Due to the energy **year-on-year**275%, the eurozone PPI is still declining rapidly.
On Monday, February 5, Eurostat released its December Producer** Index (PPI) report, which showed that the Eurozone PPI fell by 10 percent year-on-year in December6%, beating expectations by -105% vs. -88%, the year-on-year decline has been for the eighth consecutive month.
On a month-on-month basis, Eurozone PPI fell 0.m. in December8%, in line with expectations, -03% further expanded.
After the release of the data, the euro did not fluctuate much against the dollar** at 10755。Germany's 10-year yield** was little fluctuating at 2277%。
Specifically, in terms of year-on-year comparison, the main reason for the rapid year-on-year decline in the euro area's PPI in December was energy, of which energy was 275%, intermediate products ***49%, while capital goods (e.g. machinery, tools, or buildings) and consumer durables were both a**, respectively**0%, non-durable consumer goods***32%。
On a month-on-month basis, Eurozone energy ** fell by 2 in December3%, intermediate goods** decreased by 03%, while capital goods and consumer durables** remained stable and consumer non-durables***01%。Excluding energy, the PPI fell by 02%。
By country, the country with the largest decline in PPI in December was Ireland (-12.).0%), the Netherlands (-18%) and Estonia (-1.).4%), while the biggest gainer was Greece (+1.).0%), Belgium (+0.).5%), Cyprus and Luxembourg (both +0.).3%), as well as France (+0.).1%）。
The previously released CPI data also cooled somewhat, with the Eurozone CPI in January falling from 2 in December9% to 28%, the lowest since November 2023, but higher than the market expectation of 27%, which is also higher than the ECB's target of 2%. According to the PMI data released on the same day, the final value of the PMI in the services sector in the euro area in January was 484, a new low in 3 months.
Commenting on the Eurozone services PMI for January, Chief Economist at Commerzbank Hamburg noted that the ECB's hesitation to cut interest rates has become clearer given the surge in the PMI** index. The ECB is reluctant to ease monetary policy as both inputs and outputs** in the services sector are rising. However, the ECB is in a tricky position.
The analysis pointed out that in January this year, the European Central Bank stopped raising interest rates for the third time in a row, and ECB President Lagarde made an overall dovish statement. In terms of forward guidance, Lagarde still stressed that it is too early to discuss interest rate cuts, but she acknowledged the progress made in inflation and said that the wage growth rate of the previous ** has stabilized, hinting that the wage growth rate and the ECB economy in March ** will be observed to a certain extent, leaving a foreshadowing for the rate cut in March-April.