Real, seasonally and workday-adjusted retail sales:

May: -1.1% m/m, -1.9% y/y

MNI survey median: -0.9% m/m, -0.4% y/y
MNI survey range: -1.3% to +0.5% m/m

April: +0.7% m/m (revised from +0.9%)
March: -0.9% m/m (unrevised)
February: +0.2% m/m (unrevised)
January: +0.2% m/m (unrevised)
December: -0.2% m/m (unrevised)
—

FRANKFURT (MNI) – Retail sales in the Eurozone fell faster than
generally expected in May to a 20-month low, with both food and non-food
sales falling back, Eurostat reported on Tuesday.

With April’s increase revised downward, May’s 1.1% fall — the
sharpest since April 2010 — knocked sales down 1.9% on the year.

Taking both May and April together, turnover was down 0.4% on
average compared to 1Q, which in turn was 0.2% lower on the quarter.

Food, drink and tobacco sales fell 0.6% on the month to give an
annual change of -2.1%. Non-food sales slipped 0.9% m/m, undoing April’s
modest recovery, resulting in a yearly fall of 1.3%.

The proportion of consumers expecting inflation to trend upwards
contracted in June to its lowest level since the start of the year,
while jobless fears remain well below the norm, according to the
European Commission’s sentiment.

However, it remains to be seen when or if this will translate into
a robust spending revival.

Markit Economics’ PMI survey showed turnover in the retail sector
falling in June for the second consecutive month for the first time
since January. “Data for Q2 as a whole signal a flat trend in revenues,
which bodes ill for consumer expenditure,” Markit Senior Economist
Trevor Balchin said.

The Commission’s survey showed retailers’ near-term business
outlook eroding to a 10-month low in June.

Retail sales in Germany were 2.8% lower on the month, resulting in
an annual decline of 4.4%. Households’ optimism regarding the economy
and the labour market jobs helped to lift buying-propensity in June.
Retailers’ morale remains high despite the recent erosion in near- and
medium-term expectations, sector surveys show.

French sales were down 0.7% compared to April, cutting the annual
gain to 2.8%.

Rising energy and food prices are squeezing household income and
weighing on expenditures. The retail PMI showed sales falling in June on
both a monthly and yearly basis, knocking the headline index down to
49.2.

Italian sales were not reported for May. Data in April show that
turnover rebounded 0.6% on the month, undoing March’s brief dip,
resulting in an annual gain of 0.3%.

The Italian labour market is expected to improve, albeit slowly
from this year. However, with unemployment expected to remain above 8%
through 2012 and inflation to take a further bite from disposable
income, the Commission projects only a modest rise in consumption in
2011 and 2012.

Sales in Spain fell 1.6%, bringing the annual shortfall to 7.7%.
Concerns over employment, the economy and high energy prices are likely
to keep consumers from opening their wallets for anything more than
essentials.

— Frankfurt bureau: +49 69 720 142; e-mail: frankfurt@marketnews.com —

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