Eurozone: Disappointing start to Q2 for retail sales - ING
Bert Colijn, Senior Economist at ING, notes that the retail sales in the Eurozone were flat q-o-q in April and grew just 1.4% y-o-y. This disappointed analysts, even though expectations were already subdued as an early Easter had taken the wind out of the sails for April shopping.
Key Quotes
“Taken together with the subdued Eurozone PMI release of earlier this morning, the pace of Eurozone economic growth seems to indeed be somewhat slower this quarter than in the surprisingly strong first.
The Eurozone economy is generally expected to have slowed down somewhat from the strong pace of growth in the first quarter and this first indication on domestic demand seems to confirm that. It looks like the impact of the first quarter uncertainty was masked by a strong carryover effect from the end of last year when retail sales jumped in December.
Together with a downward revision for February and March, the current picture looks bleaker. In fact, the current level of sales is even lower than that of December last year, which shows that the weaker consumer confidence of the past months has worked its way through to the shops after all.
While it will require two strong months of growth in sales to have positive growth in the second quarter, the outlook for retail sales is not all that bad though. Unemployment declines weakened a little in April, but are expected to continue in the months ahead which will boost income growth.
Today’s PMI release confirms that businesses are increasing staffing levels in most large European economies. Besides that, consumer confidence has recovered quite significantly in the past months, which will help persuade Europeans to continue to spend in months ahead. The big if lies in the oil price though, but without strong further advances it seems unlikely that it will already put the brakes on Eurozone spending in the summer months. It seems to be steady as she goes for domestic demand in Europe, without any much awaited acceleration.”