Retail sales in the euro zone have 'disappointed' so far in the third quarter of the year, with a modest 0.1% increase in volumes for July indicating that the sector 'continues to flatline', an ING analyst has said.
Bert Colijn, senior economist, euro zone, at ING, was commenting following the publication of Eurostat figures that indicate a slight increase in month-on-month trade volumes in both the EU (+0.2%) and euro area (+0.1%) in July, while year-on-year retail volumes are up by 0.4% in the EU and 0.1% in the euro area.
'Slightly Decelerating'
"The economy isn't showing signs of further acceleration after a surprisingly strong first half year," Colijn commented. "In fact, it looks like the economy is slightly decelerating at the moment. This would make for a disappointing recovery after a long period of stagnation.
"The first hard data for the quarter are today’s retail sales figures and they are not particularly encouraging. Retail sales have been slowly bottoming out after a large post-pandemic correction, but there is no evidence yet of a real recovery."
Food, drink and tobacco volumes increased by 0.5% in the EU, on a month-on-month basis, in July, and by 0.4% in the euro area. Non-food products (except automotive fuel) rose by 0.2% in the EU and 0.1% in the euro area, while automotive fuel in specialised stores decreased by 1.4% in the EU and 1.0% in the euro area.
'Limited Expectations'
"Retail sales have suffered from the reopening of services after the pandemic and from a decline in real incomes for Europeans, which has limited goods consumption," Colijn added. "While the reopening effects have been wearing off and real incomes are recovering, there is still no evidence of a rebound for retail. This also limits inflation expectations for goods, even though input costs have increased recently.
"As a first reading of what the consumer is doing in the third quarter, this does not give us much hope of a surprise surge in household consumption. Perhaps the Olympics have boosted consumption in France, but don’t expect major surprises there."
EU member states to see an increase in retail trade volumes, on a month-on-month basis, include Croatia (+2.9%), Austria and Slovakia (both +1.8%) and Slovenia (+1.6%).
