LONDON — While the US economic outlook has become murkier because of the partial shutdown of the government, the picture in Europe — so long the laggard of the global economy — has brightened.
Another round of economic data on Thursday provided evidence that Europe’s recovery from recession is becoming broad-based and self-sustaining.
Particularly encouraging: Retail sales across the eurozone rose a forecast-busting 0.7 percent in August from the previous month, according to Eurostat, the European Union’s statistics office. Retail sales are an important barometer of economic confidence as they show consumers are more willing to spend rather than save despite many headwinds, such as high unemployment and government-imposed austerity measures. They are also a major component of growth.
The August increase added to the previous month’s 0.5 percent rise and was above market expectations for a 0.2 percent gain.
Much of the improvement was due to massive increases in Portugal and Spain, two of the countries at the forefront of Europe’s debt crisis. How much of their respective 4.8 percent and 3.8 percent increases were due to tourists spending more on holiday wasn’t clear.
Earlier Thursday, a closely watched survey found economic output across the eurozone rose in September at its fastest pace since the summer of 2011. Financial information company Markit said its composite purchasing managers’ index — a broad gauge of business activity across the manufacturing and services sectors — rose to a 27-month high of 52.2 points in September. The rise from 51.5 in August takes the index further above the 50-point threshold that indicates expansion.
The figures echo recent findings about the eurozone — that a recovery is taking place after the currency bloc emerged in the second quarter from the longest recession in its nearly 15-year history. This week, figures showed the number of unemployed fell in August for the third consecutive month, the first time that has happened since April 2011.
In the United States, meanwhile, the economy has shown signs of weakening while a partial government shutdown threatens to slow growth in the October-December quarter.
An even greater disruption could occur in two weeks if Congress hasn’t agreed by then to raise the US government’s borrowing cap. That cap limits total US government debt to $16.7 trillion.
Christine Lagarde, managing director of the International Monetary Fund, warned Thursday that a failure to raise the limit would severely damage the US and global economies.
Meanwhile, the signs of economic improvement in Europe help explain why the European Central Bank opted against doing anything more to shore up the recovery at Wednesday’s policy meeting and is a hopeful sign.
Analysts, though, were keen to point out that the economy might struggle to build on the recent months’ improvements.