By Abdulselam Durdak
Frankfurt letter, week beginning Sept. 19

-Eurozone inflation still off target

Euro area annual inflation was 0.2 percent in August 2016 and remained stable compared to July. In August 2015 the rate was 0.1 percent.

The European Union’s annual inflation was 0.3 percent in August 2016, up from 0.2 percent in July. A year earlier the rate was 0.0 percent, according to figures from Eurostat, the statistical office of the European Union.

The report revealed that the deepest deflation came from Croatia, Bulgaria and Slovakia, while the highest inflation was in Belgium, Sweden and Estonia.

Inflation still remains far below the European Central Bank’s (ECB) target of below, but close to, 2 percent.

-Europe's foreign trade declines in July

The foreign trade data also disappointed the markets. According to Eurostat, the first estimate for euro area exports of goods to the rest of the world in July 2016 was €167.2 billion, a decrease of 10 percent compared with July 2015 (€185.4 bn).

Imports from the rest of the world stood at €142.0 bn, a fall of 8 percent compared with July 2015 (€154.4 bn). As a result, the euro area recorded a €25.3 bn surplus in trade in goods with the rest of the world in July 2016, compared with €31.1 bn in July 2015.

Intra-euro area trade fell to €137.3 bn in July 2016, down by 7 percent compared with July 2015.

-Employment up by 0.4 percent in euro area and by 0.3 percent in EU

On the other hand, the labor markets painted a promising picture. The numbers of employed increased by 0.4 percent in the euro area and by 0.3 percent in the EU in the second quarter of 2016 compared with the previous quarter, according to seasonally-adjusted figures of Eurostat.

In the first quarter of 2016, employment increased by 0.4 percent in both zones. These figures are seasonally adjusted.

-News from Germany

Consumer prices in Germany were 0.4 percent higher in August 2016 than in August 2015. The consumer price index in August 2016 remained unchanged compared with July 2016.

This means that the inflation rate, measured by the consumer price index, persists at a low level.

-Bayer Ag to acquire Monsanto

Bayer and Monsanto announced that they signed a definitive merger agreement under which Bayer will acquire Monsanto for $128 per share in an all-cash transaction.

Monsanto’s Board of Directors, Bayer’s Board of Management and Bayer’s Supervisory Board have unanimously approved the agreement.

The acquisition is subject to customary closing conditions, including Monsanto shareholder approval of the merger agreement and receipt of required regulatory approvals. Closing is expected by the end of 2017.

-The week ahead

This week, markets will continue to monitor the ECB's Governing Council Members’s speeches.

Additionally, production in construction data will be released.



19 Sep,2016