Eurozone retail sales much stronger in August but PMI September figures disappoint
Eurozone retail sales rose much more than expected in August, pointing to stronger demand from households that could help economic growth in Q3. The European Union’s statistics office Eurostat said retail sales in the 18 countries sharing the euro rose 1.2% month-on-month in August and up 1.9% year-on-year. Analysts had expected a 0.1% monthly rise and a 0.5% annual uptick after sales contracted 0.4% month-on-month in July and rose 0.5% on the year.
“August’s jump in retail sales fuels hopes that consumer spending could make a decent contribution to euro zone GDP growth in the third quarter,” said Howard Archer, economist at IHS Global Insight, told Reuters.
“Retail sales volumes were up by 0.6% in the three months to August compared to the three months to May. Barring a very sharp correction in September, retail sales volumes look likely to have grown by around 0.7% quarter-on-quarter in the third quarter,” Archer said.
Eurostat data showed sales of non-food products and fuel at petrol stations contributed most to the monthly rise of the index in August, with the eurozone’s biggest economy Germany reporting the biggest gain of 2.5%.
In annual terms, sales of non-food products played an even bigger role as their 3.6% year-on-year rise offset a 0.2% fall in the sales of food and the same drop in the sales of petrol.
Analysts said that among other reasons for the improvement could be the very low eurozone inflation shoring up purchasing power, and the fact that over the 14 months to August, unemployment in the zone declined by 768,000.
They also point to the strong month-on-month growth in spending in Germany, where unemployment is very low and real wages are good, compared to other countries.
Both Germany and France, the second biggest eurozone economy, recorded hefty gains of 3.1 and 2.1%, respectively.
Meanwhile, the eurozone’s purchasing managers’ index (PMI) for the retail sector in September fell to 44.8 from 45.8 in August, the third straight monthly dip and the fastest decline since April 2013, according to data by global information provider Markit on Monday.
A reading above 50 signals an expansion in activity while a reading below indicates a contraction.
The indicator showed deepening downturns in retail sales in both France, where the index dropped to 41.8 from 45.5 in August, and Germany, where it fell to a 53-month low of 47.1 from 49.4 the earlier month.
Sales also continued to fall in Italy, though the rate of decline was the slowest in five months. In Italy the index climbed to 45.4 from August’s 40.8.