Euro zone economic sentiment unexpectedly improves in December as unemployment continued its decline in November. But as Grace Pascoe reports a Chinese rout and sliding oil are weighing on inflation expectations in 2016.
Good news for the euro zone Unemployment is falling And economic sentiment is rising- up to 106.8 points for December. It's powerhouse Germany roaring ahead too. With a bigger-than-expected rise in industrial orders for November. But it is heavily exposed to China And other storms are brewing - thinks Alastair McCaig of IG. (SOUNDBITE) (English) IG, MARKET ANALYST, ALASTAIR MCCAIG, SAYING: "Germany have got a number of hurdles that they are looking to address themselves. Obviously a couple of the major equities making up the constituency of the DAX had some very big wobbles over the course of 2015. And I think also there is a little bit of a political instability as well. 2017 will see a German General Election." Retailers in the euro zone are experiencing a rough patch. With sales down 0.3 percent month-on-month in November. Euro zone unemployment fell to its lowest level in over four years Down to 10.5 percent of the workforce for November. But this may not continue (SOUNDBITE) (English) IG, MARKET ANALYST, ALASTAIR MCCAIG, SAYING: "We will undoubtedly see a refocus unfortunately on Greece as once again some of their problems will re-arise and deadlines will once again loom large on the horizon. But Spain is going to be another issue... So the encouraging progress that's been made in the European employment scene over the last couple of years might come to a bit of a halt, certainly in the first half of this year." Inflation is another worry. It's already too low - and sliding oil prices and a Chinese market rout have pushed long-term expectations down even further.