ECB: Supply Bottlenecks in Goods Easing; Demand for Tourism and Recreation Services to Decline
7 November 2022
By David Barwick – FRANKFURT (Econostream) – Supply constraints affecting trade in euro area goods are gradually diminishing, whilst tourism services face declining demand ahead, the European Central Bank said on Monday.
In a pre-release from the seventh economic bulletin of 2022, due out Thursday, the ECB said that although still high, upside pressure on input prices due to supply constraints weakened in the middle of the year.
‘Growth in extra-euro area import prices for intermediate goods has been slowing since mid-2022’, the ECB said. However, with the PMI for input prices overall still high as of September, and given the weak euro, manufacturing price pressures will stay elevated, the ECB said.
‘Turning to services, the strong dynamics in the tourism and recreation sector observed over the spring and summer have started to weaken’, the ECB said.
With sector output prices having peaked earlier in 2022, price pressures for accommodation services could ease, but will remain strong, the ECB said. The relevant HICP measure and PMI both suggest price pressures in the sector may have peaked, it said.
‘Waning pent-up demand for travel, falling real incomes, rising uncertainty and higher prices may start to dampen demand for tourism and recreation services in the coming months’, with several indicators in decline, according to the ECB.
‘The deterioration of the economic outlook has been accompanied by other factors, such as the waning pent-up demand for travel, falling real incomes and rising uncertainty mentioned above’, the ECB said. ‘Overall, this points to high but gradually stabilising price pressures in the tourism and recreation sector.’