European economy shows improvement but slowdown spreads elsewhere

Amid continuing concerns over its debt problems, Europe produced better-than-expected economic data on Thursday.

In Germany, the unemployment rate fell to 6.7 percent in May from 6.8 percent in April while retail sales rose 0.6 percent in April.

In France, consumer spending rose 0.6 percent in April.

Meanwhile, inflation has become less of a threat to the eurozone economy. The inflation rate fell to 2.4 percent in May from 2.6 percent in April.

Outside the euro area, Nationwide reported that UK house prices rose 0.3 percent in May.

In Denmark, the Nationalbank lowered its key lending rate to 0.6 percent from 0.7 percent after the economy grew 0.3 percent in the first quarter.

However, while European data were encouraging, data elsewhere on Thursday indicated that the economic slowdown has spread.

Revised US first quarter GDP data showed that the economy has lost momentum. It grew at a 1.9 percent annual rate last quarter, down from the 2.2 percent initial estimate and from 3.0 percent in the fourth quarter.

May data released on Thursday indicated that there has not been much improvement since. An ADP report showed that private employers added just 133,000 jobs in May. Initial claims for state jobless benefits rose 10,000 last week to 383,000, the seventh increase in eight weeks. A report from Challenger, Gray & Christmas showed that the number of planned layoffs at US companies hit an eight-month high in May.

The Institute for Supply Management-Chicago's business barometer fell to 52.7 in May, the lowest since September 2009, from 56.2 in April.

Japan's economy may also have started the second quarter on a weak note. Industrial production rose just 0.2 percent in April. A survey showed that factory managers expected output to fall 3.2 percent in May and then rebound 2.4 percent in June.

Emerging economies have also not escaped the spreading slowdown. India's economy grew 5.3 percent in the first three months of 2012 from a year earlier, sharply down from 9.2 percent growth in the previous quarter.