MOMR June 2016

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World Economy
OPEC Monthly Oil Market Report – June 2016 21
After a strong recovery at the beginning of the year, the latest industrial production
number for February shows again some softening dynamic. It rose only marginally by
0.1% y-o-y, after growth of 1.1% y-o-y in February and 3.6% y-o-y in January. Also,
manufacturing growth was very low in March, expanding only by 0.2% y-o-y, after 2.0%
in February and 4.4% y-o-y in January. As in other economies, mining and quarrying
declined considerably, amid falling commodity prices in the past months. However, the
rate of decline decreased, falling by 4.5% y-o-y in March, after a decline of 12.5% y-o-y
in February and a drop of 14.3% y-o-y in January.
Retail sales performed well, too, though at a slightly lower growth rate when compared
to previous months. Consumers increased spending in the retail sector by 1.5% y-o-y in
April, after 1.9% y-o-y in March. The latest consumer confidence surveys point at some
slowdown in the coming months, as growing uncertainties about the development of
the Euro-zone’s economy, in combination with ongoing challenges in the labour
market, may dent private household consumption. The unemployment rate stood at
10.2% in April, the same level as in March.
Despite the latest round of ECB stimulus, inflation remained negative. It declined by
0.1% y-o-y in May, after a decline of 0.2% y-o-y in April. While slightly improving, the
lessening effectiveness of ECB stimulus seems to be also mirrored in the latest figures
of credit supply. April’s growth stood at only 0.5% y-o-y, after 0.3% y-o-y in March. This
may also be the outcome of the ongoing challenges in the banking system, with volatile
developments in the credit supply seen in the past months pointing at some continuing
fragility.
The latest PMI indicators are holding up well. The manufacturing PMI for May stood at
51.5, compared to 51.7 in April and 51.6 in March. The important services PMI even
increased slightly to 53.3 in May, from 53.1 in April.
Graph 3.4: Euro-zone PMI indices Graph 3.5: Euro-zone consumer price index
and lending activity
While the recovery in the Euro-zone is ongoing, multiple challenges remain. Taking
these into account, the 2016 growth forecast remains unchanged at 1.6%. This
compares to estimated growth of 1.5% last year.
53.3
51.5
49
50
51
52
53
54
55
May 15Jun 15Jul 15Aug 15Sep 15Oct 15Nov 15Dec 15Jan 16Feb 16Mar 16Apr 16May 16
Index
Sources: Markit and Haver Analytics.
Services PMI
Manufacturing PMI
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
-1.0
0.0
1.0
2.0
3.0
4.0
May 11Nov 11May 12Nov 12May 13Nov 13May 14Nov 14May 15Nov 15May 16
CPI (LHS) MFI lending (RHS)
Sources: Statistical Office of the European
Communities, European Central Bank and
Haver Analytics.
% change y-o-y % change y-o-y