Retail sales in the eurozone rose for the fourth straight month
in January and at the fastest rate in more than nine years, a fresh
sign that the currency area's economy has strengthened ahead of the
launch of the European Central Bank's new stimulus program.
The sustained rise in sales likely reflects the boost of
household spending power from lower oil prices, which have left
consumers with more money to spend on other goods and services.
Separate surveys of purchasing managers also released Wednesday
showed the eurozone economy grew less rapidly than first estimated
in February. But for the first time since April 2014, private
sector activity increased in all four of the currency area's
largest members.
The European Union's statistics agency Wednesday said retail
sales rose by 1.1% from December, and 3.7% from January 2014. The
month-to-month rise was the largest since May 2013, while the
year-to-year rise was the strongest since August 2005.
The rapid rise in sales over four months to January may ease
fears that the eurozone is at risk of a slide into deflation, or a
self-perpetuating spiral in which consumers postpone purchases
because they expect prices to drop, leading to a fall in output and
further declines in prices.
Eurostat Monday said consumer prices fell for the third straight
month in February, although the 0.3% rate of decline was half that
of January.
However, surveys of purchasing managers underlined the scale of
the challenge facing the ECB as it prepares to launch its program
of quantitative easing later this month, as businesses once again
cut their prices in February.
Data firm Markit, which surveys more than 5,000 businesses
across the eurozone, said its composite purchasing managers
index--a measure of activity in the manufacturing and services
sectors--rose to 53.3 in February from 52.6 in January. A reading
below 50 indicates activity is declining, while a reading above
that level indicates it is increasing.
The PMI was revised lower from a preliminary estimate of 53.5,
but signaled the eurozone economy grew at the fastest pace since
July 2014.
For the first time since April of last year, the composite PMIs
for Germany, France, Italy and Spain were all above 50, signaling
activity increased in each.
The pickup looks set to be sustained, as new orders rose, and
businesses hired additional workers at the fastest rate in more
than three years.
"There were clear signs of the eurozone economy reviving in
February, with stronger inflows of new business and rising business
confidence suggesting growth should continue to pick up," said
Chris Williamson, Markit's chief economist.
On Jan 22, the ECB announced a program of bond purchases using
freshly created money that is likely to total more than EUR1
trillion ($1.12 trillion), with the aim of returning the inflation
rate to its target of just under 2%.
Write to Paul Hannon at paul.hannon@wsj.com
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