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NBS Monthly Bulletin, August 2012 - Summary

The annual rate of euro area inflation as measured by the Harmonised Index of Consumer Prices was 2.4% in July, unchanged from the previous month. According to Eurostat’s flash estimate, euro area GDP for the second quarter of 2012 contracted by 0.4% in year-on-year terms and was 0.2% lower than GDP for the previous quarter (which was unchanged from the last quarter of 2011). The exchange rate of the euro against the US dollar depreciated during July in comparison with the previous month. At its meeting on 2 August 2012, the ECB’s Governing Council decided to leave the key ECB interest rates unchanged, with the main refinancing rate standing at 0.75%, the marginal lending rate at 1.50% and the deposit rate at 0.00%.

Annual HICP inflation in July declined in the Czech Republic, to 3.3%, and in Poland, to 4.0%, while in Hungary it increased to 5.7%. According to Eurostat’s flash estimate, the Czech Republic’s GDP for the fourth quarter contracted year-on-year by 1.2% (after declining in the first quarter by 0.7%), and Hungary’s GDP fell by 1.0% (following a drop of 1.2% in the first quarter). The data for Poland had not been published by the cut-off date. The exchange rates of the Czech koruna, Polish zloty and Hungarian forint vis-à-vis the euro appreciated in July in comparison with the previous month. None of the central banks of these central European countries adjusted their monetary-policy settings in July; Narodowy Bank Polski left its base rate at 4.75%, Česká národní banka at 0.25%, and Magyar Nemzeti Bank at 7.00%.

In Slovakia, annual HICP inflation in July rose slightly from the previous month, to 3.8%. The HICP rate reflected a higher annual rate of increase in food prices, which as in the previous month was partially offset by lower inflation in fuel prices as well as in prices of non-energy industrial goods. Annual inflation in other items of the HICP basket remained largely unchanged from the previous month. The annual growth rate of industrial producer prices was lower in June than in May, because the energy component’s annual growth rate was slowed by lower annual inflation in each of its constituent prices. The annual growth rate of construction work prices was unchanged from the previous month, while that of building materials increased slightly. The annual rate of change in agricultural prices declined moderately in June, after rising in the previous month.

According to the SO SR’s flash estimate, Slovakia’s GDP for the second quarter of 2012 (seasonally unadjusted and measured at constant prices) grew by 2.7% year-on-year, after rising by 3.0% in the first quarter. In quarter-on-quarter terms, seasonally adjusted GDP increased by 0.7% (0.9% in the first quarter). Overall employment in the second quarter increased year-on-year by 0.2% (after rising by 0.6% in the first quarter), while measured against the previous quarter it remained unchanged (following a first-quarter rise of 0.2%). The second-quarter GDP growth exceeded NBS’s expectations, while the labour market situation was in line with its projections.

The balance of payments current account surplus was lower in June than in previous month due largely to an increase in the current transfers deficit, which was partly offset by a modest rise in the trade surplus. The annual growth rate of the industrial production index increased slightly in June, largely because temporary shutdowns in certain segments, particularly the chemical industry, came to an end. In month-on-month terms, however, production declined in most segments, including the automobile industry. The annual rate of decline in construction production increased in June. Annual sales growth was slightly lower in June than in May, due mainly to slower sales growth in industry as well as in retail trade and in the sale and repair of motor vehicles. The annual rate of change in construction sector sales remained deep in negative territory. Only in selected market services did sales growth increase by a relatively large margin. The economic sentiment indicator declined in August, as retail trade, construction and consumer confidence indicators all deteriorated. The industrial and services confidence indicators improved from the previous month.

Annual growth in the average nominal wage was markedly lower in June than in the previous month, with most of the downward pressure coming from slower wage growth in industry and from a year-on-year decline in wages in the construction sector and in the information and communication sector. Annual employment growth in June was higher than in May, boosted mainly by recruitment in information and communication and in selected market services. On the other hand, employment in industry maintained its downward trend. The rate of registered unemployment in June increased month-on-month, to 13.3%.

Looking at private sector deposits in June, deposits from non-financial corporations plummeted while those from households increased steadily. The slump in corporate deposits was attributable to outflows from short-term deposits, i.e. demand deposits, but mainly to deposits with an agreed maturity of up to two years. Hence deposits from non-financial corporations reported a negative annual rate of change in June. The increase in household deposits was driven mainly by an inflow to demand deposits. The annual growth rate in overall household deposits remained unchanged at a relatively high level. Bank lending in June was dominated by loans to the household sector and reflected in particular the continuing growth in housing loans and to a lesser extent consumer loans. The annual growth rate in loans to households slowed moderately. As for outstanding loans to non-financial corporations, their decline in June was based across all maturities, but the most pronounced drop was in long-term loans with a maturity of more than five years. Although the annual rate of change in corporate loans declined substantially, it remained positive. Lending rates for non-financial corporations recorded a further moderate fall in June, with the largest decrease observed in rates on operating loans. Lending rates for households remained virtually unchanged. Deposit rates stayed flat for both non-financial corporations and households.

Petra Pauerová
NBS Spokesperson

National Bank of Slovakia
Press and Editorial Section
Imricha Karvasa 1, 813 25 Bratislava, Slovak Republic
Tel.: +421-2-5787 2142, +421-2-5865 2142, +421-2-5787 2169, +421-2-5865 2169

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