Economic contraction in eurozone slows
Source: Agencies |
June 6, 2013, Thursday
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Print Edition
Print Edition
THE pace of the eurozone's economic contraction slowed quarter on quarter in the first three months of this year, EU statistics showed yesterday, but retail sales in April pointed to continued weakness in household demand.
The European Union's statistics office confirmed its earlier estimates that gross domestic product in the 17 countries using the euro fell 0.2 percent quarter on quarter in the January-March period, for a 1.1 percent year-on-year contraction.
That came after a 0.6 percent decline in eurozone quarterly output in the previous three months.
"The eurozone remains stuck in recession, despite some signs that the recession is easing a bit," said Jonathan Loynes, chief European economist at Capital Economics.
The smaller fall in the first quarter of 2013 was mainly thanks to a stabilization of inventories and household demand, which, unlike in the previous three months, did not weigh down the overall result.
But retail sales data, a proxy for consumer demand, fell more than expected in April, pointing to continued weakness of private consumption at the start of the second quarter.
Economists said that was to be expected given record high unemployment of 12.2 percent.
"Consumers are still doing little to help the eurozone return to growth, which is little surprise given the pressure they are under in a number of countries from high and rising unemployment and limited purchasing power," said Howard Archer, economist at IHS Global Insight.
Retail sales in the eurozone fell 0.5 percent month on month in April for a 1.1 percent year-on-year decline. Economists polled by Reuters had expected only a 0.1 percent monthly fall and a 0.8 percent annual contraction.
Eurostat GDP data showed there was a 0.1 percentage point positive contribution to the overall result from eurozone net trade in the first three months of the year - but only because imports declined more than exports, another signal of very weak domestic demand.
The positive net trade was, however, more than offset by a sharp fall in investment, which subtracted 0.3 percentage points from the overall final figure, leaving it at -0.2 percent.
The contribution from government spending, constrained by fiscal consolidation to regain market confidence in eurozone public finances, was zero, for the third quarter running.
The European Union's statistics office confirmed its earlier estimates that gross domestic product in the 17 countries using the euro fell 0.2 percent quarter on quarter in the January-March period, for a 1.1 percent year-on-year contraction.
That came after a 0.6 percent decline in eurozone quarterly output in the previous three months.
"The eurozone remains stuck in recession, despite some signs that the recession is easing a bit," said Jonathan Loynes, chief European economist at Capital Economics.
The smaller fall in the first quarter of 2013 was mainly thanks to a stabilization of inventories and household demand, which, unlike in the previous three months, did not weigh down the overall result.
But retail sales data, a proxy for consumer demand, fell more than expected in April, pointing to continued weakness of private consumption at the start of the second quarter.
Economists said that was to be expected given record high unemployment of 12.2 percent.
"Consumers are still doing little to help the eurozone return to growth, which is little surprise given the pressure they are under in a number of countries from high and rising unemployment and limited purchasing power," said Howard Archer, economist at IHS Global Insight.
Retail sales in the eurozone fell 0.5 percent month on month in April for a 1.1 percent year-on-year decline. Economists polled by Reuters had expected only a 0.1 percent monthly fall and a 0.8 percent annual contraction.
Eurostat GDP data showed there was a 0.1 percentage point positive contribution to the overall result from eurozone net trade in the first three months of the year - but only because imports declined more than exports, another signal of very weak domestic demand.
The positive net trade was, however, more than offset by a sharp fall in investment, which subtracted 0.3 percentage points from the overall final figure, leaving it at -0.2 percent.
The contribution from government spending, constrained by fiscal consolidation to regain market confidence in eurozone public finances, was zero, for the third quarter running.
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