© Reuters. FILE PHOTO: A shopping cart is pushed down the aisle in this photo illustration taken at Mercator shopping mall in Ljubljana, January 28, 2014. REUTERS/Srdjan Zivulovic
LONDON (Reuters) – Euro zone business growth has slowed significantly this month – and by much more than expected – as consumers concerned about soaring bills opted to stay at home and defer purchases to save money, a survey showed on Thursday.
S&P Global (NYSE:SPGI)’s flash Composite Purchasing Managers’ Index (PMI), seen as a good gauge of overall economic health, slumped to 51.9 in June from 54.8 in May, far below the 54.0 predicted in a Reuters poll and its lowest level since February 2021.
“Euro zone economic growth is showing signs of faltering as the tailwind of pent-up demand from the pandemic is already fading, having been offset by the cost of living shock and slumping business and consumer confidence,” said Chris Williamson, chief business economist at S&P Global.
The composite new business index dropped to a 16-month low of 50.0, the dividing line between growth and contraction, from 53.3.
A PMI covering the bloc’s dominant services industry sank to 52.8 from 56.1, missing expectations for 55.5 and its weakest reading since April 2021.
Growth in demand for services all but dried up and firms faced input costs rising at a near record rate, forcing them to pass some of that burden on to customers. The input prices index rose to 78.3 from 77.4 and has only been higher twice in the survey’s 24-year history – in March and April.
Inflation in the bloc hit a record 8.1% last month and could still go higher in coming months so the European Central Bank is expected to raise its deposit rate above zero for the first time in a decade in September, a Reuters poll found.[ECILT/EU]
High prices meant demand for manufactured goods fell at the fastest rate since May 2020, when the coronavirus pandemic was taking hold, and the headline factory PMI fell to a near two-year low of 52.0 from 54.6. The Reuters poll had predicted a modest drop to 53.9.
An index measuring output, which feeds into the composite PMI, dropped to 49.3 from 51.3, its first time sub-50 in two years.
“Inflows of new business have stalled, led by a slump in demand for goods and reduced demand for services from cash-strapped consumers in particular,” Williamson said.
“At the same time, business confidence has fallen sharply to a level rarely seen prior to the pandemic since the region’s economic contraction during the 2012, hinting at an imminent downturn unless demand revives.”
With costs still soaring and supply chains disrupted factories cut back on purchases of raw materials and suggesting there would be little improvement anytime soon optimism waned. The future output index sank to 51.6 from 55.4, the lowest since May 2020.
Italy says can exceed 3.1% growth target for 2022 despite energy prices
© Reuters. FILE PHOTO: People walk along the Galleria Vittorio Emanuele II shopping mall in Milan, August 25, 2015. REUTERS/Flavio Lo Scalzo
ROME (Reuters) – Italy’s Treasury said the country’s economy could grow this year by at least as much as Rome’s official target of 3.1% set in April, despite the negative impact of surging energy prices.
Italy grew 0.1% in the first quarter from the previous three months, national statistics bureau ISTAT said last month, revising up a preliminary estimate of a 0.2% contraction.
This left Italy with so-called “carryover” growth of 2.6% this year, assuming gross domestic product was flat in the remaining three quarters, ISTAT said.
Announcing on Monday the bond issuance programme for the third quarter, the Treasury said it expected growth to accelerate in the second quarter, compared with the first three months.
This still makes it plausible to reach or exceed the 2022 growth target of 3.1%, it said in its debt issuance report.
Prime Minister Mario Draghi’s government in April revised down its 2022 economic growth forecast to 3.1% from a 4.7% projection made last September.
The government has budgeted since January more than 33 billion euros ($34.90 billion) to soften the impact of sky-high electricity, gas and petrol costs.
($1 = 0.9456 euros)
French consumer confidence falls more than expected in June
© Reuters. A woman shops at a fruit and vegetables shop in Paris, France, June 10, 2022. REUTERS/Sarah Meyssonnier
PARIS (Reuters) – French consumer confidence fell more than expected in June, hitting a near nine-year low as concerns about the economic outlook surged in the face of high inflation and political uncertainty, a survey showed on Tuesday.
The INSEE official statistics agency said its consumer confidence index fell to 82 in June from 85 in May and the lowest level since July 2013.
A Reuters poll of 14 economists had an average forecast of 84 with the lowest estimate for 83.
Although households’ concerns about future inflation remained well above the long-term average, they eased in June for the third month in a row.
However, household sentiment about the general economic outlook continued to worsen, falling to the lowest level since May 2020 when France was in the second month of its first and most strict COVID-19 lockdown.
While surging inflation has stressed households in recent months, France’s political situation has added to uncertainty about the economic outlook since President Emmanuel Macron’s party lost its ruling majority in legislative elections this month.
Peru truckers, farmers to strike over fuel and fertilizer costs
© Reuters. FILE PHOTO: People walk next to parked trucks during a national transportation strike against fuel prices, in Lima, Peru March 18, 2021. REUTERS/Angela Ponce/File Photo
By Marco Aquino
LIMA (Reuters) – Peru’s truckers and some farm groups will go on strike on Monday after failing to reach agreements with the government seeking measures to reduce the impact of steep global price rises of fuel and fertilizer, sector leaders said on Sunday.
Union leaders met on Friday and Saturday with government representatives, with demands including considering freight transport a “public service” that would reduce costs and curb competition from truckers from neighbor countries.
“We are firm in plans to strike with all our bases nationwide,” the leader of the heavy load haulage and drivers union Marlon Milla told radio station RPP. The union has 400,000 cargo transport units in 14 of the 25 regions of the country.
High global fuel prices linked to Russia’s invasion of Ukraine have stoked unrest in Peru, the world’s No. 2 copper producer, while shortages of fertilizer have raised fears over food supply with the government struggling to secure shipments.
The government of leftist President Pedro Castillo, who has seen his popularity tumble since taking office last year, has taken measures to curb the rising cost of living, but the annual inflation rate remains at around 8%, its highest level in 24 years.
Some farming unions also announced strikes on Monday, in protest at the rise in fertilizer prices and shortages.
Latin American leaders are grappling to bring down spiraling prices despite major interest rate hikes. Trucking protests over fuel costs have hit Argentina while Ecuador is being roiled by protests in part linked to gas prices. [L4N2YB27W]
“The dialogue has not been exhausted, we are in a permanent session of ministers to avoid protest,” Justice Minister Félix Chero told reporters on Sunday. The government is offering subsidies for road tolls and fertilizer costs.
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