The 17 countries that use the euro saw exports fall in October, adding to signs the bloc's economy continues to weaken in the fourth quarter, official data showed Monday.
Eurostat, the European Union's statistics agency, said exports in seasonally adjusted terms fell 1.4% in October from September, while imports rose 0.6%. Weakness in exports deprives the bloc of a key source of growth at a time when domestic demand is weak due to governments, consumers and businesses all cutting back on spending.
The economy fell back into recession in the third quarter after shrinking for six straight months. Signals so far for October, the first month of the fourth quarter, suggest the slump has continued.
However, Eurostat's headline cash measurement of the trade balance, which doesn't strip out seasonal distortions, showed a surplus of 10.2 billion euros ($13.4 billion) in October, up from a surplus of EUR9.5 billion the previous month.
Separately, Eurostat also reported that wages per hour worked in the third quarter were 2.0% higher than in the same period of 2011, a slight slowdown from the 2.1% rate of growth recorded in the second quarter.
Wages continued to lag inflation, meaning that real wages continued to fall. Combined with a drop in employment during the third quarter, that will hinder consumer spending--and any prospect of a strong economic recovery.
Total labor costs were 2.0% higher than in the same quarter of 2011, a rise from the 1.9% rate of increase in the second quarter. Rising labor costs can be a source of inflationary pressures, but the third-quarter figures indicate those remain modest.
The realignment of labor costs in the euro zone is key to rebalancing the currency area's troubled economy. Deprived of the ability to devalue their currency, troubled euro zone members have to regain competitiveness by cutting their labor costs relative to stronger northern European economies, a process known as "internal devaluation."
There were signs that happened in the three months to September. While wage growth in Germany picked up to 3.4% from 3.2% in the first quarter, wage growth in Spain was 0.8%, while in Ireland it was 1.9%, in Portugal 1.2%, and in Italy 1.1%.
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