1 Upturn in Eurozone business activity (BBC) Business output in the eurozone grew at its fastest rate in nearly four years in March, a closely watched survey suggests. The CIPS/Markit composite purchasing managers’ index (PMI) rose to 54.1, compared with 53.3 a month earlier – it’s highest level in 46 months. Any reading above 50 indicates growth while a reading below 50 points to a fall in activity.
Markit said the survey pointed to first-quarter economic growth of 0.3%. That would match the eurozone growth figure for the final three months of 2014. It said the improvement in business output was the result of growth in new orders that had increased at their fastest rate since 2011. Employment also grew at its fastest rate since August 2011.
Crucially, the survey showed that deflationary pressures eased in March with prices falling at the slowest rate since July. Markit added there was some anecdotal evidence that the European Central Bank’s (ECB) stimulus measures were beginning to be felt.
Manufacturing prices rose for the first time in seven months, albeit only modestly. Meanwhile, in the service sector, prices fell, but the rate of decline was the weakest for nine months. Business activity in Germany rose to to its highest level in eight months as new orders hit a nine-month record. The French economy also saw business activity increase for a second month.
2 What zero inflation means for UK (Larry Elliott in The Guardian) Britain is within a month of a period of deflation. When the figures for March come out next month cheaper energy bills will mean that the cost of living is lower than it was a year earlier.
These are uncharted waters for the UK, at least in the modern era. The general assumption is that this is good news all round, even though some people do better out of zero inflation than others. Pensioners benefit because the triple lock means that the state pension is uprated by whichever is highest of the annual inflation rate, average earnings or 2.5%. At present it is 2.5%.
Deflation is also a boon for those with cash in the bank, since their money will buy more in the future than it does now. Losers include those with debts, which rise in value if prices are falling.
There are two reasons economists think zero inflation is a good thing. The first is the boost to living standards from wages rising faster than prices. Wages have risen extremely slowly since the recession of 2008-09 and even against a backdrop of falling unemployment are currently only going up by 1.6% a year.
The second boost to consumers comes from the outlook for interest rates. It will come as no surprise to the Bank of England that inflation now stands at zero. All nine members of the Bank’s monetary policy committee are in favour of official interest rates remaining at 0.5%, which is where they have been since early 2009.
3 India court gives boost to online free speech (Niharika Mandhana in The Wall Street Journal) India’s Supreme Court has struck down legislation barring “offensive messages” online, saying it violated constitutional guarantees of free expression. A two-judge panel voided a part of India’s Information Technology Act that made it a crime to share information through computers or other communications devices that could cause “annoyance, inconvenience” and “enmity, hatred or ill will.”
“This provision was hugely problematic for anyone using the Internet in India and that is gone,” said Sunil Abraham, head of the Bangalore-based Center for Internet and Society. “The court has removed the additional, unconstitutional limits to free speech.”
Enforcement of the law has sparked controversy for years. In 2012, a 21-year-old was detained after complaining on Facebook about the effective shutdown of Mumbai for the funeral of a right-wing Hindu leader. Another person was also detained for “liking” her comment.
J. Sai Deepak, a New Delhi-based lawyer involved in the case, said the court decision was a significant victory for Internet companies in India. He said the law’s implementation—which earlier was “subject to the vagaries of the political winds of the state,” he said—would now be guided only by the free-speech rules laid down in the Indian constitution.