Monthly Bulletin April 2008 - European Central Bank - Europa

ECONOMIC
AND MONETARY
DEVELOPMENTS
Output,
demand and the
labour market
is conveyed by the Commission’s services confidence indicator, which dropped again in March.
Available information on the sub-sectoral breakdown suggests that the weaker performance of the
services sector may reflect the impact of the various shocks that have affected the euro area economy
in the recent past. These shocks stem from food prices (affecting the hotels and restaurants subsector),
oil prices (affecting transport) and financial tightening and the financial turmoil (affecting
the real estate services and financial intermediation sub-sectors). However, survey data remain
consistent with positive growth in the services sector as a whole in the first quarter of 2008.
Overall, the survey data for both the industrial and services sectors suggest that the GDP growth
rate in the first quarter of 2008 may be in line with that seen in the fourth quarter of last year.
INDICATORS OF HOUSEHOLD SPENDING
The latest information on household spending indicates a significant weakening in private
consumption in late 2007. Euro area private consumption declined by 0.1% quarter on quarter in
the fourth quarter, compared with an increase of 0.5% in the previous quarter. According to the
available data, this was partly due to a fall in spending on retail goods, with retail sales declining
by 0.8% quarter on quarter (see Chart 27). The drop in euro area private consumption in the fourth
quarter partly reflected developments in households’ decisions on saving and spending in Germany,
where private consumption contracted substantially. However, it also resulted from a deceleration
in private consumption in other euro area countries, such as France and Spain.
In February retail sales shrank by 0.6% month on month, reversing the previous month’s increase.
Meanwhile, new passenger car registrations in the euro area increased by 3.2% month on month in
February, following a decrease of a comparable
magnitude in the previous month. The European
Commission’s retail trade confidence indicator,
which captures the perceptions of retailers, was
unchanged in March. This indicator, which has been
affected by significant volatility in the recent past,
remained at a historically high level but declined
notably in the course of 2007. Euro area consumer
confidence remained unchanged in March vis-à-vis
February and January, standing at a level below its
long-term average for the third consecutive month.
On a three-month moving average basis, however,
consumer confidence declined, thereby continuing
the downward movement that started in mid-2007.
In contrast, conditions are favourable in the labour
market, providing support for private consumption
in 2008.
Chart 27 Retail sales and confidence in the
retail trade and household sectors
(monthly data)
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
total retail sales ¹ ) (left-hand scale)
consumer confidence ² ) (right-hand scale)
retail confidence ² ) (right-hand scale)
12
10
8
6
4
2
0
-2
4.2 LABOUR MARKET
The euro area labour market has shown a clear
improvement in recent years, and, despite slowing
somewhat, this favourable trend has continued
according to the latest data. Employment
expectations, although weakening, remain at
-1.0
-1.5
2004 2005 2006 2007
Sources: European Commission Business and Consumer Surveys
and Eurostat.
Note: Data on total retail sales refer to the euro area including
Cyprus and Malta.
1) Annual percentage changes; three-month moving averages;
working day-adjusted.
2) Percentage balances; seasonally and mean-adjusted.
-4
-6
ECB
Monthly Bulletin
April 2008
43