The euro zone's return to economic growth appears to be firming, with surveys of purchasing managers showing a sharp pickup in business activity and fresh numbers on retail sales indicating consumer spending is on the rise.
The surveys Thursday from data provider Markit indicated that the pickup--which was previously confined mostly to Germany--has broadened out to include Italy and France. Retail sales in the 17 countries that share the euro rose for the second straight month during August.
If sustained, the pickup in retail sales would be good news for the euro zone, where rising unemployment, low wage growth, and government budget cuts and tax hikes have dented consumer demand.
The European Union's statistics agency said sales volumes rose 0.7% from July--still 0.3% lower than in August 2012 but better than the 0.2% median prediction from a Wall Street Journal survey of 14 economists last week.
The figures for July were also revised higher, with Eurostat now estimating that sales volumes rose by 0.5%, having previously calculated an increase of 0.1%.
Surveys have recorded a steady improvement in consumer confidence in recent months, reflecting a slowly building conviction that the euro zone has seen the worst of its fiscal and banking crisis and that a catastrophic breakup of the currency area is less likely.
As 2013 has progressed, an increasing number of governments have eased back on austerity and while unemployment remains high, it has started to steady.
Markit said its composite purchasing managers index rose to 52.2 in September from 51.5 in August, signaling the fastest growth in 27 months. A reading above 50 means month-to-month expansion in the manufacturing and services industries.
The reading was a slight upward revision from an estimate published last week. Combined with PMI figures from July and August it suggests the third quarter was the strongest for business activity in over two years.
Among the big euro-zone economies, growth was fastest in Germany, although its expansion slowed in comparison with August. Italy registered its fastest growth in over two years and France, in over one year. Spanish business activity shrank slightly, illustrating one of the problems for the euro-zone economy.
While growth may be broadening among the major economies, some weaker member states, chiefly in the south, are sputtering after long downturns. Spain's economy is hobbled by a wounded banking system and very high unemployment.
Consumer spending rose in the three months to June for the first time since the third quarter of 2011, helping the economy to return to growth after six straight quarters of contraction. The rise in retail sales in July and August suggests that recovery in spending has continued into the third quarter.
However, retail sales remain well below the levels seen before the financial crisis that began in 2008, and consumer confidence is still low by historical standards.
So weak is consumer demand that the annual rate of inflation has fallen to its lowest level in more than three years, and at 1.1% in September is well below the European Central Bank's target of just below 2%.
Despite describing the euro-zone economy as "weak, uneven and fragile," ECB President Mario Draghi on Wednesday announced no new stimulus steps, such as more cheap bank loans, to spur borrowing and spending.
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The surveys Thursday from data provider Markit indicated that the pickup--which was previously confined mostly to Germany--has broadened out to include Italy and France. Retail sales in the 17 countries that share the euro rose for the second straight month during August.
If sustained, the pickup in retail sales would be good news for the euro zone, where rising unemployment, low wage growth, and government budget cuts and tax hikes have dented consumer demand.
The European Union's statistics agency said sales volumes rose 0.7% from July--still 0.3% lower than in August 2012 but better than the 0.2% median prediction from a Wall Street Journal survey of 14 economists last week.
The figures for July were also revised higher, with Eurostat now estimating that sales volumes rose by 0.5%, having previously calculated an increase of 0.1%.
Surveys have recorded a steady improvement in consumer confidence in recent months, reflecting a slowly building conviction that the euro zone has seen the worst of its fiscal and banking crisis and that a catastrophic breakup of the currency area is less likely.
As 2013 has progressed, an increasing number of governments have eased back on austerity and while unemployment remains high, it has started to steady.
Markit said its composite purchasing managers index rose to 52.2 in September from 51.5 in August, signaling the fastest growth in 27 months. A reading above 50 means month-to-month expansion in the manufacturing and services industries.
The reading was a slight upward revision from an estimate published last week. Combined with PMI figures from July and August it suggests the third quarter was the strongest for business activity in over two years.
Among the big euro-zone economies, growth was fastest in Germany, although its expansion slowed in comparison with August. Italy registered its fastest growth in over two years and France, in over one year. Spanish business activity shrank slightly, illustrating one of the problems for the euro-zone economy.
While growth may be broadening among the major economies, some weaker member states, chiefly in the south, are sputtering after long downturns. Spain's economy is hobbled by a wounded banking system and very high unemployment.
Consumer spending rose in the three months to June for the first time since the third quarter of 2011, helping the economy to return to growth after six straight quarters of contraction. The rise in retail sales in July and August suggests that recovery in spending has continued into the third quarter.
However, retail sales remain well below the levels seen before the financial crisis that began in 2008, and consumer confidence is still low by historical standards.
So weak is consumer demand that the annual rate of inflation has fallen to its lowest level in more than three years, and at 1.1% in September is well below the European Central Bank's target of just below 2%.
Despite describing the euro-zone economy as "weak, uneven and fragile," ECB President Mario Draghi on Wednesday announced no new stimulus steps, such as more cheap bank loans, to spur borrowing and spending.
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