FRANKFURT, July 28 (Reuters) – Huge euro zone companies are recording stagnating exercise ranges and see no enchancment within the present quarter with dangers tilted in direction of much more unfavourable outcomes, the European Central Financial institution mentioned on Friday primarily based on a survey of huge companies.
The survey provides to an already gloomy image with a raft of indicators from PMI readings to GDP and lending knowledge all suggesting that the bloc was performing on the weaker finish of expectations with recession dangers on the rise.
“Contacts continued to explain a scenario per broadly stagnating exercise total,” the ECB mentioned primarily based on a survey of 73 companies. “Present traits in exercise had been prone to persist within the third quarter, with the stability of dangers just a few quarters forward tilted mildly to the draw back.”
The ECB raised charges for the ninth successive time on Thursday however left the door open to a pause in September, partly attributable to weaker progress and tentative indicators of a cooldown in underlying inflation.
In potential excellent news for the ECB, the survey additionally pointed to a “slight moderation” in wage progress subsequent 12 months, a welcome growth since rising labour prices are the highest concern for policymakers.
“Contacts anticipated wage progress to decelerate from round 5.5% this 12 months to 4.7% in 2024,” the ECB mentioned. “Round half of contacts anticipated wage progress in 2024 to be just like 2023, whereas 4 in ten mentioned they thought that wage will increase could be decrease subsequent 12 months.”
Nominal wage progress has been at its highest charge in years in 2023 as staff are looking for to recoup a few of their seizable loss in actual earnings. This raises the danger that speedy wage will increase may then speed up inflation and power the ECB to lift charges even greater.
Corporations additionally mentioned that inflation of their promoting costs slowed additional within the second quarter.
Reporting by Balazs Koranyi
Enhancing by Francesco Canepa
: .