"Sentiment indicators have been good, concurrent indicators were rather weak, but I'm not too pessimistic for the rest of the year,"
- Andreas Scheuerle, an economist at Dekabank
Producer prices in Europe's powerhouse, Germany, stayed flat on monthly basis, and accelerated on annual basis in June, reflecting some stabilization in the economy. Figures from the Federal Statistical Office showed that the producer price index jumped 0.6% in June from the same month a year earlier, following a 0.2% gain in the preceding month meeting analysts' expectations. On a monthly basis, PPI stayed unchanged in June, after a 0.3% slump in the prior month, while index was expected to edged higher 0.1%. As to the prices of non-durable and capital goods, they increased 2.6% and 0.8% consequently, while costs of durable goods added 0.9%. When companies charge more for goods, higher costs are usually passed on to the consumers, suggesting the overall inflation rate should inch higher in the upcoming months. Several weeks earlier, data from four federal states suggested that German annual inflation probably accelerated in June, moving closer to the European Central Bank's target of 2%. In Germany's most populous state annual inflation already picked up to 2.1% on the year last month, mostly due to higher food and education costs. Nonetheless, German industrial output, factory orders as well as exports all slid in May. Even despite a slight improvement in the labour market and Ifo business confidence, the European Central Bank says that risk to the economic outlook in the Eurozone, which is Germany's biggest trading partner, remain on the downside.
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