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Trends
Financial conditions
in the euro area
6
Stock Market Indices
Nominal Interest Rates a)
%
6
500
January 1996=100
500
short-term
4
4
long-term
400
400
German share index (DAX)
300
2
2
200
0
Euro STOXX 50
100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-2
0
a) Weighted averages (GDP weights).
In the three-month period from December 2015 to February 2016 short-term interest
rates decreased: the three-month EURIBOR rate declined from -0.13% in December
2015 to -0.18% in February 2016. The ten-year bond yields also decreased from 0.63%
to 0.11% in the same period. The yield spread reached 0.29% in February 2016, down
from 0.76% in December 2015.
February
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
%
14
-6
12
12
-5
10
10
-4
8
8
6
6
2
4
ECB reference value
4.5 %
2
0
-2
0
The German stock index DAX decreased in February 2016, averaging 9,495 points compared to 10,743 points in December 2015. The Euro STOXX also decreases from 3,268
to 2,946 in the same period of time. The Dow Jones International declined as well, averaging 16,517 points in February 2016, compared to 17,425 points in December 2015.
Change in M3 a)
4
100
Source: Deutsche Börse; Dow Jones; STOXX; Datastream.
Source: European Central Bank.
14
200
0
yield spread
-2
300
Dow Jones
industrial
1994=0 (inverted scale)
Monetary Conditions Index
monetary
easing
-3
average
1999–2015
-2
-1
0
monetary
tightening
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-2
a) Annual percentage change (3-month moving average).
Source: European Central Bank.
1
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Note: MCI index is calculated as a (smoothed) weighted average of real short-term interest rates
(nominal rate minus core inflation rate HCPI) and the real effective exchange rate of the euro.
Source: European Central Bank; calculations by the Ifo Institute.
The annual growth rate of M3 increased to 5.0% in January 2016, from 4.7% in
December 2015. The three-month average of the annual growth rate of M3 over the
period from October 2015 to December 2015 reached 5.0%.
95
Between April 2010 and July 2011 the monetary conditions index remained rather stable. This index then continued its fast upward trend since August 2011 and reached its
peak in July 2012, signalling greater monetary easing. In particular, this was the result
of decreasing real short-term interest rates. In January 2016 the index started to slightly
fall again while such minor fluctuations have been observed in last months.
CESifo Forum 1/2016 (March)
Trends
EU survey results
Gross Domestic Product in Constant 2010 Prices
6
EU28 Economic Sentiment Indicator
Percentage change over previous year
%
seasonally adjusted
1990-2012=100
6
120
4
110
110
2
2
100
100
0
0
90
90
-2
-2
80
80
-4
-4
70
EU28
EA19
4
-6
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-6
Source: Eurostat.
60
70
February
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
In February 2016 the Economic Sentiment Indicator (ESI) decreased in both the euro
area (by 1.3 points to 103.8) and the EU28 (by 1.5 points to 105.2). In both the EU28
and the EA19 the ESI stands above its long-term average.
EU28 Industrial and Consumer Confidence Indicators
Percentage balances, seasonally adjusted
%
5
20
balances
EU28 Capacity Utilisation and Order Books
in the Manufacturing Industry
Assessment of order books
0
0
-5
-5
-10
-10
(left-hand scale)
0
%
Capacity utilisation
(right-hand scale)
80
-20
76
72
-15
-15
Consumer confidence **)
Industrial confidence *)
-20
-20
Feb-16
Dec-15
Oct-15
Aug-15
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
64
Source: European Commission.
Managers’ assessment of order books reached – 14.3 in February 2016, compared
to – 11.1 in January 2016. In December 2015 the indicator had amounted to – 10.5.
Capacity utilisation reached 81.5 in the first quarter of 2016, up from 81.2 in the fourth
quarter of 2015.
In February 2016, the industrial confidence indicator decreased by 1.6 in the EU28 and
by 1.3 in the euro area (EA19). On the other hand, the consumer confidence indicator
increased by 2.4 in the EU28 and by 2.5 in the EA19.
CESifo Forum 1/2016 (March)
Jun-13
Apr-13
* The industrial confidence indicator is an average of responses (balances) to the questions on production expectations, order-books and stocks (the latter with inverted sign).
**New consumer confidence indicators, calculated as an arithmetic average of the following questions: financial and general economic situation (over the next 12 months), unemployment expectations (over the next 12 months) and savings (over the next 12 months). Seasonally adjusted data.
-80
68
Feb-13
Source: European Commission.
-60
Dec-12
Feb-16
Dec-15
Oct-15
Aug-15
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
-25
88
84
-40
-25
60
Source: European Commission.
According to the Eurostat estimates, GDP grew by 0.3% in the euro area (EA19) and by
0.4% in the EU28 during the fourth quarter of 2015, compared to the previous quarter.
In the third quarter of 2015 the GDP grew by 0.3% and 0.4% respectively. Compared to
the fourth quarter of 2014, i.e. year over year, seasonally adjusted GDP rose by 1.6% in
the EA19 and by 1.8% in the EU28 in the fourth quarter of 2015.
5
120
96
Trends
Euro area indicators
Exchange Rate of the Euro and PPPs
Ifo Economic Climate for the Euro Area
150
2005=100
USD per EUR
1.65
140
1.50
130
1.35
120
110
1.20
100
Purchasing Power Parity
1.05
90
80
0.90
70
long-term average (1997-2015)
Exchange rate
0.75
60
February
50
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
0.60
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Source: European Central Bank; OECD; calculations by the Ifo Institute.
Source: Ifo World Economic Survey (WES) I/2016.
The Ifo Economic Climate Indicator for the euro area (EA19) declined by another three
index points in the first quarter of 2016. It dropped to 118.9 points, but still remains significantly above its long-term average. Assessments of the current economic situation
were only slightly less favourable than in the previous quarter, and positive expectations
also clouded over somewhat. The recovery in the euro area economy is only expected
to continue at a slow pace.
The exchange rate of the euro against the US dollar averaged approximately 1.09 $/€
between December 2015 and February 2016. (In November 2015 the rate had amounted to around 1.06 $/€.)
Inflation Rate (HICP)
Unemployment Rate
13
ILO definition, seasonally adjusted
%
3
EA19
12
Percentage change over previous year
%
2
Core Inflation
(total excl. energy and
unprocessed food)
11
1
EU28
10
0
9
Feb-16
Dec-15
Oct-15
Aug-15
Jun-15
Apr-15
Feb-15
Dec-14
Oct-14
Aug-14
Jun-14
Apr-14
Feb-14
Dec-13
Oct-13
Aug-13
Jun-13
Apr-13
Feb-13
Dec-12
Jan-16
Nov-15
Sep-15
Jul-15
May-15
Mar-15
Jan-15
Nov-14
Sep-14
Jul-14
May-14
Mar-14
Jan-14
Nov-13
Sep-13
Jul-13
May-13
Mar-13
Jan-13
Nov-12
8
Total
-1
Source: Eurostat.
Source: Eurostat.
Euro area (EA19) unemployment (seasonally adjusted) amounted to 10.3% in January
2016, down from 10.4% in December 2015. EU28 unemployment rate was 8.9% in
January 2016, down from 9.0% in December 2015. In January 2016 the lowest unemployment rate was registered in Germany (4.3%), the Czech Republic (4.5%) and Malta
and Britain (5.1%), while the rate was highest in Greece (24.6%) and Spain (20.5%).
97
Euro area annual inflation (HICP) was – 0.2% in February 2016, down from 0.3% in
January 2016. A year earlier the rate had amounted to – 0.3%. Year-on-year EA19
core inflation (excluding energy and unprocessed foods) slightly decreased to 0.8% in
February 2016, from 1.0% in January 2016.
CESifo Forum 1/2016 (March)