EURO ZONE economic confidence rose for the ninth consecutive month in December to the highest level in 18 months, but weak figures for retail sales in the region and for German industrial orders sent worrying signals about the pace of recovery.
The data came as Herman Van Rompuy, the European Union’s first full-time president, warned that the continent’s long-term outlook was “not bright”.
Addressing a Christian Social Union party meeting in Germany, he warned of a permanent drop in investment and higher structural unemployment. The Benelux countries, Italy and the UK were “de-industrialising rapidly”, he added.
The European Commission’s economic sentiment indicator, a gauge of confidence in business and among consumers, jumped 2.5 points to 91.3 for euro zone countries, its highest level since the collapse of Lehman Brothers in September 2008. The closely watched indicator has climbed 22.6 points over the past 12 months, its largest year-on-year rise since 1994.
However, the index remains below its long-term average of 100, and data on actual economic activity, also published yesterday, suggested the optimism might be overdone.
Euro-zone retail sales fell by 1.2 per cent in November compared with October, according to Eurostat, the EU’s statistical office, confirming that the recovery has yet to be felt on high streets.
German industrial orders also fell short of expectations in November, rising by just 0.2 per cent. Analysts had expected a significant rebound after a 1.9 per cent drop in October.
Powered by Germany and France, its two largest economies, the euro zone moved out of recession in the third quarter of last year, helped by a revival in exports and government measures to protect jobs and lift car sales.
The latest data suggest the recovery may have lost momentum. – Copyright The Financial Times Ltd 2010
