Euro zone factory growth eases in April

4 May4:26 PM

[LONDON] Euro zone manufacturing growth eased in April but factories raised prices for the first time in eight months, according to a survey that also showed headcount rose at the fastest pace in nearly four years.

Any signs of inflationary pressure will be welcomed by the European Central Bank, particularly as it only had a marginal impact on growth.

Markit's final April manufacturing Purchasing Manager's Index (PMI) stood at 52.0, revised up from a flash reading of 51.9 but shy of March's 10-month high of 52.2.

It was the 22nd month it has been above the 50 mark that separates growth from contraction. An index measuring output, which feeds into the Composite PMI due on Wednesday, came in at 53.4, compared with March's 10-month high of 53.6. "The dip in the rate of expansion will serve to check recent optimism that the ECB's quantitative easing programme has bought a guaranteed ticket to recovery," said Chris Williamson, Markit's chief economist.

To restore economic growth and combat deflation, the ECB started buying around 60 billion euros a month of mostly government bonds in March. Recent data have implied that the programme has already paid dividends.

Official figures last week showed the euro zone ended four months of deflation in March with consumer prices unchanged from year-ago levels. The survey's output price index nudged above 50 for the first time in eight months, suggesting inflation may turn positive.

In further signs for optimism, the employment sub-index rose to 51.9 from 51.6, its highest since August 2011. Unemployment held steady at 11.3 percent in March, official data showed last week.

REUTERS

    
 

BOJ's Kuroda says won't hesitate to adjust policy: Jiji News

Bank of Japan Governor Haruhiko Kuroda said he will not hesitate to adjust the central bank's quantitative easing programme if there is a delay in reaching its underlying inflation goals, Jiji News reported. 

PHOTO: BLOOMBERG

4 May1:51 PM

[TOKYO] Bank of Japan Governor Haruhiko Kuroda said he will not hesitate to adjust the central bank's quantitative easing programme if there is a delay in reaching its underlying inflation goals, Jiji News reported.

Mr Kuroda, who spoke on the sidelines of an Asian Development Bank meeting in Baku, Azerbaijan, said the expected timing of inflation meeting the BOJ's 2 per cent price target had been pushed back to the first half of fiscal 2016, Jiji reported.

A decline in oil prices and several other factors led to the delay, Jiji reported Mr Kuroda saying.

The BOJ was forced on April 30 to push back the timing of its inflation target after falling oil prices and lacklustre consumer spending saw inflation grind to a halt.

When the BOJ made this announcement on April 30, Mr Kuroda said he saw no need to ease policy because a narrowing output gap between the economy's actual and potential output shows that consumer prices should start rising again.

However, two members of the BOJ board objected, saying inflation will not reach 2 per cent even by early 2018.

Many private-sector economists also speculate that the BOJ could ease policy again later this year by expanding purchases of government debt or risk assets.

REUTERS