© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
Last updated: January 8, 2014 4:33 pm
Shoppers in the eurozone provided a boost to the region’s economic recovery towards the end of last year, with retail sales rising at their fastest pace in four years.
The currency bloc’s retail sales figures for November offered grounds for cautious optimism, rising 1.4 per cent from a month earlier – a rate last seen in December 2009.
Two of the region’s most worrisome economies were among the star performers, according to the figures from Eurostat, the European Commission’s statistics bureau, on Wednesday. In Portugal, sales rose 3.1 per cent and in France 2.1 per cent, though shoppers in the bloc’s second-largest economy could have spent more than usual because of January’s value added tax increase.
While the monthly sales figures are volatile, the strong reading for November bodes well for hopes that the currency bloc’s recovery will have strengthened in the final months of the year after flagging in the third quarter.
The figure also comes as investors regain their optimism for a recovery in eurozone periphery economies, as Ireland tapped the bond market after exiting its bailout programme last month. Portugal is to follow suit, having hired bankers to manage a sale of five-year bonds, as early as Thursday.
“The net news from this report is relatively encouraging, and consistent with our forecast for another quarter of moderate private consumption growth in the fourth quarter,” said James Ashley, economist at RBC Capital Markets.
However, he cautioned that shoppers could not be expected to sustain the recovery. “Household balance sheets continue to be under pressure and precautionary savings are likely to remain elevated for some considerable time further given the uncertain economic outlook and the ongoing weakness in the labour market,” he said.
Highlighting the strains on the region’s households, euro area unemployment remained well into double figures, holding steady at a record 12.1 per cent, while strong regional divergences revealed the tentative nature of the recovery.
The number of jobless reached 19.24m in November, an increase of 452,000 over the year, according to Eurostat data.
Although Europe’s economy has been showing signs of recovery from the financial crisis, unemployment is a persistent concern. Taking heart from some eurozone indicators last year, Christine Lagarde, managing director of the International Monetary Fund, described an unemployment rate of 12 per cent as “far too high”.
Germany and Austria recorded the lowest rates, at 5.2 per cent and 4.8 per cent respectively, both unchanged from October. In southern Europe, despite investor optimism, the picture was bleaker. Unemployment in Italy rose to 12.7 per cent in November from 12.5 per cent in October, while Spain’s jobless total was stuck at 26.7 per cent.
Greek unemployment rose to 27.4 per cent in September from 26 per cent a year earlier.
News, commentary and analysis of the eurozone’s debt crisis and its faltering recovery as it struggles with austerity and attempts to regain competitiveness
Laszlo Andor, European commissioner for employment, said the jobless rate was stabilising but much more needed to be done to give people “decent work”. He said there would have to be “courageous steps towards economic, fiscal and political integration in the eurozone”.
“Without these further steps uncertainty could return sooner than we think and today’s recovery could quickly dissipate,” he warned.
Youth unemployment is a particular worry with a rate of 24.2 per cent in the euro area, up from 23.9 per cent a year earlier. Spain had the highest rate of youth unemployment in November at 57.7 per cent. In September, the rate was 54.8 per cent for young Greeks.
By contrast, the US has been steadily adding jobs as it recovers. Its unemployment rate now stands at 7 per cent.
Politically, this protracted high unemployment is expected to play an important role in Europe’s parliamentary elections in May, when populist parties from both the left and right, several of them hostile to the EU, are set to prosper.
With additional reporting by Peter Wise in Portugal and Robin Wigglesworth in London
Please don't cut articles from FT.com and redistribute by email or post to the web.
Sign up for email briefings to stay up to date on topics you are interested in