The data showed that the German economy contracted by 0.3% in the first quarter of 2023 compared to the last quarter of 2022 by 0.5%, which means that the main engine of growth in Europe has entered recession.
“Household reluctance to buy was evident in a variety of areas,” the German statistics office said.
“Families spent less on food, drink, clothes and shoes, and on furniture,” he added.
The GfK Consumer Confidence in June also showed that German sentiment remained weak, with the index improving slightly to -24.2 in May from -25.7 the previous month.
However, despite the negative data, the European Central Bank still needs to raise borrowing costs to bring inflation back to its target, bank board member Bostjan Vasel said Thursday.
Vassell joins several other members of the European Central Bank’s 26-member Governing Council in calling for further increases that could continue beyond the summer months.
By contrast, investors are concerned about the slow pace of negotiations on raising the US debt ceiling. Negotiators representing Democratic President Joe Biden and Republican House Speaker Kevin McCarthy held what the two parties described the talks as fruitful. on Wednesday trying to strike a deal to raise the debt ceiling to $31.4 trillion, averting a catastrophic default, but talks ended with no deal.
Fitch Ratings put the United States on watch for a possible downgrade on Wednesday as the crisis remains unresolved.
price movements
Europe’s Stoxx 600 index stabilized at 08:20 GMT, after losing around 2.5% over the past two days, due to a wave of sales in shares of luxury goods companies, and investors were affected by the crisis of the raising of the American debt ceiling.
Shares of European chipmakers rose on Thursday after NVIDIA Corp forecast quarterly revenue to beat Wall Street forecasts by nearly 50%.
Semiconductor stocks jumped 8.06%, ASM International 8.57% and the broader technology index 1.7%.
The German DAX fell 0.32% after the German economic data.
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