14. Data for June will be published on July 1.
In Asia, Chinese central bank Governor Zhou Xiaochuan tried to soothe concerns that a credit crunch will harm growth in the world’s second-largest economy, saying the nation will maintain market stability and adjust policies at the right time.
The cash squeeze in China, aimed at wringing speculative lending out of the banking system, has increased chances that the government will miss its annual target for economic growth this year, according to Goldman Sachs Group Inc. — Bloomberg.
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