Sharp Jump In Eurozone Retail Sales
One of the few bright spots in the struggling Eurozone economy appears to be the consumer sector according to the latest Retail Sales data just released by Eurostat. The August figures have produced a positive surprise in terms of the magnitude of the pick up in the sector. Year on year the data is showing 1.9% growth in Eurozone Retail Sales, this follows a revised July reading of just 0.5%, analysts had not been anticipating any change from this level. Month on month the retail trade growth is now registering at 1.2% in contrast to the July contraction of -0.4%, a pick up was expected here but only to approximately 0.1%.
Beyond the consumer sector the Eurozone growth recovery has unquestionably stalled, Purchasing Managers Index (PMI) data this week across the key sectors has shown general contraction in both Services and Marketing with some minor expansion in Construction. The spotlight is continuing to shine on the European Central Bank (ECB) as further monetary stimulus is desperately sought in the face of stagnation brought on by protracted fiscal austerity.
Yesterday’s ECB meeting was not expected to deliver anything on the Interest Rate side, there is little further capacity to do so, it was however closely watched for clarity on the Bank’s active and proposed liquidity expansion programs. There was no further indication of the timing of a much anticipated quantitative easing program but it is likely that this will depend on the success of the other two liquidity programmes the Bank has recently announced.
The Targeted Long Term Refinance Operation (TLTRO) has already fallen well short of ECB targets following it’s phase one roll out last month, this has the potential to be better subscribed to in the second phase in December but the jury is still out on this. Details of the second liquidity program emerged yesterday, the ECB announced that it will begin buying covered bonds next month and asset backed securities before the end of the year, the Bank could spend up to 1 Trillion euro on this scheme but analysts estimate this to be more in the region of 200 Billion initially.
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