The labor market improvement was spectacular in November with +321 000 jobs that have been added. January 2012 was the last month with higher jobs creation (360 000).
When we look at the last four years we see a deep change since last April. That’s what is shown on the first graph. Since last April the number of new jobs is systematically higher than the average of the previous three years. The economy appears to be more robust.
The change seen in the chart is observable for the total employment figure and for the private employment figure. Continue reading →
The ECB will have to go beyond the monetary policy measures that have already been announced.
It will not probably be at today’s meeting as the next TLTRO operation is scheduled for December the 11th. But probably some new instruments will be presented at the next meeting on January the 22nd.
The first reason for this new approach is on macroeconomic ground. The current economic situation is weak as it was suggested by the Markit survey yesterday. I think that we can have a recovery in 2015 linked to a lower euro and lower oil prices. But monetary policy has also to be supportive. The rate of inflation at 0.3% in November is also a source of worry. It is to low and well below the ECB target of 2%. Moreover looking at the macroeconomic adjustment who can expect a rapid and certain convergence to the 2% target? It would be risky
That’s why the ECB has to act rapidly.
The current instruments that have been put in place by the ECB are not sufficient to fulfill all the ECB targets. Continue reading →
The global economic outlook was still much contrasted in the manufacturing sector at the end of November. That’s the result of PMI/Markit and ISM surveys.
The first point to mention is the marginal drop of the PMI world index from 52.2 in October to 51.8. (An index above 50 means an improvement of the activity in the manufacturing sector. Going from 52.2 to 51.8 means that activity is still growing in the manufacturing sector but at a slower pace)
The downward inflection of the global index is linked to a US PMI index that is weaker than last summer according to the Markit survey. This is in contrast with the ISM survey that shows that since last summer the manufacturing sector is booming. The divergence can be seen on the chart. Continue reading →
Every Monday, I record a podcast in French (here) on macroeconomic news of the previous week and on macroeconomic news expected for the week to come.
The translation in English of the podcast can be found below
Four points have to be mentioned in the week beginning on November the 24th
The first point is the absence of commitment on production at the OPEC meeting in Vienna (November the 27th). The downward impact on oil price was strong. The Brent is now priced circa USD 70. Since the beginning of the year, the price is down by -36% in dollar and by almost 30% in euro. This will have a positive impact on activity for developed countries and it will be a strong support for a recovery, specifically in the Euro Area. We do not expect a rapid change in behavior. The last meeting does not provide elements that could lead to a rapid convergence of interest. Continue reading →
Every morning I record a podcast in French (see here) on a specific topic. The text below is the translation of this morning podcast.
The combination of a more competitive euro, an oil price at $ 70 and a proactive monetary policy will be strong support for an economic improvement in the Euro zone.
For now, this situation is not good. Surveys like PMI/Markit show a fragile dynamics, while in the same time, consumer confidence is bending on the downside.
The fall of the euro will have two effects
First it will restore European companies’ competitiveness. Given their recent performances, France and Italy will benefit more because of their current poor exports’ performances. Continue reading →