OPEC Monthly Oil Market Report – November 2017
developments continued to improve as the unemployment rate fell below 9% for the first time
since the onset of the financial crisis in 2009. It stood at 8.9% in September, compared with 9.0% in August.
Still, labour market developments differ widely within the Euro-zone. Germany’s unemployment rate
remained at a very low 3.6% in September for the second month in a row, while in Spain it still stood at
16.7%, which is the lowest since 2009, and shows a continuation of a considerably improving trend.
was backed only to some extent by these improving developments in the labour market, which on the flip-
side may increase the likelihood of rising inflation in the future, as wages so far have not responded much to
these improvements. Considerable slack remains in the labour market, but signs are emerging that wages
based on latest trade union agreements in some Euro-zone economies may rise more significantly than in
the past years. Inflation stood at a muted 1.4% y-o-y in October, slightly down from the 1.5% y-o-y in
September. Core inflation – that is, the consumer price index (CPI), excluding energy, tobacco and food – fell
to 0.9% y-o-y in October, after a level of 1.1% y-o-y for the previous four months. Both numbers are well
below the ECB’s approximate 2% inflation target.
While inflation is expected to pick up in 2018 as economic developments are improving, the ECB’s monetary
policies may also have an impact on credit supply growth from financial institutions to the private,
non-financial sector. The growth dynamic of this liquidity line to SMEs appears to have stabilised, to rise by
1.53% y-o-y in September, the same growth level as in August and higher than in July, when liquidity to the
private sector rose only by 1.3%. Hence, the development of credit growth seems to continue to support the
grew by a healthy 3.5% y-o-y in August, after 3.7% y-o-y in July, once again a
growth in value terms picked up, increasing by 4.9% y-o-y in September,
compared with 3.4% y-o-y in August. These most recent indicators have remained at considerable levels
over the past months and now continue to demonstrate a healthy dynamic with ongoing improvements in the
underlying economy. This trend is forecast to continue in 4Q17 and also to some extent in the coming year. It
remains to be seen, however, whether the trend will stay as strong as in the first three quarters or, as
currently expected, will slow down somewhat.
Graph 3 - 5: Euro-zone CPI and lending activity
Graph 3 - 6: Euro-zone PMIs
indicators have confirmed the ongoing improvement in the Euro-zone. The manufacturing
PMI increased to 58.5 in October, compared with 58.1 in the previous month. This marks the highest level on
record, i.e. since the initiation of this index back in 2012. The important PMI for the services sector, which
constitutes the largest sector in the Euro-zone, dropped slightly, but remains at a high level of 55.0, after
seeing a level of 55.8 in September.
MFI lending (RHS)
Sources: Statistical Office of the European Communities,
European Central Bank and Haver Analytics.
% change y-o-y
% change y-o-y
Sources: IHS Markit and Haver Analytics.