Eurozone inflation rises to zero in AprilGreek exit fears riseSpain’s recovery accelerates with 0.9% growth in Q1German unemployment disappoints in AprilFrench consumer spending falls 12.10pm BST This morning’s French consumer spending figures are not so gloomy once the fall in energy consumption is taken into account.Energy consumption has been a drag on GDP and consumer spending figures for the first quarter across much of Europe. 11.56am BST Russia has lowered its key interest rate to 12.5% from 14%, in a bid to boost the faltering economy amid signs that inflation has peaked.Economists had predicted a smaller cut to 13%.Russia Lowers Key Rate More Than Forecast as Economy Slumps http://t.co/8yYaES16OT via @business pic.twitter.com/vCOnsQkXB2RUSSIAN CENTRAL BANK LOWERS KEY RATE TO 12.50%; EST. 13% 11.39am BST Moody’s has issued another warning on Greece, a day after downgrading its credit rating and plunging it deeper into junk territory.The direct economic and financial impact of a Greek exit from the euro area would be small, but an exit would undermine the euro area’s longer-term resilience somewhat and could yet trigger a more immediate confidence shock, disrupting government debt markets.Moody’s expects Greece (Caa2, negative outlook) to reach an agreement with its creditors and avoid default. However, lack of progress so far means the probability of a default, and of exit, is rising. 11.12am BST Some reaction now to the eurozone inflation and unemployment data. Inflation increased to zero in April, ending a four-month run of deflation. The jobless rate was unchanged at 11.3% in March.The latest eurozone inflation and labour market data paint a mixed picture, with deflation ending - for now at least - but unemployment stuck at a very high level. The general picture remains one of very weak underlying price pressures in the eurozone, reflecting both the weakness of pipeline cost pressures and the spare capacity left in the economy. After four months with negative inflation rates, the eurozone officially exited deflation in April. However, this is not yet a sign of fading domestic disinflationary pressures, as the painfully slow decline in unemployment evidenced in today’s unemployment data for March reminds us.Eurozone inflation will move up further towards the end of the year and then gradually beyond. But to get back to the ECB’s 2% target, it is still a long way to go.Headline deflation is over. The drag of energy prices on headline inflation should gradually diminish further in the course of this year and our baseline scenario is for headline inflation to slowly rise, surpassing 1% by the end of the year. Taken together with an improving macro outlook, a pickup in bank lending and absent a deepening of the Greek crisis, ECB-president Draghi could face increasing questions about the continued need for quantitative easing in the second half of the year. Highly welcome news for the ECB as the Eurozone exited deflation in April as consumer prices were flat year-on-year. Adding to the good news Eurozone unemployment dropped 36,000 in March which was a fourth successive decline. However, it was the smallest decline since November, largely due to Italian unemployment rising by a disappointing 52,000. Nevertheless, the number of Eurozone unemployed has fallen by 418,000 since November 2014. 10.37am BST The jobless rate in the eurozone was unchanged in March at 11.3% according to official Eurostat figures.It disappointed expectations of a fall to 11.2%. 10.11am BST Eurozone inflation picked up in April to 0%, from -0.1% in March. It brings to an end a four-month run of deflation.The biggest driver behind the increase was a rise in food, alcohol, and tobacco inflation according to the flash estimate from Eurostat. 10.06am BST Greek shares are down this morning, with the banks the main losers. The ATG index in Athens is down 1% at 790.Confidence about a deal between Greece and its creditors over a set of crucial reforms is faltering as time ticks on.Majority sees Greece headed for euro exit in Bloomberg user poll http://t.co/EyPbmkcfSM 9.26am BST The number of people out of work in Germany dropped by 8,000 on a seasonally adjusted basis in April, to 2.792m. A bigger fall of about 15,000 had been expected.It left the unemployment rate unchanged at 6.4%, as expected. Despite some unsolved structural issues (think of female labour market participation, demographic change or the low-wage sector) and still some room for improvement, the extremely solid labour market remains the showcase model of the German recovery. 8.57am BST Christian Schulz, economist at German bank Berenberg, says stronger-than-expected Spanish growth in the first quarter is positive on many levels, with lessons to be learned by Greece.It shows that reforms work, it should help reduce unemployment much further and thus political fragility and it serves as a shining example to Greeks of what their country could have if its government finally returns to the path of virtue. Sustained performances like this, in particular when core countries like Austria and Belgium underperform, show that the periphery can grow faster than the core of the eurozone. Eurozone GDP growth may well have picked up to 0.5% quarter-on-quarter in first quarter given improved growth in Spain, Belgium & Austria 8.46am BST Spain’s recovery gained momentum in the first quarter of 2015, with growth of 0.9% following 0.7% growth in the fourth quarter of 2014.It beat expectations, with economists polled by Reuters forecasting growth of 0.8%.GDP rises 0.9% in #Spain in Q1, strongest gain since end of 2007. Economy has grown continually since mid-2013 pic.twitter.com/4MZa75TluV 8.33am BST Europe’s major indices are down this morning following Wall Street losses on Wednesday. 8.10am BST Consumers were less willing to part with their money in March according to figures from INSEE, the national statistics office. 7.57am BST Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.Following’s yesterday’s shockingly weak US growth numbers (read our full story here), the key data out this morning is the flash estimate of eurozone inflation at 10am. Continue reading...
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