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6 May 2015
Disappointing retail sales expose weakness of Eurozone recovery – ING
FXStreet (Barcelona) - “Is the Eurozone consumption recovery faltering?,“ quotes Teunis Brosens of ING, as he reviews the Eurozone retail sales data, which fell 0.8% mom, indicating that the economy sees a fragile recovery.
Key Quotes
“One might think so as Eurozone March retail sales fell 0.8%MoM. Sales are now up “only” 1.6% compared to a year ago. Sales were especially weak in Germany, up only 0.9%YoY. Retail sales in Spain on the other hand are still strong, up 2.8%YoY, although all that growth was realised in the course of 2014. French retail sales are also doing OK, up 2.1%YoY.”
“While these weak retail sales volumes are certainly disappointing, we should not forget that they come on top of a few very strong months. As a result, retail sales are still up a reasonable 0.7%Q0Q in 2015Q1. On past form, this is consistent with Eurozone consumption contributing 0.2% to quarterly GDP-growth in the first quarter.”
“With that, consumption growth would be comparable to the previous two quarters, but it would certainly underperform compared to expectations. Moreover, weak March retail sales make for a bad starting position going into the second quarter.”
“We are not yet ready to give up on European consumers. But today’s numbers provide a reality check: Eurozone consumption may be back from the dead, but that doesn’t mean everything is back to normal. This is still the Eurozone, and this is still a weak and fragile recovery. These weak retail sales show that any talk of tapering is certainly premature at this stage.”
Key Quotes
“One might think so as Eurozone March retail sales fell 0.8%MoM. Sales are now up “only” 1.6% compared to a year ago. Sales were especially weak in Germany, up only 0.9%YoY. Retail sales in Spain on the other hand are still strong, up 2.8%YoY, although all that growth was realised in the course of 2014. French retail sales are also doing OK, up 2.1%YoY.”
“While these weak retail sales volumes are certainly disappointing, we should not forget that they come on top of a few very strong months. As a result, retail sales are still up a reasonable 0.7%Q0Q in 2015Q1. On past form, this is consistent with Eurozone consumption contributing 0.2% to quarterly GDP-growth in the first quarter.”
“With that, consumption growth would be comparable to the previous two quarters, but it would certainly underperform compared to expectations. Moreover, weak March retail sales make for a bad starting position going into the second quarter.”
“We are not yet ready to give up on European consumers. But today’s numbers provide a reality check: Eurozone consumption may be back from the dead, but that doesn’t mean everything is back to normal. This is still the Eurozone, and this is still a weak and fragile recovery. These weak retail sales show that any talk of tapering is certainly premature at this stage.”