Mixed signals for Q3

The latest indicators have given mixed signals about the euro-zone economy in Q3. Somewhat ironically, the “hard” data available so far have been rather soft. Industrial production rose by just 0.1% on the month in July. And retail sales fell in both July and August. By contrast, the “soft” (or survey) data have been unanimously strong. In September, consumer confidence rose to its highest level since April 2001, pointing to a sharp rebound in retail sales growth. The broader Economic Sentiment Indicator and Composite PMI also rose, consistent with quarterly GDP growth at least matching Q2’s 0.6% in the third quarter. For now, we are more inclined to believe the positive message from the surveys.