The Conference Board Economics Watch^® European View

Quantitative easing, a low euro, and cheap oil provide modest upsides for an otherwise sluggish European economy. The Conference Board Leading Economic Index® for the Euro Area indicates that growth for the coming months is likely to continue to be sluggish, even though other forecasters are becoming more optimistic. Lower oil prices have pushed the Euro Area into deflation, but core inflation rates remain stable. The continued disinflationary environment has led the European Central Bank to launch a large program of quantitative easing of at least 1.1 trillion euro, which includes government bond purchasing for the first time. The sluggish labor market, together with stalling consumer confidence, will slow domestic demand, despite lower oil prices. However, the depreciation of the euro provides an upside to European exports. It is starting to boost growth in new orders for capital goods.