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 Such strength in the face of economic headwinds from China and other
emerging markets could give European Central Bank policymakers pause
for thought as they consider whether they need to expand the bank's
trillion-euro stimulus program.
The signals from Germany, the euro zone's number one economy, so far
remain positive. Business morale, tracked by the Ifo economic
institute's survey of 7,000 firms, unexpectedly improved in
September, suggesting company executives in Germany remained upbeat.
The country's HDE retail association also raised its forecast for
sales growth in its sector, thanks to rising real wages and low
inflation.
Ifo economist Klaus Wohlrabe said the slowdown in the Chinese
economy was not currently dampening the confidence of German
exporters.
"We had expected that the export expectations of industry would have
perhaps fallen a bit. They did not, they actually rose slightly,"
Wohlrabe said.
Industry morale in France also beat expectations, rising in
September to its highest level since July 2011, data from state
statistics body INSEE showed.
France has been struggling to deliver enough growth to bring down
unemployment, with the economy stagnating in the second quarter, but
the government says its labor market reforms are having a beneficial
impact on businesses.
Business confidence also rose in the Netherlands in September.
There were even positive signs in Italy, the euro zone's third
biggest economy, where data on Thursday showed both retail sales and
industrial orders rising in July.
Italy has been plagued by weak growth for years, but last week the
main employers group raised its forecasts for the economy, crediting
low oil prices and interest rates and a decline in the euro's
exchange rate.
The crisis on Europe's borders which has seen nearly half a million
migrants and refugees pour into the continent this year, many
fleeing war in Syria, may yet cloud the economic outlook.
Morale among German consumers declined for the second consecutive
month heading into October, market research group GfK said on
Thursday, amid uncertainty about the government's handling of the
crisis.
The German labor office research institute said the arrival of large
numbers of refugees could push up German unemployment next year by
70,000.
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However, Ifo's Wohlrabe said the influx in recent weeks had boosted
the retail sector, in particular sales of groceries, with
supermarkets seeing a clear rise in turnover that was expected to
continue.
He said the scandal around Volkswagen, which has admitted to
deliberately falsifying U.S. diesel emissions tests, broke too late
to be reflected in the latest Ifo survey. Any negative fallout will
not show through until next month.
The world's biggest carmaker by sales, VW is a potent symbol of
German industrial might and fears have been raised that the scandal
could tarnish the reputation of all the country's firms.
The stream of relatively upbeat data from the continent will support
those who argue that the ECB will need more evidence before ramping
up its quantitative easing program.
ECB President Mario Draghi said as much on Wednesday.
While acknowledging risks to Europe's inflation and growth outlook
have increased due to the emerging market slowdown, he said the
central bank needed more time before deciding on further stimulus.
(Reporting by Michael Nienaber in BERLIN, Yann Le Guernigou in
PARIS, Gavin Jones in ROME and Amsterdam Newsroom; Writing by Toby
Chopra; Editing by Mark Trevelyan)
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