Business

German Producer Prices Decline for 16th Consecutive Month in October

Published

14 hours ago

November 20, 2024

RTX

Germany’s producer prices fell for the 16th straight month in October, marking a 1.1% decline compared to the same month last year, according to the Federal Statistical Office. The drop, in line with analysts’ expectations, was slightly smaller than the 1.4% decrease recorded in September.

The Producer Price Index (PPI), which measures the average change in selling prices received by domestic producers for goods and services, was primarily affected by a sharp drop in energy prices. Energy costs fell by 5.6% in October from the previous month.

Light heating oil prices saw the steepest decline, plummeting 22.7%, while prices for mineral oil products and natural gas decreased by 12.9% and 10.1%, respectively. Fuel prices dropped 12.1%, and electricity prices were down by 7.3%.

Excluding energy, producer prices rose by 1.3% in October. Prices for capital goods increased by 2%, driven by a 1.4% rise in motor vehicles and parts, and a 2% increase in machinery costs. Durable goods prices edged up 0.9%, while consumer goods prices rose by 1.9%. Intermediate goods prices also saw a slight rise of 0.4%.

On a month-on-month basis, the PPI grew by 0.2% in October, rebounding from a 0.5% decline in September and meeting market forecasts.

Economic Recovery Hopes Amidst Slowing Activity

Despite the drop in producer prices, Germany’s economy remains under pressure due to weakened industrial output and reduced consumer spending, driven by high interest rates and rising living costs.

In its latest forecast, the European Commission projected a 0.1% contraction in Germany’s economy for 2024. “High uncertainty has been weighing on consumption and investment, while the trade outlook has worsened as global demand for industrial goods declined,” the Commission noted.

However, the report highlighted expectations for an economic recovery starting in 2025, with GDP growth projected to rise to 0.7% that year and 1.3% in 2026. The recovery is anticipated to be supported by increases in real wages, bolstering domestic demand.

Inflation in Germany is expected to moderate, averaging 2.4% in 2024 before easing to 2.1% in 2025 and further declining to 1.9% in 2026. Meanwhile, the government deficit is forecast to decrease, and the national debt ratio is expected to stabilize at around 63% of GDP.

The ongoing decline in producer prices offers some relief to businesses, but it underscores the broader challenges facing Germany’s economy as it seeks to rebound from prolonged industrial slowdowns and global trade uncertainties.

Business

Thyssenkrupp Writes Down Steel Business Value Amid Decarbonization Challenges

Published

2 days ago

November 19, 2024

RTX

Thyssenkrupp has announced a further €1 billion write-down of its steel business, citing weak earnings projections and the costly demands of transitioning to greener operations. The German industrial conglomerate reported a net loss of €1.4 billion for the fiscal year, primarily driven by the asset impairment. This loss is an improvement over the €2 billion deficit reported last year.

The latest devaluation marks the second major impairment for Thyssenkrupp’s steel division in two years, following a €2.1 billion write-down in November 2023.

Strategic Decisions Ahead for Steel and Naval Units

“In respect of our main strategic issues, the current fiscal year will be a year of decisions — especially for Steel Europe and Marine Systems,” CEO Miguel Lopez stated on Tuesday.

Thyssenkrupp’s steel unit, Germany’s largest, has faced sustained challenges, including higher energy costs, competition from cheaper Asian producers, and the financial burden of decarbonization. The transition to green operations has triggered internal disputes, contributing to leadership turnover and uncertainty about the unit’s future.

The company is in discussions with Czech billionaire Daniel Křetínský, who currently owns 20% of Thyssenkrupp’s steel business. There is speculation that his stake could increase to 30%, but no confirmation has been made.

Leadership Shake-Up and Restructuring Concerns

The decarbonization effort and restructuring plans have led to significant departures. Bernhard Osburg, CEO of Thyssenkrupp’s steel unit, and Sigmar Gabriel, head of the supervisory board, resigned earlier this year, alongside other executives and board members.

Concerns about the steel unit’s potential spinoff with inadequate financial backing have also been raised. “The fear is that we will be given as little dowry as possible, so that at the end of the day the insolvency administrator will be at our door,” warned Ali Güzel, chairman of the Works Council at the Duisburg/Beeckerwerth site, in August.

Marine Systems IPO in the Pipeline

Thyssenkrupp is also seeking to offload its naval shipbuilding subsidiary, Thyssenkrupp Marine Systems. After US private equity firm Carlyle withdrew its bid last month, the company is now planning an initial public offering (IPO) for the unit.

Financial Outlook and Market Response

Despite the setbacks, the company offered some optimism in its earnings forecast. Adjusted earnings before interest and taxes (EBIT) for the current fiscal year are projected to rise to between €600 million and €1 billion, up from €567 million in the previous year.

Thyssenkrupp shares saw a 6% increase in daily trading on Tuesday, signaling cautious optimism from investors amid ongoing challenges.

Business

Eurozone Inflation Hits ECB Target in October, Rising to 2%

Published

2 days ago

November 19, 2024

RTX

Eurozone inflation climbed to the European Central Bank’s (ECB) target of 2% in October, up from 1.7% in September, according to data released Tuesday by Eurostat, the European Union’s statistical agency. The rise comes after a year-over-year inflation rate of 2.9% in October 2023.

Across the broader European Union, annual inflation reached 2.3% in October, up slightly from 2.1% in September, but lower than the 3.6% recorded in the same period last year.

Diverging Inflation Rates Across Member States

The report highlighted significant variation among EU member states. Slovenia recorded no inflation, while Lithuania and Ireland registered rates of 0.1%. In contrast, Romania reported the highest inflation at 5.0%, followed by Belgium and Estonia at 4.5% each.

Of the 27 EU nations, inflation rose in 19 countries, remained stable in six, and fell in two compared to September.

Eurostat identified services as the largest contributor to eurozone inflation, accounting for +1.77 percentage points (pp) of the annual rate, followed by food, alcohol, and tobacco (+0.56 pp), and non-energy industrial goods (+0.13 pp). Energy prices, however, exerted a downward influence (-0.45 pp), reflecting sustained declines in energy costs.

Potential Impact on ECB Policy

The increase in inflation was largely anticipated by the ECB, which had forecast a temporary rise in inflation during the final months of 2024. In its October bulletin, the central bank reaffirmed expectations of a near-term uptick before inflation stabilizes around its 2% target next year.

Analysts note that domestic inflation pressures remain strong, driven by elevated wage growth across the eurozone. However, the ECB expects labour cost pressures to ease gradually, with corporate profits absorbing part of the increases, mitigating their broader impact.

Market analyst Piero Cingari of Euronews highlighted the ECB’s “data-dependent and meeting-by-meeting” approach to future policy decisions, emphasizing its cautious stance amid inflationary fluctuations.

The ECB’s upcoming December meeting will be closely watched for signals on its policy direction. With inflation now meeting the central bank’s target, policymakers may feel less urgency to tighten monetary policy further, opting instead for a gradual normalization.

Looking Ahead

The inflation figures underline the challenges facing the ECB as it balances price stability with broader economic pressures. While inflation is currently under control, ongoing wage dynamics and energy prices remain critical variables that could influence future policy decisions.

The ECB is expected to maintain its focus on economic data as it assesses the path for interest rates and other monetary measures heading into 2025.

Business

Survey Reveals High Stress Levels and Job Dissatisfaction Among European Workers

Published

3 days ago

November 18, 2024

RTX

A recent survey by ManpowerGroup highlights widespread workplace stress and job dissatisfaction across Europe, with nearly half of workers experiencing daily stress and a third considering changing jobs within the next six months. The findings, part of the Global Talent Barometer, offer insights into well-being, job satisfaction, and workforce confidence across 16 countries, including 10 in Europe.

Stress Levels Vary Across Europe

The survey revealed that 48% of European workers report daily work-related stress, with notable variations by country. Spain leads with the highest stress levels at 58%, followed by Sweden and Italy at 53%, and Poland at 51%. The Netherlands recorded the lowest stress levels at 34%, with Norway and Switzerland also below average at 40% and 46%, respectively.

Despite high stress levels, 65% of European workers feel supported in maintaining work-life balance and personal well-being. The Netherlands reported the highest perceived support at 73%, while France, Germany, and Switzerland fell below average.

Job Satisfaction and Career Development

Although 82% of respondents find their work meaningful, a significant portion of workers is dissatisfied with career development opportunities. One-third of respondents believe their organisations lack sufficient avenues for advancement, with Norway (41%) and Switzerland (39%) reporting the highest dissatisfaction.

Becky Frankiewicz, ManpowerGroup’s Chief Commercial Officer, noted the evolving expectations of workers. “People expect work to offer more than just a paycheck—more balance, more humanity, and more options. Organisations must meet these needs to retain talent,” she said.

Job Security and Confidence

While 71% of workers feel confident about job security over the next six months, 25% express concerns about involuntary job loss. Norway reports the lowest fear of job loss (18%), while Spain and Poland have the highest (29%).

Confidence in finding a new job within six months stands at 58% across Europe, with the Netherlands (66%) and the UK (65%) leading. Italy (48%) and Sweden (49%) reported the lowest confidence levels.

Training and Retention Efforts

The survey also highlights the role of training in boosting job satisfaction. In the Netherlands, where job satisfaction is highest, 42% of workers received training in the past six months. This contrasts with Norway, where only 37% reported similar opportunities.

Conclusion

ManpowerGroup’s findings underline the challenges European employers face in addressing worker stress, career development, and job satisfaction. As employees increasingly seek workplaces that prioritise balance, growth, and well-being, organisations must adapt to meet these expectations or risk losing talent in an increasingly competitive market.