EUR pushes lower after regional PMI fall
UK retailers experienced the largest fall in sales in 9 months during February, adding to fears that the UK consumer is not going to drive economic growth in the short term. Retail sales volumes fell by 0.8% last month with January’s data revised down from +0.9% to +0.3%. This release is bad news for the Government who are hoping for a stronger recovery in household consumption. Several MPC members have warned that subdued consumer spending will strengthen the case for a further round of quantitative easing.
The Eurozone showed further signs of weakness yesterday with the release of March’s PMI data which showed a quickening in the pace of contraction. The composite index slipped from 49.3 last month to 48.7 dragged down by manufacturing which fell to a 3 month low of 47.7. Of particular note were the figures for both German and French manufacturing which slipped below the 50 expansion/contraction marker. Germany also posted the lowest job creation data in 2 years. This does not bode well for the peripheral countries in the region that are in desperate need of a pick up in exports to stronger European countries.
Markets will be paying close attention to the US new home sales data later today. The US housing sector has been slow to recover from the global economic crisis and a strong data release could see the US Dollar strengthen.
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