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Focus on ECB after tepid growth data

Wednesday, November 04, 2015 - 01:41

Euro zone business growth remained tepid last month. As Ciara Lee reports the ECB's massive stimulus programme seems to be having little impact on economic activity or price pressures.

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Tepid - euro zone business growth in October. A survey from Markit shows expansion was lower than expected but above the four month lows seen in September. The index came in at 53.9 - a 50 mark signifies growth. IG's Alastair McCaig. (SOUNDBITE) (English) MARKET ANALYST, IG, ALASTAIR MCCAIG, SAYING: "Greece is still a problem on the horizon, Germany has rather materialised as being potentially an issue. And something I think the city is keeping a pretty close eye on. Deutsche Bank feeling the need to suspend dividend payments for the first time since the second world war, due to the ongoing costs and the weakening business environment that it is feeling. Volkswagen as well and the knock-on consequences there." The results suggest the ECB's massive stimulus program is having little obvious impact on economic activity. The bank has injected 60 billion euros a month of new money through its bond-buying program since March to support growth. Its chief, Mario Draghi has hinted it may beef up the program at its next meeting in December. (SOUNDBITE) (English) MARKET ANALYST, IG, ALASTAIR MCCAIG, SAYING: "His track record would say that he does backup his words, although there is invariably a time lag between what he says he is going to do and when he actually delivers it. But I think the markets would be willing to believe and willing to give him a bit of flexibility and leeway, as far as the timeline is concerned." But inflation remains a concern for the ECB which targets a rate of just below two percent. Firms returned to price cutting last month and prices in the euro zone were flat year-on-year. A PMI for the dominant service industry rose but missed forecasts. One bright spot, a rise in the employment index, suggesting firms are preparing for a pick-up in activity.

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Focus on ECB after tepid growth data

Wednesday, November 04, 2015 - 01:41