Spanish, German Unemployment
The euro was trading at $1.3463 at 4:49 p.m. in London, little changed on the day. The Stoxx Europe 600 Index (SXXP) was down 0.1 percent at 289.36.
Spanish data last week showed a record 26 percent of the workforce without jobs in the fourth quarter, bringing the total close to 6 million people. In Greece, the rate was even higher in October, at 26.8 percent, also a record.
“Companies are still shedding labor, especially in southern Europe,” Martin Van Vliet, an economist at ING Groep NV in Amsterdam, said in an interview.
Unemployment will probably continue to trend higher in the next couple of months.
While economists predict the German unemployment rate will stay unchanged, they still see an increase of 8,000 people without work this month from December.
The eurozone economy has shrunk for two successive quarters and economists predict a further 0.4 percent decline in gross domestic product in the final three months of last year.
The International Monetary Fund on Jan. 23 cut its global growth forecast and projected a second year of contraction in the eurozone.
While investor confidence in Germany, Europe’s largest economy, rose to the highest in 2 1/2 years this month as debt tensions ease, high unemployment and continued austerity measures elsewhere are undermining household sentiment and spending.
An index of eurozone economic confidence probably rose to the highest level since June.
“We’re in the phase of financial conditions improving and markets becoming more optimistic, but that has to feed through to the real economy,” ING’s Van Vliet said.
ECB Governing Council member, Luc Coene, said he would prefer the central bank’s as-yet-untapped bond-buying program to stay that way and it’s now up to governments to generate growth in the eurozone.
There is only so much a central bank can do, Coene, who heads Belgium’s central bank, said in an interview at the World Economic Forum in Davos, Switzerland, on Jan. 26.
“Governments can make the adjustments that are needed to make the economy grow again. We are going to hear that message this year again and again. The next move won’t be from the ECB.”
No country has yet asked for a bailout that could trigger bond buying by the ECB after Draghi’s rescue plan, announced in July, ended a wave of panic in euro-region debt markets.
“The currency block will see a shallow recovery starting this year as long as leaders don’t hesitate to implement measures to reduce debt and increase competitiveness,” Coene said.
Harvard economist Kenneth Rogoff said France needs an economic overhaul to revive growth and help underpin the political union required to stabilize the eurozone.
European governments’ policy responses to the debt crisis, such as a ‘half-hearted’ banking union and national budget oversight by the European Commission, aren’t enough, Rogoff was quoted as saying in an interview published in German newspaper Die Welt.
Leaders need to start now with a push toward political integration that includes a European government with taxation powers, he told the Berlin-based daily.
If governments follow through on their promises in the coming months, underlying momentum could mean the ECB will revise its prediction that the eurozone economy will contract by 0.3 percent this year, Coene said.
“When you look at the latest indicators in Germany, they point to a stronger underlying base of activity than was assumed,” he said.
If there is any adjustment to happen, it will be a small adjustment, and probably rather on the upside than the downside.
Mark Carney, who is due to take over as Bank of England governor in July, said policymakers should secure “escape velocity” for their economies and there’s room for more monetary stimulus around the world.
Policy in developed countries isn’t “maxed out” and central bankers can be flexible in meeting inflation goals, Carney, currently governor of the Bank of Canada, said on Jan. 26 in Davos.
Alongside the eurozone unemployment data, Eurostat, the European Union’s statistics office, will also release data on consumer prices for January. The annual inflation rate will remain at 2.2 percent, according to the median of 39 economists’ forecasts in a survey.
Eurozone economic conditions will be tough in the first half before a wider recovery takes hold in 2014, according to Patrick de Maeseneire, chief executive officer of Adecco SA (ADEN), the world’s biggest supplier of temporary workers.
“This year is not going to be a good year,” De Maeseneire said in an interview on Jan. 25.
The first six months will be tough, especially in France, especially in southern Europe.
“Germany is also slowing down; we see automotive slowing down, and that’s going to have an effect on the surrounding economies,” he said.
Job shedding continues because it’s clear the eurozone economy is still in recession, said UniCredit’s Valli. Still, “what we’re seeing right now is all the preconditions that are necessary in order to have some sort of economic improvement. Nothing in the near term, but down the road.”
Elsewhere in Europe, a report from Hometrack Ltd. showed UK house prices stagnated in January as concern about the debt crisis and the impact of the British government’s fiscal squeeze hit demand.
Prices in England and Wales were unchanged from December, the property researcher said.
A Commerce Department report showed orders for durable goods in the US rose in December for an unprecedented fourth consecutive month, indicating manufacturing will keep improving in 2013.
China Rural Income Gains
Chinese incomes rose faster in the countryside than in cities for a third straight year in 2012, as migrant workers boosted their pay and the government strengthened the social safety net.
Rural per-capita net income advanced 10.7 percent, compared with 9.6 percent for urban dwellers, partly on the rise in migrant laborers and their wages, the National Bureau of Statistics said on Jan. 18.
Rural residents’ income from benefits payments rose 21.9 percent, almost double the urban pace, as the government boosted its budget for healthcare handouts, Business Exchange reported.
Rural spending power has been lifted by wages earned by peasants working in cities, underscoring the broader benefits of the urbanization drive championed by incoming Premier Li Keqiang.
Spreading gains in consumption would help sustain a growth rebound and reduce the economy’s reliance on exports, which rose last year at less than half of 2011’s pace.
“Rising rural incomes should definitely help boost consumption and aid rebalancing,” said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong.
“Growth will gear down a bit as rising labor costs diminish investment incentives, but such consumption-led expansion will be more sustainable.”
The trend may persist for a while as a declining working-age population helps push up migrant laborers’ pay and the government keeps improving social safety-net funds, including for healthcare in the countryside.
Rural per-capita net income, which includes migrant workers’ pay, rose more than that of urban residents in 2010 for the first time since 1997.
Retail sales in rural regions rose 14.5 percent last year, exceeding the gain in urban areas, which increased 14.3 percent, for the first time in three years. That compares with 17.2 percent growth for urban consumption in 2011 and a 16.7-percent advance for rural dwellers.
Rural spending, at 2.78 trillion yuan ($447 billion) last year, was still less than one-fifth of what urban households spent. Urbanites account for about 52.6 percent of China’s population of 1.35 billion, according to the statistics bureau.
Italian Consumers Gloomy
Italian consumer confidence has hit new lows, as surveys showed households declared weaker confidence in both the current and future economic situations.
Economists had forecast that there would be a modest overall improvement, Euro News wrote.
The consumer confidence index slipped to the lowest level years since the surveys started 17 years ago.
The decline reflects political uncertainty in the recession-hit country, less than one month ahead of national elections.
“With confidence bouncing around record lows, cautious household spending will serve as a major obstacle to any recovery in economic activity during 2013-14,” said Raj Badiani of IHS Global Insight.
The eurozone’s third largest economy has been in recession since the middle of 2011 and most analysts expect gross domestic product to fall around 1 percent this year, following a contraction of around 2 percent in 2012.
At the same time, the national statistics institute said workers’ hourly wages were up 1.5 percent last year from 2011, just half the level of inflation and the lowest average salary rise since 1983.
The negative gap between wages and consumer price inflation last year was the widest since 1995.
Tax hikes introduced by Mario Monti’s technocrat government as part of tough austerity measures have helped calm investor fears about the sustainability of Italy’s huge public debt but have eroded purchasing power and deepened the recession.
Monti is running at the election at the head of a centrist coalition, but he is lagging far behind both the center-left and the center-right blocs in opinion polls.
Consumer spending has long been an Achilles heel of the Italian economy, the most sluggish in the eurozone for at least a decade.
Isfahan, Lazio Expanding Economic Cooperation
Ways of expanding economic cooperation between Isfahan province and Italy’s Lazio region were discussed in a meeting held between their economic officials in Rome on Friday.
Speaking in the meeting, Sandro Pettinato, the deputy head of Italy-Iran Chamber of Commerce, said Iran is a large and profitable market for Italian industrialists.
He said Italian companies are willing to expand economic cooperation with Iran.
“We are of the opinion that trade relations between Iran and Italy should be enhanced more than before,” he said.
Pettinato said 150 and 70 chambers operating inside and outside Italy respectively as well as 40 joint chambers with foreign countries are members of the Union of Italian Chambers of Commerce.
“Cultural activities should also be undertaken to help the two nations recognize each other more than before,” he said.
Iranian Ambassador to Italy Mohammad Ali Husseini referred to the important role played by the provinces and regions in expanding bilateral ties and said such meetings will help achieve the objective.
Husseini also said Isfahan province, which has a large number of tourism, cultural and historical attractions, is considered one of the most important economic and industrial hubs of Iran.
He noted that the condition is prepared for expanding cooperation with Italy in various fields.
“Fortunately, Italian entrepreneurs and industrialists are willing to enhance cooperation with Iran,” he said.
In a meeting with Italian Ambassador to Iran Luca Giansanti on January 15, Iranian Foreign Minister Ali Akbar Salehi said Iran is a reliable trade partner for Italy and other European countries.
Iran 5th Biggest Tajik Investor
Iran made $26 million worth of investment in Tajikistan during 2012, said chairman of Tajik Investment Committee and State Property Management.
Davlatali Saidov added that Iran ranked fifth among countries investing in Tajikistan, IRNA reported.
He noted that a number of large Iranian projects, including Sangtoudeh-2 Power Plant, have been completed in Tajikistan.
Tajik Investment Committee and State Property Management announced that over $350 million worth of foreign direct investment were in Tajikistan in 2011.
In October, Iran and Tajikistan signed a memorandum of understanding (MoU) for cooperation between the two countries’ free trade zones.
Addressing a ceremony in which the MoU was signed, deputy of the Coordination Council for Iran’s Free Trade and Special Economic Zones, Alireza Movahhedi, said cultural and historical conditions of Iran and Tajikistan have led them to form ties in various fields and boost social and economic interactions.
Movahhedi further said with seven free trade zones and 16 special economic zones, Iran plans to further establish a number of latter zones.
Ankara Satisfied With Gas Import
Turkish Minister of Energy and Natural Resources Taner Yildiz said his country is satisfied with the unchanged level of gas trade with Iran.
“Iran successfully continues to provide natural gas via pipeline. We are happy about the natural gas trade with Iran,” Yildiz said on Tuesday.
The minister stated that despite taking Iran to arbitration court over its gas price, the flow of gas between the two countries has not been affected, Press TV reported.
“We said we were not happy with the high gas price so we took Iran to international arbitration over the price paid for gas imports,” he added.
IMF Loan for Mali
The International Monetary Fund has approved an $18.4 million loan for Mali to aid the stabilization of the African state economy over the next 12 months.