Mixed Signals Emerge for Eurozone Economy

Following a solid start to the year, signs emerged Wednesday that the 19-country eurozone economy is losing some traction.

While a closely-watched survey indicated that economic activity grew at a steady pace in April, a separate report pointed to a sharp drop in retail sales in March.

Financial information company Markit said its purchasing managers' index, a broad gauge of business activity, was 53.9 points in April. Though slightly lower than the near four-year high of 54.0 in March, it remained well above the 50-point threshold that separates growth from decline.

The firm said the survey provides further evidence that countries that have made bold economic reforms over the past few years are reaping the benefits. Overall, Markit said the survey points to quarterly economic growth of 0.4 percent in the first quarter of the year, in line with expectations.

"The fact that the rate of growth failed to gain further momentum is a disappointment, but the national growth variations will give policymakers some real encouragement that the economic health of the region is improving," said Chris Williamson, Markit's chief economist.

Williamson highlighted the performances of Spain and Ireland, two countries that have been at the sharp end of Europe's debt crisis over the past few years. Both countries are exhibiting strong growth and Williamson says that's largely due to the economic reforms they have pursued.

He noted that companies in Spain are seeing the largest inflows of new work for 15 years, while Ireland is enjoying one of its longest growth spells since the dot-com boom.

Though the Markit survey suggested that the eurozone economy continues to grow, official figures from the European Union's statistics agency suggested that consumer demand may be coming off the boil following a decent start to the year.

Eurostat found that retail sales in the currency union fell by 0.8 percent in March from the previous month. However, that was largely due a 2.7 percent fall in automotive fuel sales. The decline also followed a series of monthly increases.