Some highlights of ECB monthly bulletin
External environment:
- Global survey indicators continue to signal a steady growth momentum for the second quarter of 2018.
- At the same time downside risks to the global economy have intensified, amid actions and threats regarding trade tariff increases by the United States and possible retaliation by the affected countries.
- Global financial conditions remain supportive overall, but have tightened somewhat for emerging market economies.
- Global trade indicators recorded a loss in momentum.
- The outlook for economic activity in the United States remains solid, but concerns about tariffs have arisen among firms.
- In Japan, the economy is expected to recover from a mild contraction in the first quarter of 2018, but the outlook is surrounded by growing uncertainty.
- In the United Kingdom, the weakening in GDP growth over the first quarter of 2018 is considered to be temporary.
- In China, GDP growth moderated slightly in the second quarter of 2018 while financial markets recorded downward pressures.
Economic activity
- Although incoming data point to a loss in momentum following the very strong growth seen in 2017, the solid and broad-based growth pattern in the euro area is expected to continue.
- Employment growth remained robust in the first quarter of the year.
- Looking ahead, short-term indicators point to continued strength in the labour market in the coming quarters.
- Rising household incomes supported growth in private consumption.
- Gains in employment are expected to continue to support robust growth in private consumption.
- While investment growth eased in the first quarter of 2018, short-term indicators continue to point to robust growth.
- Investment is expected to continue to grow at a robust pace. Euro area trade growth remained moderate at the beginning of the second quarter of 2018.
- Overall, the latest economic indicators suggest ongoing solid growth.
- This easing reflects a pull-back from the high pace of growth observed last year and is related mainly to a weakening of external trade, compounded by an increase in uncertainty and some temporary and supply-side factors at both the domestic and the global level.
- The risks surrounding the euro area growth outlook can still be assessed as broadly balanced.
Prices and costs
- Euro area annual HICP inflation rose to 2.0% in June, up from 1.9% in May
- Measures of underlying inflation have remained generally muted but stand above earlier lows.
- Price pressures for HICP non-energy industrial goods remained robust, with signs of more upward pressure visible in the early stages of the pricing chain.
- Recent wage growth data points to a continued upward shift from a trough in the second quarter of 2016.
- Both market and survey-based measures of longer-term inflation expectations have remained broadly unchanged
- Residential property prices in the euro area continued to accelerate further in the first quarter of 2018.
