Growth slows in Europe slower retail sales show (Reuters) (03-02-2012)

BRUSSELS – A surprise drop in Christmas retail sales in the euro zone in December, shows that rising joblessness and stubborn inflation were indicating the stabilization in Europe's economy is still far off.

Sales across the 17-nation single currency area fell 0.4 percent in December from November, well down from the 0.3 percent rise forecast by economists in a Reuters poll.

They were down by 1.6 percent on an annual basis, the European Union's statistics office Eurostat said.

That annual drop was the biggest since December 2008 when retail sales also fell 1.6 percent in the month at what turned out to be the start of the world's biggest post-1930s recession.

European households cannot yet be relied on to help the euro zone pull out of its latest slump. Joblessness reached a euro-era high of 10.4 percent in December, while inflation remains near recent peaks of 3 percent.

Even in Germany, the bloc's biggest economy, sales fell 1.4 percent compared with November and shoppers stayed away from the malls in France and Spain, where sales slid 0.3 percent and 0.8 percent respectively. Consumer confidence is also weak, despite rising slightly in January from a 26-month low in December.

EU leaders at a summit on Monday promised to free funds to promote jobs and try to revive the euro zone economy, a shift in their mantra that spending cuts are the only way to recover from the euro zone's two-year sovereign debt saga.

The European Central Bank's decision late last year to provide cheap three-year loans to banks has also helped to avert a freeze in lending that could have deepened the downturn.

Source: Reuters