- Howard Archer, chief European and UK economist at IHS
Consumers in the 18-nation bloc are still cautious about their prospects and are not showing willingness to spend, suggesting inflation and growth in the whole region will be subdued in the foreseeable future, and bolstering the case the ECB will pull the trigger soon once again.
The Euro was trading in a narrow range against the U.S. Dollar on Wednesday even despite the fact services PMI, composite PMI as well as retail sales surprised markets to the downside. A report from Markit unveiled that a gauge of activity in the services sector stood at 51.6 in January, falling short of analysts' estimates of 51.9 points, however, accelerating from December's 51 figure. The final composite PMI improved as well, with the index rising to 52.9 following 52.1 in December, however, missing forecasts as well. Regarding the demand at European retailers, it remained subdued as well, with retail sales falling 1.6% in December, dragged down by disappointing numbers from Europe's largest economy and weak Christmas sales. Market's reaction was limited, as Germany and France, which both makes around 50% of the bloc's economy are releasing the data earlier.
Nevertheless, weak consumer spending– a primary gauge of overall economic activity, can become another reason for Mario Draghi to sound dovish this week.
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