Europe's retail sales are exploding and suddenly everyone is bullish

Merkel hollande laughREUTERS/Alessandro GarofaloGermany’s Chancellor Angela Merkel (L) smiles with Latvia’s President of the Republic Andris Berzins (C) and and French President Francois Hollande during the Asia-Europe Meeting (ASEM) in Milan October 16, 2014.

Eurozone retail sales just blew the doors off, with the fastest surge in 10 years, nearly twice as rapid as analysts expected.

Sales rose 3.7% in the year to January, against the 1.9% economists expected, proving for all who were in doubt that there is genuinely something happening in Europe’s economy, after years of stagnation.

Sales actually rose 1.1% in January alone, from December.

That figure was helped upwards by Germany’s astonishing surge in retail sales, which rose 5.3% year-on-year in January. Remember, just a few months ago people were seriously worrying about German domestic demand, and whether Europe’s powerhouse economy might fall into recession.

Here’s how the retail trade figures look in context. It’s clear there’s still a long way to go for Europe, but there’s an obvious and whopping uptick:

Services PMI figures were out early Wednesday, following manufacturing, and giving a good idea of the strength of Europe’s budding recovery as 2015 gets underway.

That whole-economy eurozone figure is the best since July 2014. Germany, Italy and Spain all came in a little lower than expected, but none of the big four countries is in recession territory any more, and the French figure is a massive improvement.

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