Euro-Area Data Maze Leaves Economists Puzzled Over Way Out

Economists are puzzling over a range of different culprits for the recent euro-area data that point to slower economic growth. What most can agree on is that the trend comes at a bad time for the European Central Bank as it considers exiting ultra-accommodative policy.

Reports on inflation, output, retail sales and German industrial activity all failed to meet expectations this week, continuing the underwhelming start to the year. The data have economists asking whether it’s temporary effects holding the economy back, or whether it mirrors a true slowing of momentum that could lengthen the time frame for the ECB to normalize stimulus.