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Eurozone GDP Growth Revised Down

Eurozone GDP Growth Revised Down

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The EU Commission released new forecasts for the Eurozone yesterday and expects growth to slow down as headwinds from emerging markets and China together with the UK’s “Brexit” referendum is expected to weigh on growth. In 2016, the EU’s GDP is expected to rise 1.60%, less than the 1.70% previously estimated. Forecasts for 2017 GDP growth have been revised down to 1.80%, from 1.90%.

Eurozone Producer Prices Rose 0.30% in March

Producer prices increased 0.30% in March, slightly above forecasts of a 0.10% increase, according to data from Eurostat released on Tuesday. Despite the monthly price increase, on a year over year basis, the PPI was down 4.20% in March, the same as in February, but slightly above forecasts of a 4.30% decline. Excluding energy, producer prices fell at an annual pace of 1.10% in March compared to 0.80% in February. Energy prices fell strongly, declining 12.01% while the prices of intermediate goods were down 2.60%. The PPI data comes following a modest increase in the Eurozone GDP. Last week the euro area's GDP showed a quarterly increase of 0.60%, while earlier this week, the manufacturing PMI in the region increased to 51.7, indicating only mild growth.

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UK Manufacturing PMI in April Contracts

The manufacturing PMI in the UK fell below the critical 50-level, slipping to 49.2 in April, according to data released by Markit on Tuesday. A figure below 50 indicates that the sector is in contraction. The decline in the manufacturing PMI marks the first since February 2013, driven by soft domestic demand, weaker exports and the uncertainty on the EU membership referendum known as “Brexit.” The manufacturing PMI for March was revised lower to 50.7 from 51.0 previously. It is estimated that manufacturing production in the UK is falling at a quarterly pace of 1.0% and that will certainly negatively affect the UK's second quarter GDP, a spokesperson for Markit said. The first quarter GDP in the UK got off on a soft start, rising only 0.40% compared a 0.60% increase in the fourth quarter of 2015.

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New Zealand Unemployment Rate Rises in Q1, 2016

The quarterly unemployment rate in New Zealand climbed to 5.70% in the first quarter of this year, up from a revised 5.40% in the previous quarter, data from Statistics New Zealand showed late yesterday. On a quarter over quarter basis, employment was up 1.20%, rising above forecasts of 0.60% and accelerating from the 0.90% increase seen in the previous three months. On a yearly basis, New Zealand employment increased by 2.0%, rising above forecasts of a 1.30% increase. In the quarter ending March, New Zealand's labor force grew by 38,000 marking the largest increase in 12 years.

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Today: US ADP Private Payrolls and ISM Non-manufacturing PMI

Data from the US today will include the ADP nonfarm employment figures. The private payrolls data is expected to show that the US economy added 205k jobs in April, compared to 200k jobs added in March. Recent data from the US labor market continues to show a strong strengthening which is the only bright spot so far. Some analysts point out that a very high percentage of the jobs added in recent months have been part-time jobs and in their opinion that explains the situation where the headline jobs figure is strong while almost all other economic data points have been weak. Following the ADP report, US services PMI is due with expectations of an unchanged print at 52.1 in April, same as in March. The ISM's non-manufacturing PMI is due at 14:00 GMT and is expected to show a modest increase to 54.7 in April, following 54.5 in March.

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