Eurozone speeds into slowdown with weak shop sales
The Eurozone ended summer with a stumble, new economic data has shown, as political concerns begin to weigh on the continent.
Retail sales, one barometer for consumer confidence, dropped by 0.1 per cent in August, Eurostat confirmed this morning, while it also dealt a significant downgrade to the sector's performance in July. The body now thinks retailers collected just 0.3 per cent more in the first full month after the EU referendum, rather than its earlier estimate of 1.1 per cent.
Closely-watched purchasing managers' index (PMI) figures for September also showed the recovery was losing steam as the weather turns. The composite PMI, which measures output across the entire economy, dropped to 52.6, above the 50-mark which signifies growth by a 20-month low. France was the only one of the Big Four economies to show an improvement, with growth in Germany, Spain and Italy slipping.
Markit, which crunches the numbers, said the figures were in line with the single currency bloc expanding by around 0.3 per cent in the third quarter – in line with its current rate of expansion and the same pace as the UK is predicted to grow.
Chris Williamson, chief business economist at Markit, added political risks could derail the relatively lacklustre recovery: "The slowing rate of growth across the region in part reflects growing caution among businesses in terms of their spending due to worries about the economic outlook, linked in many cases to political uncertainty.
"We see this trend persisting into next year, as the impact of Brexit is exacerbated by uncertainty surrounding elections in France and Germany alongside ongoing political unrest in Italy and Spain."
Jack Allen, European economist at Capital Economics, added: "As rising energy inflation causes headline inflation to pick up more significantly in coming months, sales growth should slow more sharply."