- Howard Archer, an economist at IHS Global Insight
Retail sales in the Euro zone rose at the fastest annual pace since early 2007, adding to evidence that consumer spending may start bolstering economic recovery in the region, as unemployment declines somewhat. Eurostat said that retail sales climbed as much as 0.4% from May, when the gauge was upwardly revised to 0.3%. Compared with the same period last year, sales jumped 2.3%, the biggest yearly increase since March 2007. In addition to boosting growth, a sustained increase in consumer spending would also ease the way for businesses to raise their prices, thereby pushing up inflation rate, which is currently well below the targeted rate of 2%. With jobless rate close to all-time highs, slow growth of wages, and ongoing government austerity programmes, consumer spending has been one of the economy's weakest components.
Meanwhile, service sector activity in Spain grew at the fastest pace since 2006 in July, with employment rising for the fourth consecutive month as new orders increased. Services PMI climbed to 56.2, compared to 54.8 in June. Positive news also came from France, which also posted expansion in the services sector. The final Purchasing Managers' Index rose to 50.4 points in July, up from the 48.2 recorded a month earlier. Nevertheless, the overall performance remained subdued.
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