Digital Zeitgeist – It’s Possible That The Recession In The Eurozone Won’t Be As Severe As Anticipated
LONDON (Reuters) – According to a study, economic activity in the Eurozone declined less than previously predicted towards the end of last year as pricing pressures eased. This suggests that the recession that the EU is experiencing may not be as severe as was initially anticipated.
The final composite Purchasing Managers’ Index (PMI) for the Eurozone, which is seen as a good gauge of economic health, increased to 49.3 in December from November’s reading of 47.8, exceeding a preliminary estimate of 48.8. The reading in December was an improvement from November’s reading of 47.8.
Despite the fact that the index has been below the 50 mark since July, which denotes the threshold between growth and contraction, it reached a five-month high in December. Because of the holiday season, the final data was compiled one week sooner than it normally would have been.
“The Eurozone economy continued to deteriorate in December, but the strength of the downturn moderated for a second successive month, tentatively pointing to a contraction in the economy that may be milder than was initially anticipated,” said Joe Hayes, senior economist at S&P Global Market Intelligence.
“Nevertheless, there is little evidence across the survey results to suggest the euro zone economy may return to meaningful and stable growth any time soon.”
A survey conducted by Reuters in December made the projection that the region’s economy would decrease by 0.3% in the prior quarter and by 0.4% in the current quarter.
The total amount of demand fell for the sixth consecutive month, but at a more gradual rate than what was previously anticipated. The PMI new business index rose to 47.0 from 44.8, easily above the 46.5 prediction that was provided in the flash report.
A PMI that covers the largest services industry in the Eurozone registered 49.8, up from November’s reading of 48.5, bringing it to within a hair’s breadth of the mark where it would be considered profitable. The initial calculation yielded a value of 49.1
Although there was some relief in price pressures in the market last month, they are still rather high. The production prices index reached 61.0, down from 62.3, marking its lowest point since the month of August.
The officials at the European Central Bank (ECB), who have been tightening monetary policy in an effort to try to manage inflation that is running significantly above their target, would probably view this as a cause for celebration.
The Driving Force Behind Britain’s Record Christmas Grocery Sales Is Inflation
In December Consumers In The UK Spent An Additional £1.1 Billion On Groceries But For Fewer Items
Kantar, a market researcher, said on Wednesday that British grocery sales jumped by 9.4% to a record £12.8 billion ($15.3 billion) in the four weeks leading up to Christmas Day. However, the surge was driven more by price inflation than increased buying, according to the report.
It was stated that sales as measured by volume, or the quantity that consumers bought, decreased by 1% year-on-year, which demonstrates the difficulties that shoppers are encountering amid a cost-of-living issue.
“This story played out across the traditional Christmas categories. For example, value sales of mince pies soared by 19% but volume purchases barely increased at all,” said Fraser McKevitt, Kantar’s head of retail and consumer insight.
According to Kantar, the inflation rate for grocery prices was 14.4% in December, which is slightly lower than the 14.6% rate recorded in November. The rate of price inflation was highest in categories such as milk, dog food, and frozen potato goods.
“This is the second month in a row that grocery price inflation has fallen, raising hopes that the worst has now passed,” McKevitt said.
According to separate data that was published on Wednesday by the British Retail Consortium (BRC), the price of fresh food in supermarkets in the United Kingdom in early December was 15.0% higher than it had been a year earlier. This represents the largest annual increase seen since at least 2005, when records first began to be kept.
Consumers have continued to switch down to store brands, according to Kantar, which found that sales of store brands increased by 13.3%, which was significantly higher than the 4.7% growth in sales of branded lines.
It was reported that the number of trips to supermarkets had climbed by 5.2% year on year. Although online sales of groceries increased by 4%, the market share of online grocery shopping declined by 0.6 percentage points to 11.6%.
Market leader Tesco, Sainsbury’s and Asda all delivered solid performances, with sales on a value basis up 6.0%, 6.2% and 6.4% respectively over the 12 weeks leading to Christmas Day.
In the morning trading session, shares of Tesco were up 1.9%, while those of Sainsbury’s were up 2.6%.
However, German-owned discounters Aldi UK and Lidl GB were the fastest growing chains with growth of 27.0% and 23.9% respectively. This increase was partially attributable to the establishment of new stores.
The worst performers in terms of sales were Morrisons and Waitrose, which fell by 2.9% and 0.7%, respectively. On Tuesday, Aldi said that their own sales had increased by 26% in the month of December.
Next week, both Tesco and Sainsbury’s are going to release their Christmas trading updates.
The overall inflation rate in the UK now stands at 10.7%, and consumers face the risk of a greater squeeze in 2023 due to the prospect of rising taxes and mortgage rates as well as a scaled-back support programme from the government for home energy costs.
online sources: reuters.com, spglobal.com, brc.org.uk, kantar.com