Euro Zone's Economy Slumps At Year-End
The euro zone's economy deepened its downturn at the end of 2011 as retail sales fell and sentiment soured, but the first improvement in the business climate in 10 months offered hope that an expected recession may be mild.
Euro zone retail trade fell a worse-than-expected 0.8 percent in November from October, data from the European Union's statistics office Eurostat showed on Friday. Economists polled by Reuters had forecast a 0.2 percent monthly fall.
Pointing to the cautiousness of European households, the European Commission said that in December consumer confidence fell 0.7 points in the 17 countries sharing the euro.
In its overall reading of economic sentiment in the euro zone, the Commission said its indicator fell 0.5 points to 93.3, its lowest level since November 2009.
"This data has recession written all over it," said Martin van Vliet, a euro zone economist at ING. "It is all but guaranteed that we are going to see a contraction in the euro zone in the fourth quarter," he said.
High unemployment is afflicting the euro zone, hurting consumers, and Eurostat said the bloc's joblessness rate was 10.3 percent of the working population in November, the same as October and up slightly from a year ago, when it was 10 percent.
The number of unemployed increased for the seventh consecutive month, while hiring intentions fell further in December, according the data.
That compared with an unemployment rate of 8.6 percent in the United States, Eurostat said.
One apparent bright spot in the data released on Friday was the improvement in the Commission's business climate indicator, which increased for the first time in 10 months as factory managers showed optimism about future production plans and export order books.
The indicator was -0.31 points in December, compared to -0.42 points in November and better than the -0.50-point reading seen by economists polled by Reuters for the month.
Unlike the euro zone's economy, which is expected to contract in the fourth quarter of 2011 and the first quarter of 2012, the U.S. economy is expected to grow about 2 percent in 2012, helping to increase export demand in Europe.