How are we left after the latest data?
EURUSD didn't do anything over the data but let's look at what it all means
- Sentiment up - tick
- Unemployment down - tick
- Retail sales down - X
Sentiment continues to improve across the sectors and Europe's consumers are becoming a less miserable bunch. That's not translating into spending with the drop in Nov retail sales. I mentioned in the retails post that sales might improve in Dec, given the PMI's. The holidays are likely to add to that but there's a counter to that argument too. The only negative from the sentiment report was the retail component which fell to 2.8 from 5.6 in Nov. That itself fell from 6.4 in Oct.
What we're seeing is the continuation of a very slow improvement in Europe. People are finding jobs and are feeling better about the future but what's lacking is a rise in household incomes to help that recovery further
It a huge piece of the puzzle and one that needs to fall into place fast so that things don't start going backwards
What needs to happen in Europe is what has happened in the UK and US. They bottomed, they recovered, unemployment fell and now wages are rising. You need all these ducks to line up to see a sustained recovery or else people give up and sentiment turns. It's momentum thing. Lose it and you can slip back twice as far as you went forward
The ECB will, and should, be very afraid of that. Europe turning into Japan was touted a lot a couple of years ago but that reality may creep closer unless we see more euro's going into people's pockets, and not just via the false economy of cheaper energy reducing everyday bills
