On Friday morning, annualised German retail sales for October smashed forecasts. The markets had been expecting sales to do an about-turn from -2.8% to 2.7%, but the year-on-year reading actually came in at 5%. On a monthly basis, sales unexpectedly declined by 0.3% to leave a faintly sour taste in the mouth. Analysts had expected a 0.3% gain.
We also saw inflation in the eurozone fall to 2% in November from 2.2% the previous month and below expectations of 2.1%. With the European Central Bank’s target set at 2%, policy makers will be in no rush to increase interest rates. Indeed, the eurozone’s economy is facing many risks at present, such as the Italian budget row and increased levels of global protectionism. The unemployment rate unexpectedly held steady at 8.1% when a drop to 8% had been predicted. Still, it remains the lowest jobless rate since November 2008.
As with the UK, today we will the Markit manufacturing PMI reading for Germany and the eurozone. Both are expected to fall a little which would continue a trend of weakening economic data from Europe. The highlight of the week is the third estimate of the eurozone’s GDP growth rate for the third quarter of 2018.
