Inflation down but euro area’s manufacturing still struggling with high energy costs : simply short

Abstract

The decrease in inflationary pressures has already allowed two interest rate cuts this year in the euro area. There is a time lag before their impact will be felt, however, and the monetary policy stance is still contractionary. Stronger purchasing power is supporting consumption, but the recovery in investment is slow. Growth in the euro area's economy is still fairly subdued and is underpinned mainly by the service sectors, as industrial output continues to be weak. There are structural problems in manufacturing that call for an improvement in competitiveness. The service sectors, on the other hand, are in need of a productivity improvement.