Category Archives: Eurocoin

27/3/15: Euro Area Growth Indicator up in March, but…

Latest Eurocoin (Banca d'Italia and CEPR) leading growth indicator for euro area economy came in at a slight improvement in March to 0.26 from 0.23 in February, posting the highest reading since July 2014. The average quarterly growth forecast now implied by Eurocoin is at around 0.25-0.3% q/q with the risk to the upside.

This is the first monthly reading since July 2014 that puts Eurocoin into statistically significant growth territory and also the first monthly reading for positive growth momentum based on 6mo moving average.

However, as the chart below indicates, y/y we are still in weak growth territory and, to a large extent, this growth is supported by dis-inflationary momentum, rather than by nominal growth.

Accommodative monetary policer remains the key forward and the ECB remain stuck in the proverbial 'monetary policy corner':

In March, the main factors behind the Eurocoin increase were: an improvement in household and business confidence, plus gains in share prices. In other words, there is no organic driver for growth - both confidence indicators and share prices may have only indirect link to real economic activity.

10/3/15: Euro Area Growth Indicator Improved in February

In February, Eurocoin - a leading growth indicator from CEPR and Banca d'Italia posted a pretty decent rise to 0.23 from 0.16 in January. The 2 months average is now consistent with growth of 0.3-0.4 percent q/q.

This is the strongest reading in the indicator since July 2014. This time around, gains in Eurocoin indicator were based on improved exports and industrial activity, which is a much better indicator of actual underlying economic performance than gains from stock markets valuations that drove Eurocoin over previous months.

Nonetheless, Eurocoin remains well below its historical average of 0.32. 3mo average through February 2015 is 0.17 against 3 mo average through February 2014 of 0.32, so, once again, growth conditions, albeit improving, remain weak.

The above is confirmed by the recent weakening in the outlook for France. Yesterday, French Government lowered its forecast for Q1 growth from 0.4% to 0.3%.

As ECB went into its much hyped QE, the monetary policy remains firmly 'anchored' in zero growth corner: