00:00We've had the German numbers, manufacturers there recording their best performance in more than four years,
00:05so that economy healing, but then also the French numbers coming through,
00:09business activity unexpectedly weakening because partly of the heat wave.
00:14So when you layer on the euro area wide print, what are your main takeaways from these numbers?
00:19Good morning.
00:21So overall, good morning.
00:23The main takeaway here will be that the euro area is quite resilient.
00:26That's in line with what policymakers across the region have been saying.
00:31Again, when the Iran war started, we were very concerned that the energy situation in Europe would mean that Europe
00:37would be really,
00:39that this would be a major blow to the euro area economy.
00:43It's done surprisingly well.
00:45Yes, France isn't doing well.
00:47France has been under that 50 level for months now, but Germany is quite robust.
00:52The headline number, the composite number in Germany was a bit slower than expected,
00:56but still, it's clearly above that 50 level, that euro area number particularly good.
01:02So in a way, it does also show that the euro area can do well, even if the number two
01:07economy isn't doing well
01:08and if the number one economy, Germany, isn't as strong as anticipated.
01:13So generally, this should fill us all as Europeans with joy.
01:19Joy on a Friday.
01:20Does it change the picture then for the ECB?
01:24The ECB can make of this in a way what it will.
01:27Overall, we know the ECB has already hiked interest rates.
01:30It hiked interest rates by a quarter point in June.
01:33In July, it held still.
01:36Everyone is expecting it to hike again in September.
01:39And this number today allows it to do that.
01:41Jim, simply because we know that inflation will hover around 3% for the rest of the year.
01:47And if the economy was doing very poorly, there would be the danger that one says we just can't afford
01:53to do another rate hike.
01:55This number today, and generally the GDP numbers we've seen, allows policy makers to do that.
02:00The question, of course, is what happens after September?
02:03Markets are very much pricing another rate hike.
02:05Some policy makers have said another one will be needed.
02:08If you look at these PMI numbers, you can say, look, we don't have strength everywhere.
02:14So those doves among the governing council members can use these numbers again to say, we do still need to
02:20be cautious.
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