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mpc: 8 As discussed in September, euro-area GDP growth in Q2 had been a little stronger than expected, with consumption weaker and investment stronger. Retail sales had, however, increased in August, and euro-area consumer confidence had risen slightly in Q3. And with employment strengthening, the fundamentals seemed to support further growth in household spending. The picture for German consumption still looked relatively weak, and the planned increase in VAT in the New Year clearly continued to pose a future downside risk. On the output side, the euro-area manufacturing and services Purchasing Managers' indices had eased in Q3 but remained at high levels, and the EC industrial confidence indicator had risen in Q3 to its highest rate since 2000. Together these indicators pointed to further healthy growth in Q3. The relative health of the euro-area economy might indicate that structural reforms were now having some impact.