Why does Europe have more room to run?
According to Dryden, the falling unemployment rate and improving consumer spending in Europe are important factors that will change the outlook of the economy.
Eurozone unemployment rate
The unemployment rate in the Eurozone (EZU) (HEDJ) stood at 10.2% in April 2016. In the last year, the unemployment rate has been falling. In April 2015, it was at 11.1%. This is a good sign for the region, as employment and job growth are two important factors driving consumer spending in the economy.
Eurozone consumer spending
Eurozone consumer spending has been increasing in the last two years. Consumer spending in the Eurozone rose to 1.37 trillion euros in 1Q16 from 1.36 trillion euros in 4Q15. This improvement indicates that the demand outlook for the economy is also improving.
According to Alexander Dryden, the domestic economy is improving, not overseas (VTI) (VEU) demand. Recently, the World Bank said in its 25th global economic forecast that it was positive about the economy’s private consumption. It also said that along with lower crude oil prices and an improved labor market, the economy would be able to achieve some gains. Read Falling Oil Prices Could Boost the Eurozone’s Economy to learn more.
In the next part, we’ll analyze how the UK market outperformed its European peers.