[ad_1]
Introduction: France returns to growth on eurozone GDP day
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
Today we discover how the eurozone economy fared in the first full quarter since the Ukraine war drove up energy prices and disrupted supply chains, slowing global growth.
And the breaking news is that France has avoided recession, by returning to growth in April-June as stronger exports helped offset weak domestic demand.
French GDP rose by 0.5% in Q2, figures just released show, having shrunk by 0.2% in January-March as rising inflation hit the eurozone’s second-largest economy.
That’s stronger than expected, and means France has avoided two quarters of falling growth in a row.
France’s statistics body INSEE says “GDP in volume terms strongly recovered after the decline in the previous quarter”.
Foreign trade lifted growth, with exports rising 0.8% and imports falling by 0.6%.
But household consumption expenditure fell again, as French consumers were squeezed by rising prices.
We also get growth figures from across the eurozone through the morning, which are likely to show a generally weak quarter of economic activity, and continued high inflation.
Michael Hewson of CMC Markets says:
On the broad EU basis Q2 GDP is expected to slow to 0.2% from 0.6% in Q1. In Germany we will be lucky to see any expansion at all and given the current geopolitical and economic backdrop this could be as good as it gets for a while.
We also get a quick snapshot of flash CPI inflation for July after the numbers from Germany jumped higher to 8.5% in numbers released yesterday.
And with the US economy shrinking for two quarters in a row, the outlook for the world economy in the months ahead looks uncertain.
Also coming up today
UK bank NatWest is reporting results, while staff at telecoms group BT are holding their first national strike in decades.
Energy groups Shell and Centrica are facing heavy criticism after reporting a surge in profits, and hefty payouts to shareholders yesterday:
Overnight, tech giants Apple and Amazon have beaten Wall Street expectations.
- Amazon reported its second quarterly loss in a row on Thursday but the company’s also beat revenue expectations and gave an upbeat forecast for the remainder of the year; shares jumped over 10% in after-hours trading
- Apple reported higher-than-expected profit and sales as demand for iPhones held firm, despite the slowing US economy and rising inflation
The agenda
- 6.30am BST: French GDP report for Q2
- 8am BST: Spanish GDP report for Q2
- 8am BST: Austria GDP report for Q2
- 9am BST: German GDP report for Q2
- 9am BST: Italian GDP report for Q2
- 9,30am BST: UK mortgage approvals and consumer credit report
- 10am BST: Eurozone GDP report for Q2
- 10am BST: Eurozone inflation report for July
- 1.30pm BST: US personal income and spending report
Key events
Filters BETA
Inflation kept climbing in Austria too.
Consumer prices have jumped by 9.2% in the last year (or 9.3% on an EU-harmonised basis), the highest in decades.
Statistics Austria director General Tobias Thomas says:
“In July 2022, life in Austria has become even more expensive: According to a first estimate, the inflation rate for July is 9.2 %. This is the highest value since March 1975.
While there are further price increases for household energy and in restaurants, the prices for food and fuel remain at a high level”
French inflation has hit a record high, taking the shine off this morning’s stronger-than-expected GDP figures.
French inflation climbed even further in July to 6.8%, on an EU-harmonised basis, up from June’s record high of 6.5%.
Inflation was driven up by the acceleration of service prices “linked to the summer period” says INSEE, along with higher price for food and manufactured goods.
Austria grew 0.5% in Q2
Austria’s economy continued to grow in the last quarter too.
Austrian GDP increased 0.5% in April-June, as it continued to recover from last winter’s national lockdown when it was battling a severe outbreak of Covid-19.
Spain beats forecasts with 1.1% growth
Next up… Spain.
And the Spanish economy has expanded by a faster-than-expected 1.1% in the second quarter of the year.
That’s up from 0.2% in the previous three months, and much faster than the 0.4% which economists expected.
SPANISH ESTIMATED GDP QOQ ACTUAL 1.1% (FORECAST 0.4%, PREVIOUS 0.2%) $MACRO
— Breaking Market News ⚡️ (@financialjuice) July 29, 2022
Claus Vistesen, macroeconomist for Pantheon Macroeconomics, says France’s growth in Q2 was “solid”, but cautions that the boost from net trade and inventory-building could unwind later this year.
Solid French GDP growth in Q2, but it was all inventories and net trade. Significant scope for mean-reversion in both in H2, and I doubt that household spending will rebound much. The positive trend in services capex remains a real strong point.
— Claus Vistesen (@ClausVistesen) July 29, 2022
Tourism stands out as another strong point, both in terms of offsetting weakness in domestic consumption and of course, via net exports. Bodes well for the Spanish headline later.
— Claus Vistesen (@ClausVistesen) July 29, 2022
German cities impose cold showers and turn off lights amid Russian gas crisis
Philip Oltermann
Cities in Germany are switching off spotlights on public monuments, turning off fountains, and imposing cold showers on municipal swimming pools and sports halls, as the country races to reduce its energy consumption in the face of a looming Russian gas crisis.
Hanover in north-west Germany on Wednesday became the first large city to announce energy-saving measures, including turning off hot water in the showers and bathrooms of city-run buildings and leisure centres.
Municipal buildings in the Lower Saxony state capital will only be heated from 1 October to 31 March, at no more than 20C (68F) room temperature, and ban the use of mobile air conditioning units and fan heaters. Nurseries, schools, care homes and hospitals are to be exempt from the saving measures.
Here’s the full story:
ASOS, Boohoo and Asda probed over green fashion claims
Fashion retailers ASOS and Boohoo, and UK supermarket group Asda, are being investigated over their fashion ‘green’ claims.
The Competition and Markets Authority will scrutinise their eco-friendly and sustainability claims, concerned that products are being wrongly marketed to customers as eco-friendly.
The investigation will include whether:
- the statements and language used by the businesses are too broad and vague, and may create the impression that clothing collections – such as the ‘Responsible edit’ from ASOS, Boohoo’s current ‘Ready for the Future’ range, and ‘George for Good’ – are more environmentally sustainable than they actually are
- the criteria used by some of these businesses to decide which products to include in these collections may be lower than customers might reasonably expect from their descriptions and overall presentation – for example, some products may contain as little as 20% recycled fabric
- some items have been included in these collections when they do not meet the criteria
British Airways’ owner, International Consolidated Airlines Group, has returned to profit for the first time since the start of the coronavirus pandemic.
IAG made a pre-tax profit of €73m in the second quarter of the year, up from a loss of €1.12bn in Q2 2021 when pandemic travel restrictions were in force.
Passenger revenues jumped to almost €5bn in April-June, up from €682m a year ago, despite the travel chaos at UK airports this summer that led IAG to cancel thousands of flights.
IAG also made an operating profit during the quarter, of €293m after an operating loss of €967m a year ago.
IAG chief executive Luis Gallego said:
“In the second quarter we returned to profit for the first time since the start of the pandemic following a strong recovery in demand across all our airlines.
“This result supports our outlook for a full-year operating profit.
“Our performance reflected a significant increase in capacity, load factor and yield compared to the first quarter.
“Premium leisure remains strong, while business travel continues a steady recovery in all airlines.”
Bloomberg: France faces an electricity ‘Waterloo’ this winter
Worryingly for France, Paris could be the first European city to suffer a blackout as temperatures drop toward the end of the year, rather than Berlin.
So warns Bloomberg’s energy expert Javier Blas, who explains that France’s nuclear industry is struggling badly.
As winter approaches, the outlook in France is increasingly dire. Electricite de France SA, the state-owned utility, is running only 26 of its 57 reactors, with more than half of its chain undergoing emergency maintenance after the discovery of cracked pipes. With atomic reactors generating the lowest share of the country’s power in 30 years, France faces an electricity ‘Waterloo.’
The slump in nuclear availability is forcing France to rely more than ever on gas-fired plants, intermittent wind and hydro as well as imports. That’s pushing up the cost of electricity in the wholesale market for the whole of Europe, with French forward prices surging to almost 1,000% more than their decade-long average through 2020.
In the middle of the summer, when French electricity demand hovers around 45 gigawatts per hour, that’s not an insurmountable problem. But on a cold winter evening, when French households can push consumption above 80 or 90 gigawatts, it could be catastrophically expensive.
More here.
The reopening of French hospitality businesses after last winter’s wave of Covid-19 also lifted growth, points out Gilles Moëc, AXA Group chief economist.
But he also flags that consumer spending remained weak, as cost-of-living pressures hit households.
French GDP boosted by tourism in Q2. Post-reopening activity in hotels/transport contributed massively to the higher than expected 0.5% print (that’s 2% for those who read their GDP the US way 😀). Personal consumption down again though 1/3
— gilles Moec (@MoecGilles) July 29, 2022
That may be a pattern for the rest of Europe: countries with strong tourism industry/heavy on personal services could do well, maybe more difficult for Northern European countries 2/3
— gilles Moec (@MoecGilles) July 29, 2022
The fact that personal consumption is down again despite generous fiscal support is telling though. Stimulus has a hard time offsetting actual erosion in real income and/or loss of consumer confidence in a challenging environment. 3/3
— gilles Moec (@MoecGilles) July 29, 2022
France’s strong-than-expected return to growth puts it on a firmer footing as surging inflation and the risk of a Russian energy cuttoff threaten to tip Europe into a recession.
So says Bloomberg:
After a surprise contraction at the start of 2022, gross domestic product rose by 0.5% in the three months through June, more than the 0.2% median estimate in a Bloomberg survey of analysts.
But trade accounted for most of the surprise, with consumer spending falling for a second straight quarter.
Although France has avoided recession today, economist Charlotte de Montpellier of ING fears its economy will be in a downturn this winter (when Europe could face energy shortages).
France escapes recession for the moment (Q2 GDP +0.5% qoq after -0.2%), thanks to tourism! But domestic demand remains weak and consumption continues to fall. A recession is our base case for this winter. https://t.co/f5vozJijkC
— Charlotte de Montpellier (@CdeMontpellier) July 29, 2022
Tourism helped France to return to growth in April-June too.
Spending by foreign travellers in France rose by 8.6% in the last quarter, after +5.0% in Q1.
Introduction: France returns to growth on eurozone GDP day
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
Today we discover how the eurozone economy fared in the first full quarter since the Ukraine war drove up energy prices and disrupted supply chains, slowing global growth.
And the breaking news is that France has avoided recession, by returning to growth in April-June as stronger exports helped offset weak domestic demand.
French GDP rose by 0.5% in Q2, figures just released show, having shrunk by 0.2% in January-March as rising inflation hit the eurozone’s second-largest economy.
That’s stronger than expected, and means France has avoided two quarters of falling growth in a row.
France’s statistics body INSEE says “GDP in volume terms strongly recovered after the decline in the previous quarter”.
Foreign trade lifted growth, with exports rising 0.8% and imports falling by 0.6%.
But household consumption expenditure fell again, as French consumers were squeezed by rising prices.
We also get growth figures from across the eurozone through the morning, which are likely to show a generally weak quarter of economic activity, and continued high inflation.
Michael Hewson of CMC Markets says:
On the broad EU basis Q2 GDP is expected to slow to 0.2% from 0.6% in Q1. In Germany we will be lucky to see any expansion at all and given the current geopolitical and economic backdrop this could be as good as it gets for a while.
We also get a quick snapshot of flash CPI inflation for July after the numbers from Germany jumped higher to 8.5% in numbers released yesterday.
And with the US economy shrinking for two quarters in a row, the outlook for the world economy in the months ahead looks uncertain.
Also coming up today
UK bank NatWest is reporting results, while staff at telecoms group BT are holding their first national strike in decades.
Energy groups Shell and Centrica are facing heavy criticism after reporting a surge in profits, and hefty payouts to shareholders yesterday:
Overnight, tech giants Apple and Amazon have beaten Wall Street expectations.
- Amazon reported its second quarterly loss in a row on Thursday but the company’s also beat revenue expectations and gave an upbeat forecast for the remainder of the year; shares jumped over 10% in after-hours trading
- Apple reported higher-than-expected profit and sales as demand for iPhones held firm, despite the slowing US economy and rising inflation
The agenda
- 6.30am BST: French GDP report for Q2
- 8am BST: Spanish GDP report for Q2
- 8am BST: Austria GDP report for Q2
- 9am BST: German GDP report for Q2
- 9am BST: Italian GDP report for Q2
- 9,30am BST: UK mortgage approvals and consumer credit report
- 10am BST: Eurozone GDP report for Q2
- 10am BST: Eurozone inflation report for July
- 1.30pm BST: US personal income and spending report
[ad_2]
Source link
