(RTTNews) - Monday, the start of the week in Europe saw the release of many important statistical data.

Eurozone

In Germany, business confidence deteriorated significantly in June and reached the lowest level in more than two years, a monthly business climate survey from the Ifo Institute for Economic Research showed. The business confidence index fell to 101.3 in June from 103.5 recorded in May and stood below 102.5 expected by economists. While the business confidence for industry and trade clearly worsened in June, the business climate indicator for the construction sector improved.

According to the survey, the index measuring current business situation stood at 108.3, below May’s 110.1 and the 109 expected by economists. Meanwhile, the expectations with regard to the six-month outlook weakened to 94.7 in June from a revised reading of 97.2 reported in May, while economists had expected a reading of 96.3.

Elsewhere, survey results showed that economic activity in the Eurozone fell to its lowest level in five years and is signaled to deteriorate further in the coming months. According to a closely watched survey released by the NTC Economics, the latest RBS/Markit Flash Composite Output Index for the 15-nation economy declined to 49.5 in June from 51.1 in May. The index slipped below the 50.0 no-change level to signal a contraction of private sector output for the first time since July 2003. Economists had expected the index to fall to 50.7.

The PMI for services sector recorded a reading of 49.5, down from 50.6 in May, while the indicator for the manufacturing sector stood at 49.1, lowest reading since May 2005.

Separately, a survey revealed that Belgian business confidence fell sharply in June, nearly erasing a recovery witnessed in May. The National Bank of Belgium’s monthly business survey showed that the gross overall synthetic curve fell to minus 5.9 in June from minus 1.6 in May. Economists were looking for a reading of minus 3.4 for June. The decline was largely due to a slump in confidence in the manufacturing industry.

Rest of Europe

According to property website Rightmove, average asking prices for homes in Great Britain declined 1.2% in the past month. The mid-June drop compared to the previous period was the first decline for the index for June since the survey began in August 2002.

In other news, the Bank of England policy maker Andrew Sentance said the monetary policy committee is ‘firmly committed’ to bring inflation back to its 2% target over a reasonable time frame, reports said citing an article in The Daily Mail. Sentance reportedly said that the current increase in the headline inflation is temporary. He expects a weak economy and housing market to dampen inflation over the next year.

Separate forecasts confirmed that the Swiss economic growth is set to slow in 2008, weighed down by inflation. The State Secretariat for Economic Affairs, or SECO released the official forecasts, which showed that the growth projection for 2008 was maintained at 1.9%. However, the growth forecasts for 2009 underwent downward revision. The SECO now expects the economy to grow just 1.3%, down from 1.5% it had forecasted in March. Thus, growth is projected to substantially slow from the 3.1% recorded in 2007.

On the inflation front, SECO sees the situation heating up considerably in 2008. The agency significantly hiked its inflation forecast for 2008 to 2.5% from 1.7%. Inflation is expected to cool off next year and is projected at 1.3%, up from an earlier forecast of 1%.

Meanwhile, the KOF Swiss Economic Institute revised down its Swiss growth forecast for 2008 to 2% from 2.1%. The institute also lowered economic growth estimate for 2009 to 1.8% from 2%. According to the institute, the downward revision was due to the fact that prices of oil were well above the US$95 per barrel that had been assumed for the spring forecast.

In the medium term, KOF said inflation would gradually flatten out and settle at a little above 1% as of mid-2009, assuming that the price of oil would stay at US$120. Further, the institute expects the Swiss National Bank to take a wait-and-see stand and forecasts nominally a slight appreciation of the franc, which will lower the risk of imported inflation.

Norway’s international reserves decreased NOK3.7 billion month-on-month to NOK288.4 billion in May, the Statistics Norway reported. Foreign exchange reserves totaled NOK285.36 billion. The statistical office also announced that retail sales in Norway increased 9% year-over-year in the first two months of the year. During the same period, the turnover in the wholesale sector was NOK13.5 billion, an increase of 12.2%.

The wage index increased at a slower pace of 0.4% month-on-month in May, compared to 0.9% in April, the Statistics Iceland said. On an annual basis, the wage index growth stood at 7.9% versus 8.2% in the prior month.

In central bank action, the Magyar Nemzeti Bank or the Hungarian central bank left its base rate unchanged at 8.5%. Economists had expected the central bank to hike its key interest by 25 basis points to 8.75%. In May, the apex bank had hiked the rate by 25 basis points to 8.5%.

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Posted in Categories: Economy, Eurozone, Forex, Releases, Stocks, Switzerland, UK, USA.

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