Eurozone: Business Sentiment at 21- Year High in July - Kathrein ...

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Eurozone: Business Sentiment at 21- Year High in July - Kathrein ...
Eurozone: Business Sentiment at 21-
         Ye a r H i g h i n J u l y
Eurozone: Business Sentiment at 21- Year High in July - Kathrein ...
• Euro zone has highest growth rate in 21 years in July
• Purchasing managers' index rose from 59.5 points to 60.6 points in July compared with the
  previous month

Berlin (APA) - The eurozone economy grew at its fastest pace in 21 years in July. The purchasing
managers' index - which combines industry and service providers
- rose to 60.6 points in July from 59.5 points the previous month, the IHS Markit institute said Friday
on its monthly survey of thousands of companies. Economists had expected 60.0 points. The
barometer signals growth from 50 points.

"Given the easing of coronary restrictions, the eurozone is enjoying a summer surge in growth,"
Markit chief economist Chris Williamson said. Business in the service sector was at its best since
fifteen years ago. In the industrial sector, however, growth weakened somewhat.
In this sector, according to Markit, persistent delivery delays continue to cause major problems, as
not only production stalls but also companies' costs continue to skyrocket.

This sharp rise in costs has led to a near-record increase in average selling prices for goods and
services, which is likely to translate into higher consumer prices in the coming months, the
economist explained. The survey results also showed that the delta variant of the coronavirus posed
a major risk to the outlook. Further waves of the virus around the world could lead to new delays in
global supply chains, resulting in ever-higher prices.

Volvo Cars generates more business than                     Credit card giant American Express
        before the Corona crisis                                profits jump in 2nd quarter

• Volvo made more sales and profit in the first            • A year ago, the US Group was severely
  half of 2021 than before the crisis                      impacted by the Corona crisis
• Polestar luxury electric subsidiary also               • Part of provisions reversed
  contributes to net profit of 9.6 billion kroner         • Day-to-day business also significantly better
• No news on the IPO

Gothenburg (APA) - Swedish carmaker Volvo,               New York (APA) - The continuing economic
part of China's Geely Group, made more sales             recovery from the Corona crisis has helped the
Eurozone: Business Sentiment at 21- Year High in July - Kathrein ...
and profit in the first half of 2021 than before       U.S. credit card group American Express to
the crisis thanks to the market recovery. Sales      significantly higher profits. In the second
climbed by a good quarter to 141.1 billion           quarter, the company earned 2.3 billion dollars
Swedish kronor (13.8 billion euros) compared to      ( just under 2 billion euros) on the bottom line.
the same period last year, which was very weak
due to the pandemic, thanks to increased sales,      A year ago, high charges due to the pandemic
the company said Friday.                             had caused the result to collapse to 257 million
                                                     dollars. At that time, American Express had set
That's also more than the Swedes had                 aside a lot of money for impending credit
generated in the first six months of 2019 before      defaults. Now it has been possible to reverse a
the Corona crisis. Earnings before interest and      large part of the risk provisioning, from which
taxes (EBIT) were 13.2 billion crowns, an            the balance sheet has benefited greatly.
operating margin of 9.4 percent. The bottom
line was a net profit of 9.6 billion kroner, which    But day-to-day business was also much better
also included a positive valuation e ect from the    again: Group-wide revenues climbed 33 percent
luxury electric subsidiary Polestar.                 to $10.2 billion.
A year ago, Volvo, like most automakers, was in      In June, according to CEO Stephen Squeri,
the red.                                             spending by credit card customers already
                                                     exceeded the level seen before the Corona
There was initially no news on the planned IPO.      crisis. In previous quarters, American Express
A final decision would depend on market               had had to cut back sharply, for example,
conditions, and there was no certainty of a          because lucrative hotel and flight bookings were
listing, it was said. Geely's Chinese had acquired   lost due to travel being crippled by the
Volvo Cars from U.S. carmaker Ford in 2010 for       pandemic. Now, the annual report clearly
$1.8 billion (1.5 billion euros). Carmaker Volvo     exceeded analysts' expectations.
Cars has been separate from Swedish
commercial vehicle maker Volvo AB for
decades, though Geely also has a stake in the
Geely owner Li Shufu is also the largest single
shareholder in Germany's Daimler Group, with a
stake of around 9.7 percent.

      Russian Central Bank raises interest
                rates to 6.5 %
Eurozone: Business Sentiment at 21- Year High in July - Kathrein ...
• Russian central bank raises interest rates by the most since 2014 Central bank takes action against
  high inflation
• Further interest rate hikes not ruled out: 6 to 7 percent possible in 2022

Moscow (APA) - Russia's central bank is raising its key interest rate by the most since 2014 in the
face of stubbornly high inflation. The rate will rise from 5.5 to 6.5 percent, the central bank
announced in Moscow. The monetary watchdog expects inflation to range between 5.7 and 6.2
percent this year, then from 4.0 to 4.5 percent in 2022.

"We must not resign ourselves to increased inflation expectations, lest they become entrenched at
this high level," central bank chief Elvira Nabiullina said in justification. Actually, the central bank is
aiming for inflation of four percent. It therefore reserved the right to raise interest rates further.
"Currently, we see the key interest rate in the range of six to seven percent next year," Nabiullina said.

Higher interest rates make loans for investment and consumption more expensive, which can
dampen inflation. It also makes saving more attractive, which can also reduce inflation. It also
supports the ruble, which can make imports cheaper. However, higher interest rates can also dampen
the upswing.

"Our policy will not harm economic growth rates," the central bank chief assured. According to her,
the Russian economy has already returned to its pre-Corona level in the past second quarter. For the
year as a whole, she expects GDP to grow by 4.0 to 4.5 percent. Monetary policy continues to push
the economy, it was said.

High inflation is depressing the standard of living of many Russians. It is one of the main concerns for
households ahead of parliamentary elections in September, in which the ruling United Russia party is
expected to retain its dominance. "A good grain harvest could ensure a sharper drop in food prices,"
Nabiullina said.
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