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Issue #592

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2014 Media Kit

Euro zone weak recovery confirmed, Oct retail sales disappoint

By: | at 03:31 PM | International Trade  

Rising inventories and investment kept euro zone economic growth in positive territory in the third quarter despite a negative contribution from trade and no help from household demand which weakened further in October, data showed.

The EU’s statistics office Eurostat confirmed its previous estimate that gross domestic product in the 17 countries sharing the euro rose 0.1 percent quarter-on-quarter for a 0.4 percent year-on-year fall.

The 9.5 trillion euro economy emerged from recession in the second quarter with 0.3 percent quarterly growth, marking the end of its longest contraction since the creation of the euro.

The rebound, however, remains fragile and uneven, undermined by record-high unemployment, fiscal austerity policies, slow structural reforms and a strong euro, which hurts exporters across Europe.

Net trade, traditionally a strong driver of the euro zone economy, had a negative contribution in the three months to September, subtracting 0.3 percentage points from the overall result after a 0.3 point positive contribution in the previous quarter.

But rising inventories added 0.3 points and investment another 0.1 point. Government spending and household consumption were flat on the quarter.

Separately, Eurostat said that euro zone retail sales, a proxy for consumer demand, unexpectedly fell in October, pointing to the continued weakness of private consumption at the start of the fourth quarter.

The sales dropped 0.2 percent on the month in October after a 0.6 percent drop in September. Economists polled by Reuters expected sales to be flat.

Compared with the same period of last year, retail sales fell 0.1 percent after a 0.3 percent rise in September. Market expectations were for a 0.9 percent increase. The reading came in even below the lowest forecast for a 0.2 percent rise. (Reuters)