Inflation Cooled in France and Spain, German Retail Sales Contracted In January

Bridgette Randall
29 Feb, 2024
Frankfurt

European markets traded higher and bond yields rose after a flood of economic data and earnings results. 

Benchmark indexes in Paris, Frankfurt, and London edged higher after inflation in Spain cooled more than expected and in France slowed to its weakest level since September 2021. 

The Swiss GDP expanded 0.3% from the previous month and rose 0.6% from a year ago in the final quarter of 2023, the State Secretariat for Economic Affairs reported Thursday. 

For all of 2023, Swiss GDP rose 0.8% from a year ago after industrial and service sectors rebounded and exports held up despite macroeconomic uncertainties. 

 

German Unemployment Rate Rises to a 3-year High, French Payrolls Stable

France confirmed payroll employment in the fourth quarter was stable, as previously estimated. 

France added 11,900 net new jobs in the fourth quarter, after adding 60,800 in the third quarter compared to the previous quarter, respectively. 

Payrolls expanded by 1.3 million or 5% in the fourth quarter compared to the pre-Covid fourth quarter in 2019, and about one in three jobs are apprentice contracts. 

Germany's unemployment rate expanded to nearly a 3-year high of 5.9% in February from 5.8% in January, destatis reported Thursday. 

 

German Retail Sales Contracted In January 

Germany retail sales decreased 0.4% from the previous month in January as high borrowing costs and elevated inflation forced consumers to stick to basic items, destatis, or the Federal Statistics Office, reported Thursday. 

Retail sales declined for the third month in a row and fell in eight of the last twelve months. 

From a year ago, retail sales declined 1.4% in January, after falling 1.7% in each of the previous two months, as consumers battled rising costs of food, energy, and housing. 

For all of 2023, retail sales declined, deepening to 3.3% from a fall of 0.7% in 2022. 

 

Spain's Inflation Cools to a 6-month Low In February

Spain's annual consumer price inflation eased to a six-month low of 2.8% in February, down from 3.4% in January, the National Statistics Institute reported Thursday. 

Consumer inflation increased by 0.3% when measured on a monthly basis. 

The core rate of inflation, which excludes food and energy prices, eased for the seventh month in a row to 3.4%. 

 

French Inflation Eased Due to Base Effects

France's annual inflation rate eased to 2.9% in February from 3.1% in the previous month, the statistical agency INSEE reported Thursday. 

Consumer price inflation slowed in February largely because of the higher base in the previous year, and compared to the previous month, inflation rose by 0.8%. 

Food, which is about 15% of the consumer basket, saw inflation rise at a slower pace of 3.6% compared to 5.6% a year ago. 

For services, which account for about 51% of consumption, inflation eased to 3.1% from 3.2% in the previous year. 

Over the year, the harmonized consumer price index increased by 3.1% in February after a 3.4% rise in January, and from the previous month, inflation rebounded by 0.9% after falling 0.2% the previous month. 

 

Europe Indexes and Yields

The DAX index increased by 0.4% to 17,672.06, the CAC-40 index gained by 0.8% to 7,961.29, and the FTSE 100 index inched higher by 0.2% to 7,639.69.

The yield on 10-year German bonds edged up to 2.50%; French bonds inched higher to 2.98%; the UK gilts edged lower to 4.26%; and Italian bonds inched lower to 3.95%.

The euro edged higher to $1.084, the British pound inched higher to $1.266, and the U.S. dollar weakened to 87.99 Swiss cents.

Brent crude decreased $0.80 to $81.99 a barrel, and the Dutch TTF natural gas increased by €0.79 to €24.83 per MWh.

 

Europe Stock Movers

International Consolidated Airlines eased 0.7% to 151.74 pence after the parent company of British Air and Iberian Airlines reported a surge in profit. 

Air France KLM dropped 8.2% to €10.47 after the international airline swung to a loss in the fourth quarter. 

Nordex jumped 4.8% to €10.10 after the German wind turbine maker narrowed its full-year net loss in the previous fiscal year. 

CRH PLC rose 7.2% to 6,646.0 pence after the Ireland-based diversified construction material maker reported a rise in pre-tax profit. 

Total revenue in 2023 increased 7% to $34.9 billion from $32.7 billion, net income from continuing operations increased 14% to $3.1 billion from $2.7 billion, and diluted earnings per share rose to $4.36 from $3.58 a year ago.