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ECB likely to act, in spite of strong manufacturing and services growth

Euro zone growth dynamics is in much better shape than last year and way better than registered during debt crisis back in 2011/12, however that not likely to deter European Central Bank from easing policy further.

Since the central bank announced that it will re assess its current monetary policy in December meeting, in light of fresh projections and data, economic activity and inflation which has been dwindling seem to be turning the corner.

  • Euro zone manufacturing PMI edged up to 52.3 against expectation of 52. Almost all Euro zone countries are firmly in expansionary zone, even Greece PMI has recovered sharply after uncertainty subsided.
  • Today's services PMI report also put a strong show throughout Euro zone. Euro zone services PMI marginally weaker at 54.1 in October from September's 54.2 but still robust enough.

On the other hand, latest report showed, Euro zone is back from deflation in September, before ECB hinted further measure.

Unemployment rate dropped to 10.8% in Euro zone.

Despite all this good economic news, ECB is still like to act further as an action would further strength the pace of recovery, whereas cost of any inaction could be very high.

Euro is currently trading at 1.093 against Dollar.

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