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TheStreet Open House

Eurozone economy shows glimmers of hope

By PAN PYLAS

LONDON (AP) a¿¿ Glimmers of hope emerged Wednesday for the eurozone economy to suggest that the coming year will see the recovery gathering steam.

Official figures showed a stabilization in unemployment and the biggest increase in monthly retail sales in 12 years.

Eurostat, the EU's statistics office, said the eurozone's unemployment rate held steady in November at a record 12.1 percent for the eighth month running after a modest 4,000 rise in the ranks of the jobless to 19.24 million. Since September's 12.2 percent rate was revised down, 12.1 percent is now the record.

The agency also said retail sales during the month spiked by 1.4 percent, way ahead of predictions in the markets for a more modest increase of around 0.3 percent. The rise was the biggest since November 2001.

Though much of the increase was due to a 2.1 percent rise in France, where consumers may have brought forward purchases ahead of a sales tax rise, analysts said the figures suggest households are increasingly confident that the financial crisis is past its worst and that the recovery has legs.

The increase followed two monthly declines and was fairly broad-based across the eurozone. The Iberian economies of Spain and Portugal did particularly well, posting gains of 1.9 percent and 3.1 percent.

"The outlook is starting to brighten a little for eurozone consumers," said James Howat, European economist at Capital Economics.

Despite the signs of improvement, the eurozone continues to face huge problems and most economists think it will remain the laggard of the world economy. However, few think the European Central Bank will change its monetary policy at its monthly meeting on Thursday.

"The ECB may want to keep some ammunition in its back pocket in case of emergencies," said Kathleen Brooks, research director at Forex.com.

Among the challenges will be to get unemployment down and prevent deflation, a sustained fall in prices that can encourage consumers to put off purchases in the hope of getting better bargains further down the line.

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