European Consumer Expenditure Declines, Restricting Economic Growths in the Region
The European consumer expenditure that accounts to about 60 % of the financial system, declined for the first time in the fourth quarter restricting the economic growth of the region. Since 2001 the consumer expenditure in the European region fell down to 0.1 % for the first time since six years. This happened after developing 0.5 % in the last three months reported the statistics office of European Union in Luxembourg. The development in the sickening domestic products relieved from 0.7 % to 0.4 %, harmonizing the evaluation that was published on 14th February. The towering prices of gasoline, bread and milk were corroding household expenditure control in the European region even as the unemployment declined to the lowest level since 1993.
The economic slowdown of United States at the same time also reduced the demands of European products. Even the increase in the euros records against the US dollar made the exports less feasible, making the companies to reduce investments. Unicredit MIB economist Aurelio Maccario, in Milan, said that the consumer figures were even worse than they were expecting. As the current investments seem to be the best news, the predictions are less glowing and the tendency may soften in the coming months. At present the figures show that the investment growth of the company has slowed down from 1.2 % to 0.8 %, whereas the government expenditure has slipped down to 0.1 %. Even exports had enhanced to 0.5 % in comparison to the previous three months which was at 2.1 %.
Production Level
In a separate report it showed that the inflation of the production level increased in the month of January to the record in 17 months as the energy prices mounted high. The decline in the development of the European region could extend this year, as the nastiest housing downturn of US in 25 years restricted the development in the largest economy of the world. Even the progress of euro against the dollar warns the sales overseas. In the past one year the euro rose up to 16 % against the US dollar, reaching to a record high of 1.5275 dollars on 3rd March. In Brussels it slipped down to 1.5196 dollars by 0.1 % at 11.45 am on the next day.
After this report the European stocks completed its declines. The Stoxx 600 fell to 0.7 % and the Dow Jones Stoxx 600 slipped to 0.9 %. The government bonds climbed up overturning the previous decline. The 10 year bund yield of the Europe’s target slipped to 3.85 % by 1 basic point. From the previous year the economy of the European region grew up to 2.2 % in the fourth quarter, altering the first 2.3 % evaluation. In the third quarter the economy grew up to 2.6 %.
Inflation in the Production Prices
Present day figures show that the inflation in the production prices increased from 4.3 % in the month of December to 4.9 % in the month of January. The energy growth prices also increased to 11 % whereas the prices for durable consumer goods and intermediate goods even mounted high. The Chief European economist Howard Archer said that the report on the production prices will manage the ECB’s worries on increasing pressures which reduce the supplying sequence. In the third quarter Germany’s GDP climbed to 0.3 % when it improved 0.7 % expansion in Netherlands and France, whereas the economic development of Spain increased from 0.7 % to 0.8 % in the third quarter.
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