New series of bearish data hits Eurozone

Julian Harris
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A WAVE of poor economic data knocked confidence even further in the Eurozone yesterday, piling more pressure on the beleaguered single currency area.

Retail sales across the 17 member states fell 0.7 per cent in September compared to August, official figures showed -- far worse than economists expected.

“It was a pretty disappointing figure,” said Juergen Michels, an economist at Citigroup. “The 0.7 per cent decline in retail sales really suggests there is a huge amount of uncertainty coming through to consumers.”

In the same month, German industrial output fell at its sharpest rate since February 2009, fuelling concerns that Europe’s stuttering growth engine could go into reverse before the end of the year as an abrupt slowdown abroad eats into demand for its exports.

From Germany news also emerged that investor confidence in the Eurozone has hit a two year low. The Sentix index sank by 2.7 points to -21.2 points, signalling “a continued weakening of the economic dynamic in Euroland.”

Sentix said that while improved confidence has been recorded in other regions this month, such as in the US and Asia excluding Japan, the Eurozone remained stuck in the mud.

“The current situation remains under pressure and document there is the risk of recession in Euroland,” the report warned.

Meanwhile productivity across the European Union dropped at its fastest rate or over two and a half years, a study by Markit revealed.

The UK was the only “big four” economy to record improved private sector productivity, with Germany, France and Italy all printing further declines. Even on this side of the channel, “the overall rate of increase in output per work was only modest,” Markit said.