Eurozone Experiencing Economic Recovery
The Eurozone made up of nineteen countries are now experiencing some economic recovery as a result of the current reduction in oil prices plus the fact that the Euro is low. However, this economical restoration is not has profound as the recovery process taking place in the United States.
Several economic reports released on Wednesday indicated that there was an increase in economic operations in the Eurozone following a period of no economic progress, especially in the vital consumer spending sector.
The members of the European Central Bank will appreciate the economic progress taking place and this might be a focus in their forth coming meeting in Nicosia on Thursday.
Eurostat data released indicated an increase in retail sales within the Eurozone at a rate of 1.1 percent in the month of January, being the greatest value for almost two years now. This is a vivid sign of an economical boom in progress.
The increase in January was well above the 0.2 percent forecast made by market investors, increasing the yearly rate to 3.7 percent more than previous figures in the past ten years.
Consumer expenditure forms the foundation for economic progress in the Eurozone and in the Western world as a matter of fact. Since the consumer spending rate has progressed for four months consistently in the eurozone, then economical good days are here again for the zone, since year 2000.
IHS Global Insight’s Chief Econimist in Europe, Howard Archer, said, “This reinforces our belief that eurozone growth will pick up markedly to 1.6 percent in 2015 as it benefits appreciably from very low oil prices, a much more competitive euro and substantial ECB stimulus”.
The rate of consumer expenditure in the past has been restricted in the one currency region by an increased unemployment in various Eurozone countries, no pay rise, different governmental restrictions imputed to revitalize public finances. All of these factors has inhibited consumer spending in the past years within the Euro group.
In recent months, the story is different as consumers are now more confident to spend due to the sudden decrease in oil prices, coupled with the decrease in unemployment to a rate of 11.2 percent.
Delayed consumer spending consistently is dangerous to any economy, because this has a rippling effect on investments as the more consumers refuse to buy, the more producers refuse to produce so as to curb losses. When this happens extensively, then an economic brake down is inevitable, economists say. It is good that the Eurozone is breaking out of the period of low consumer spending, as people spend less money on fuel, they have more money to spend on other products, hence increasing consumer spending.
Markit’s financial data report for Eurozone in February indicated a monthly composite purchasing managers’ index (PMI) increased to 53.3 from 52.6 in January – this is a three months increase now. Factory orders are also on the increase as well.
Even if the PMI value did not reach the forecasted value of 53.5, the present PMI value is still the greatest since the previous year. Purchasing Manager’s Index value above 50 signifies economical growth. Markit data indicated that the growth of the Eurozone economy in February was at a 0.3 percent rate.
Significant economic progress was seen in Germany, Spain, Italy and France, the biggest economies in the Eurozone this year, more than what occurred last year. Markit reported.