Eurozone Retail Sales Fall 0.7% in September, Signalling Weakening Consumer Demand
Key Takeaways
- •Eurozone retail sales dropped 0.7% month-on-month in September, far worse than the expected 0.1% decline and reversing the prior month's 0.1% increase.
- •Annual retail trade growth slowed to 0.4% in the euro area, missing the 0.6% forecast and down from 0.8% previously, while the EU posted 0.9% yearly growth.
- •Germany recorded the sharpest monthly decline at 2.0%, with non-food products leading the euro area's fall at 1.2% and food, drinks and tobacco slipping 0.3%.
- •Automotive fuel was the only category to expand monthly, rising 1.0% in the euro area, yet it remained down 3.0% year-on-year.
- •The data signals weakening consumer demand amid higher interest rates and elevated energy prices, but it does not change the European Central Bank's inflation-focused policy outlook.
Eurozone retail sales — September
- Month-on-month: -0.7% vs -0.1% expected (prior: +0.1%)
- Year-on-year: +0.4% vs +0.6% expected (prior: +0.8%)
Eurozone retail sales fell 0.7% month-on-month in September, a steeper decline than the 0.1% drop that had been expected, according to the full Eurostat euro-indicators release. The monthly release is one of the euro area's most closely watched gauges of household spending, measuring the volume of goods sold through the retail trade channel. Germany recorded the largest monthly decline, with retail sales down 2.0%, while the wider European Union saw a 0.6% drop.
Non-food products drove the monthly fall, with sales volumes down 1.2% in the euro area and 1.0% across the EU. Food, drinks and tobacco also weakened, slipping 0.3% and 0.4%, respectively. Automotive fuel was the only category to expand, rising 1.0% in the euro area and 0.1% in the EU.
On an annual basis, retail trade volumes remained positive but still missed expectations, rising 0.4% year-on-year in the euro area against a +0.6% forecast and following +0.8% in the prior period. The EU posted 0.9% annual growth. Within the euro area, food, drinks and tobacco led annual gains at 1.1%, followed by non-food products at 0.7%, while automotive fuel sales remained under pressure, down 3.0% year-on-year.
Household consumption is the largest component of euro area gross domestic product, which is why retail trade volumes are often used as an early gauge of domestic demand.
The September figures point to weakening consumer demand amid higher interest rates and elevated energy prices. Retail sales is almost never a market-moving release, and the data does not change anything for the European Central Bank, which remains focused on inflation. The next Eurostat euro-indicators release, covering October, will show whether September's contraction extends into a second month.
Source: ForexLive
