Economic Glossary – Euro Zone2019-01-04T11:38:52+00:00

Euro-Zone

Gross Domestic Product the GDP measure of the total value of goods and services produced by Euro-zone nations. GDP is the most comprehensive measure of economic output and provides key insight as to the driving forces in the economy. Due to this report’s lack of timeliness and because data on GDP components are available beforehand, the actual GDP figure is usually well anticipated. But given its overall significance GDP has the tendency to move the market upon release, especially if it upsets expectations.

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.

The Manufacturing Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the manufacturing sector. A reading above 50 indicates expansion in the sector; below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.

The six members of the European Central Bank (ECB) Executive Board and the 16 governors of the euro area central banks vote on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.

The European Central Bank (ECB) press conference is held monthly, about 45 minutes after the Minimum Bid Rate is announced. The conference is approximately an hour long and has two parts. Firstly, a prepared statement is read, and then the conference is open to press questions. The press conference examines the factors which affected the ECB’s interest rate decision and deals with the overall economic outlook and inflation. Most importantly, it provides clues regarding future monetary policy. High levels of volatility can frequently be observed during the press conference as press questions lead to unscripted answers.

As head of the ECB, which controls short term interest rates, he has more influence over the EUR value than any other person. His comments may determine a short-term positive or negative trend

The deposit facility is the rate which banks may use to make overnight deposits with the Euro system.

The PMI monthly Composite Reports on Manufacturing and Services are based on surveys of over 300 business executives in private sector manufacturing companies and also 300 private sector services companies. Data is usually released on the third working day of each month.

The Euro-zone Services Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the services sector.

Industrial Production measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities.

The (ZEW) Economic Sentiment Index rates the relative six-month economic outlook for the euro zone. On the index, a level above zero indicates optimism.

The Trade Balance measures the difference in value between imported and exported goods and services over the reported period. A positive number indicates that more goods and services were exported than imported.

Breakdown of total nominal hourly labor costs, whole economy: wages.% change from previous year, not seasonally adjusted. In addition to employees gross earnings, total labor costs include indirect costs such as employers’ social contributions and taxes connected to the employment. Gross earnings or wages are those paid directly and regularly by the employer at the time of each wage payment. These indices are calculated by Member States using jointly-agreed definitions.

EU Finance Ministers Meetings are attended by Finance Ministers from the 28 EU member states. Relevant European Commissioners also participate in meetings. They discuss a wide range of financial issues, such as euro support mechanisms and government finances and are responsible for EU policy in three main areas: economic policy, taxation issues and the regulation of financial services.