It’s pretty rare that there is a day where good news emerges out of the Eurozone and today is one of those. Positive economic data out of Germany and France has seen the single currency strengthen against the majority of its peers and has led to an increase in risk appetite as optimism grows that the Eurocrisis could be turning a corner.
According to the German statistics office the Statistsches Bundesamt Deutschland, the nation’s Gross Domestic Product inched upwards by 0.1% in the first quarter of 2013, following a 0.7% decline in the last three months in 2012. The data has given investors optimism that Germany will post stronger growth in the second quarter of 2013. The data is being hailed as good news as it means that Germany has avoided recession.
As with all seemingly positive data out of the region there is always a negative side as Carsten Brzeski of ING said; “German consumers remain the silent helpers of the economy. Often forgotten, ignored and labelled as had-beens, German consumers have become an important growth driver. In fact private consumption grew in each quarter since the first quarter of 2012.
‘Unfortunately, the positive trend of private consumption is anything but a spending spree and Germans are still unlikely to become a bunch of shopaholics. This means that despite all delight, this morning’s data also hold an inconvenient truth which interdicts any euphoria: without its exports, the German economy is currently only like a sports car without sixth gear.”
As well as the tiny rise in GDP consumer confidence showed much stronger signs of improvement. The Gfk consumer confidence index for June rose to its highest level since September 2007. The index rose to 6.5 in June from the 6.2 recorded in May.
Christian Schulz of Berenberg Bank said; “In 2013, Germany will have to rely largely on domestic demand for growth. With consumption showing signs of strength and some bounce-back in investment after the long winter, the outlook for domestic demand is brightening.”
Adding to the sense of positivity was the very rare release of good news out of France. According to data things seem to be on the verge of picking up. Confidence in the country’s manufacturing industry beat economist expectations by posting a rise. The confidence index increased to 92 in May from the 88 recorded in April.
Julien Manceaux at ING said; “All in all, it seems that even if manufacturers remain downbeat, slowly improving order books and decreasing stocks could finally boost activity in the manufacturing sector in the second half of this year.
This in turn could lead to a slow recovery in the service sector, the main provider of jobs and investments, whose activity continues to contract: the PMI for the service sector in May was stable at 44.3, which is much lower than the average it reached in the last quarter of the year when the economy was contracting. Even if today’s data are encouraging, they are no more than the first green shoots for the Ayrault government.”
Current Euro (EUR) Exchange Rates
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2987
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8586
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.3421
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6034
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7720
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.1649
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7456
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6236
(Correct as of 11:25am GMT)
