Euro Area retail sales rose in January according to Eurostat today but composite PMI (purchasing managers' index) survey data for February comprising activity in both manufacturing and services, fell to a 13-month low while French data fell below the no-change 50 level.


In January, retail sales grew 0.4% month on the month, down from a revised 0.6% growth rate in December. In January 2016 compared with January 2015 the calendar adjusted retail sales index increased by 2.0% in the euro area and by 2.8% in the EU28.

Among member states for which data are available, the highest year-on-year increases in total retail trade were observed in Romania (+15.6%), Estonia (+8.9%) and Poland (+7.5%), while decreases were observed in Belgium (-2.2%) and Austria (-0.5%). Ireland's rate was (+6.2%.)

Markit Economics’ composite PMI dipped to 53.0 from 53.6 in January — a 13-month low. The data indicated a slowdown across the region, with rates of expansion falling in Germany, Italy, Spain and Ireland. France fell into contraction for the first time in over a year, Markit said. It's index level was 49.3.

The slowdown mainly reflected a weaker rate of improvement in new business received. Slower growth of new work meanwhile filtered through to the labour market and business confidence† . Job creation at euro area service providers slowed to a four-month low, but remained stronger than the average for the current 16-month sequence of growth.

Markit’s measure of output prices across manufacturing and services fell further below the key 50 level.

Chris Williamson, chief economist at Markit, commented:

The broad-based disappointment ups the odds of the ECB acting aggressively to avoid another downturn.
The survey data raise the prospect of economic growth deteriorating further from the already meagre pace seen late last year, when GDP rose only 0.3%. Germany and Italy both reported the smallest expansions for five months, while Spain recorded the worst growth for 14 months.
The slowdown in growth of business activity, accompanied by a similar easing in the pace of job creation and the steepest fall in prices charged for a year, suggest that the region’s recovery is losing momentum.

Euro area PMI 2016On Tuesday the Wall Street Journal reported that the European Central Bank will review its stimulus next week against a background of heightened economic risks and weaker-than-expected inflation, Mario Draghi, ECB president, said underlining the bank’s readiness to use all its tools if needed to drive up prices in the Euro Area.

The comments, in a letter to a European lawmaker dated 1 March 1, come ahead of a key ECB policy meeting on March 9 and 10, where the bank has pledged to “review and possibly reconsider” its roughly €1.5 trillion ($1.6 trillion) stimulus.
That review “has to be seen against the background of increased downside risks to the earlier outlook amid heightened uncertainty about emerging market economies’ growth prospects, volatility in the financial and commodity markets, and geopolitical risks,” Mr. Draghi wrote.
“In this environment, euro area inflation dynamics continue to be weaker than expected,” the letter said..

On Monday, Eurostat reported that Euro Area annual inflation is expected to be -0.2% in February 2016, down from 0.3% in January.