- Frederik Ducrozet, senior euro zone economist at Credit Agricole
The economic releases for Thursday provided further indication that the Euro zone might currently be contracting as the news were mainly disappointing. The day started with Spain's GDP data, which was in line with expectations at 1.2% for the year. Furthermore, Spain's HICP was better than expected at -0.5% but clearly, it did not show too much promise staying in the negative territory. Next, the German employment data did not provide a reason for an improved outlook. While the jobless rate remained at 6.7%, the unemployment change showed that the number of unemployed increased by 1K compared to the predicted decrease of 5K and the previous decline of 11K. Lastly, all of the German inflation index numbers came out as predicted. Nevertheless, for the month the indexes remained unchanged, which might reduce the possibility of reaching ECB's 2% inflation target.
In addition, the Italian data was arguably the most disappointing. Compared to the previous year the retail trade index fell 2.6% in relation to the fall of 0.4% the month prior, even as there was no change month-on-month. Moreover, business confidence in Italy fell drastically from 99.1 to 95.7. The releases for the whole Euro zone mostly were also below expectations. Notably, private loans decreased 1.6% for the year.
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