Real, seasonally and workday-adjusted retail sales:

December: -0.6% m/m, -0.9% y/y

MNI survey median: +0.4% m/m
MNI survey range: -0.4% to +0.5% m/m

November: -0.3% m/m (revised from -0.8%)
October: flat m/m (unrevised)
September: -0.2% m/m (revised from -0.1%)
August: -0.1% m/m (unrevised)

PARIS (MNI) – The slide in Eurozone retail sales accelerated in
December, disappointing widespread hopes for a recovery, according to
seasonally adjusted Eurostat data released Thursday.

Taking account of the upward revision for November, the 0.6%
decline in December left sales 0.9% lower on the year and more than 4%
below the peak in early 2008.

Sales in 4Q were 0.7% below the 3Q average, suggesting there was
little support from consumption for GDP growth in 4Q after the slowdown
over the course of last year.

The recovery in retail turnover since the cyclical trough in
mid-2009 stalled in 4Q amid the rise in energy and food prices. The
momentum in commodity prices, coupled with overall sluggish wage gains
amid high unemployment point to weak consumption in the months ahead.

Consumers’ inflation expectations have mounted sharply in recent
months, surpassing the long-term average in December, according to the
European Commission’s sentiment surveys. This has eroded consumers’
outlook for personal finances and weighed on plans for major purchases
over the coming year, which are close to historic lows.

Retailers polled by the Commission in January said recent business
had slowed markedly. Expectations for the near term also dropped off
abruptly, while remaining above long-term averages.

Sales of food, drinks and tobacco and of non-food products both
posted monthly declines of 0.5% in December. More detailed results for
November showed annual gains led by computer equipment and books,
clothing, and internet and mail order sales.

German retail sales fell another 0.3% in December after a 1.9%
downturn in November, disappointing expectations for a robust rebound.
Fundamentals here are more promising than elsewhere, given expanding
employment, rising consumer confidence and expectations for wage
increases over the course of the year. The Ifo institute’s surveys show
retailers’ assessment of current business and their expectations at the
six-month horizon at multi-year highs, despite the correction in
January. However, the retail association HDE expects real turnover to
stagnate this year.

After a 0.9% upturn in November, sales in France fell back 0.2% in
December but were still 3.2% higher on the year. The monthly decline
was less than the sharp drop signaled in the Bank of France’s sector
survey, but also down from the 0.6% rise in manufactured goods turnover
alone. New car purchases are likely to stall in the months ahead after
the buying spree at the end of last year, which may benefit spending in
other areas. However, inflation and tax hikes will take a bigger bite
out of pay checks. Retailers surveyed in January were much more
pessimistic about near-term business than in previous months.

In Spain, sales fell another 0.9% on the month after a 0.4%
downturn in November and were 5.0% lower on the year. Retailers’
assessment of current business and their expectations for the near term
remain far below long-term averages, the European Commission’s surveys
show.

As usual, data for Italy were not available for the reporting
month. Sales in November were 0.8% lower on the year. Retailers’
assessment of recent sales eroded markedly in January as did their
outlook for the near term, Istat’s survey showed.

Among the other reporting Eurozone members, monthly sales gains
were recorded in Belgium (+0.1%), Slovakia (+1.2%) and Portugal (+4.7%
after -4.1%). Monthly declines were modest in Finland (-0.2%) and
Austria (-0.9%) and steep in Ireland (-3.0%), Slovenia (3.3%) and Malta
(-3.4%).

Annual comparisons in December ranged from robust gains in Finland
(+2.5%) and Estonia (+7.0%) to marked declines in Malta (-3.6%), Ireland
(-3.3%), Slovenia (-3.0%) and Slovakia (-2.3%).

–Paris newsroom +331 42 71 55 40; e-mail: stephen@marketnews.com

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