De Standaard Online

Weekly updates

• The most recent surveys suggest that the pace of economic growth in the Euro-zone is continuing to slacken.
• The Purchasing Managers manufacturing index has been dropping for around 18 months now and has reached a level consistent with little growth in output over coming months. The European Commission’s surveys show a similar picture.
• It is striking that the fall in business confidence has occurred across the Euro-zone and is not just concentrated in one or two economies. This suggests global factors like high oil prices and the slackening in US demand are behind the weakness.

• The last week has seen a reversal of the trend for Euro strength and US dollar weakness.
• A good deal of this change in trend may be due to the shift in sentiment on US interest rates highlighted above. Weaker confidence and provisional figures showing that inflation dropped back to 3.3% in April (from 3.6%) have also raised hopes of a cut in interest rates in the Euro-zone.
• However, it may be too soon to conclude that the Euro has peaked against the US dollar, even though the Euro is expensive on all valuation measures. There have been similar setbacks for the Euro in its steady climb against the dollar and this may just be another one.

De Standaard Weblog op 7 mei 2008 om 16:30 | Link

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