NBS Monthly Bulletin, May 2012 - Summary

The annual rate of euro area inflation as measured by the Harmonised Index of Consumer Prices was 2.6% in April, slightly lower than in the previous month. According to Eurostat’s flash estimate, euro area GDP in the first quarter of 2012 stagnated in both year-on-year and quarter-on-quarter terms (by comparison, in the fourth quarter of 2011 it grew by 0.7% year-on-year and contracted by 0.3% quarter-on-quarter). The exchange rate of the euro against the US dollar depreciated during April in comparison with March. At its meeting on 3 May 2012, the ECB’s Governing Council decided to leave the key ECB interest rates unchanged, with the main refinancing rate standing at 1.00%, the marginal lending rate at 1.75% and the deposit rate at 0.25%.

In the Czech Republic, annual HICP inflation declined in April in comparison with the previous month, to 4.0%, while in Hungary and Poland it increased, respectively, to 5.6% and 4.0%. According to Eurostat’s flash estimate, the Czech Republic’s GDP for the first quarter of 2012 declined by 1.0% year-on-year (compared to a rise of 0.6% in the fourth quarter of 2011) and Hungary’s GDP fell by 1.5% (compared to growth of 1.2% in the fourth quarter). The data for Poland had not been published by the cut-off date for this Bulletin. The Czech koruna and Polish zloty depreciated against the euro in April on a month-on-month basis, while the Hungarian forint gained in value against the single currency. None of the central banks of these central European countries adjusted their monetary-policy settings in April; Česká národní banka left its key rate at 0.75%, Narodowy Bank Polski at 4.50%, and Magyar Nemzeti Bank at 7.00%.

In Slovakia, annual HICP inflation in April declined month-on-month, to 3.7%. This reflected lower annual rates of change in prices of food, energy and services. On the other hand, the annual rise in prices of non-energy industrial goods was higher in April than in the previous month. Industrial producer price inflation recorded a further month-on-month increase in March, due mainly to still high energy price inflation resulting from an increase in gas production prices. The annual rate of construction price inflation increased moderately, while agricultural price inflation declined year-on-year.

Slovakia’s seasonally unadjusted GDP for the first quarter of 2011, measured at constant prices, increased by 3.1% year-on-year, according to the SO SR’s flash estimate (after rising by 3.4% in the fourth quarter of 2011). Seasonally adjusted GDP recorded quarter-on-quarter growth of 0.8% (the same as in the fourth quarter). Total employment increased year-on-year in the first quarter by 0.6% (after rising by 0.9% in the fourth quarter), while measured against the previous quarter it rose by 0.2% (after remaining unchanged in the previous quarter). Both GDP growth and the labour market situation in the first quarter of 2012 exceeded NBS expectations.

The balance of payments current account surplus declined slightly in March in comparison with the previous month. While surpluses in the trade balance and services balance increased, negative movements in the current transfers balance and income balance were more pronounced and caused a drop in the current account surplus. The annual growth rate of the industrial production index rose again in March. This largely reflected the continuing annual growth rate in the manufacturing component, in particular the manufacture of transport equipment and, to a lesser extent, the manufacture of machinery and equipment. The annual rate of decline in construction production increased in March. Annual sales growth in the economy slowed in March due largely to lower growth in industry segments and in the motor vehicle sale and maintenance sector, as well as a to a year-on-year drop in sales in the transportation and storage sector. Construction sector sales recorded a substantial annual decline. The overall Economic Sentiment Indicator in April fell in year-on-year terms, but rose in comparison with the previous month. Industry, construction and consumer confidence indicators all rose, while confidence in the retail trade and services sectors fell.

Annual growth in the average nominal wage was lower in March than in February, reflecting lower wage growth in all the sectors under review apart from wholesale trade, food service activities, and motor vehicle sale and maintenance. Employment increased month-on-month in March, driven up mainly by employment growth in industry and in selected market services, as well as by a lower decline in construction sector employment. The only sector to report slower employment growth was information and communication. The rate of registered unemployment decreased month-on-month in March, to stand at 13.7%.

Looking at private sector deposits in March, the stock of deposits from non-financial corporations increased while the stock from households declined. Deposits from non-financial corporations rose in comparison with the previous month and, as in that month, there were increases across all maturities. The sharpest rises were in deposits with up to two-years’ agreed maturity and in demand deposits. As a result, the stock of corporate deposits again recorded a lower year-on-year decline. As for household deposits in March, a marked decline in demand deposits was partially compensated by a rise in deposits of longer maturities. Nevertheless, the annual rate of growth of household deposits was again higher than in the previous month. The stock of loans to non-financial corporations fell in March while the outstanding amount of loans to households increased. In the case of corporate loans there were declines in the stocks of loans with a maturity of between one and five years and loans with a maturity of over five years. The annual rate of change in outstanding loans to non-financial corporations was almost the same as in the previous month. In the household sector, the increase in the stock of loans was largely accounted for by housing loans and consumer loans. The annual rate of growth in loans to households fell slightly in comparison with the previous month. Turning to interest rates, lending rates for non-financial corporations increased moderately in March with the largest rises observed in rates on investment loans and real estate loans. By contrast, lending rates for households declined slightly, with the largest declines recorded by real estate loan rates and consumer credit rates. Deposit rates for both sectors maintained a slightly downward trend.

Note: The full text of the Slovak version of the NBS Monthly Bulletin for May 2012 will be published on 30 May 2012 at 10.00 a.m.

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
Internet: http://www.nbs.sk

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