EUROZONE growth prospects looked uneven after data out yesterday showed unemployment held steady in Germany in February, where credit conditions continued to ease – and weaker signs came from France, where household spending dropped unexpectedly sharply.
Eurozone inflation was revised down to 2.6 per cent in the year to January, which economists believe reflects low demand in the currency area, though poor weather is expected to push up food prices in the coming months and oil prices also represent an upside risk.
Germany maintained its 20-year low rate of unemployment at 6.8 per cent, and the Ifo measure of credit constraints reported 21.1 per cent of firms suffering from banks’ restrictive credit policies, down 1.7 percentage points on January’s level to the lowest since the survey began in 2003.
Ireland saw unemployment stabilise at 14.2 per cent, unchanged from January’s figure and down slightly from 14.3 per cent in December.
However, French household spending fell 0.4 per cent in January, doubling the 0.2 per cent drop in December and countering economists’ predictions of a small increase.
“This is a weak start to the quarter, and the deepening downward trend seen in each month since the beginning of the fourth quarter of 2011 bodes ill for private consumption momentum in the current quarter,” said Barclays Capital’s Francois Cabau.
“January’s household spending highlights the downside risks to our baseline scenario.”