Real, seasonally and workday-adjusted retail sales:

June: flat m/m, +0.4% y/y

MNI survey median: +0.2% m/m, +0.2% y/y
MNI survey range: -0.8% to +0.7% m/m

May: +0.4% m/m (revised from +0.2%)
April: -1.0% m/m (revised from -0.9%)
March: +0.7% m/m (unrevised)
February: flat m/m (revised from -0.1%)
January: -0.3% m/m (unrevised)
—

PARIS (MNI) – Eurozone retail sales were overall stable in June, as
a drop in food outlays offset a further modest recovery in turnover for
other goods, according to Eurostat’s preliminary estimates released
Wednesday.

The outcome was somewhat weaker than generally expected, but
results for May were revised up slightly. Indeed, most analysts had
expected little change on the month, but were split on the direction.

Real retail trade has stagnated over the past year after a 4% slide
from a peak in early 2008. Sales in June were only 0.4% higher on the
year. Turnover contracted by 0.2% in 2Q, all but erasing the gain in 1Q.

Despite promising signals in Germany, Eurozone private consumption
is unlikely to regain much momentum as long as high unemployment dampens
wage gains and rising prices squeeze family budgets. Fiscal tightening
will increasingly weigh on revenues.

Sales of food, drinks and tobacco fell back 0.7% in June,
essentially retracing the recovery in May. Sales of non-food products
excluding motor fuel rose 0.3% after a 0.4% upturn to return to levels
seen in March.

More detailed results for May showed respectable annual gains for
electrical goods and furniture (+4.4%), pharmaceuticals (+2.8%) and
computers and books (+1.1%) and declines for textiles and clothing
(-1.7%) and mail order and internet sales (-1.5%).

Among the larger Eurozone economies, gains in June were led by
Spain, where sales jumped 1.1% ahead of the two-point VAT hike in July,
but were still only marginally higher on the year.

Spanish sales are likely to correct lower in the coming months. In
fact, sector sentiment eroded markedly in July to the weakest level
since the end of last year, according to the European Commission’s
survey. With stocks rising and sales falling, retailers were
increasingly pessimistic about near-term prospects and said they
intended to cut back orders accordingly. Austerity measures will no
doubt weigh on consumption ahead. Expecting their financial situation to
deteriorate further over the coming year, consumers said they were
cutting back on major purchases.

German sales fell back 0.9% in June after May’s 3.0% rebound for a
gain of 1.1% on the year. Retailers and wholesalers polled by the Ifo
institute in July were much more satisfied with current turnover and
slightly more optimist about six-month prospects, confirming the trend
of previous months.

In France, a 1.3% downturn in June more than wiped out the gains
since March, leaving sales slightly lower on the year. Retailers polled
by Insee in July confirmed that recent sales had slowed and expected the
trend to continue in the coming months. Firms remain “rather
pessimistic” about sector conditions, the statistics institute
commented.

Data for Italy were unavailable for June, but total results point
to a recovery after two months of decline. However, Isae’s sector survey
showed a marked erosion in sentiment in July to the lowest level in nine
months, reflecting slowing turnover, rising stocks and growing pessimism
about sales in the coming months.

Monthly results from smaller reporting countries were also quite
mixed, with gains in Slovakia (+2.6%), Belgium (+1.6%), Austria (+0.9%)
and Slovenia (+0.6%) and declines in Portugal (-1.1%) and Malta
(-1.6%).

At the Eurozone level, retail sentiment recovered somewhat in July,
thanks to a strong rebound in Germany and modest gains in Austria,
Portugal and Slovakia. Elsewhere, morale was stable or weaker. The
overall improvement in recent and expected sales and order plans was
also due mainly to a boost from Germany.

Eurozone consumers’ plans for major purchases at present and over
the next 12 months eroded in July, falling further below historical
averages, according to the Commission.

Most analysts expect private consumption to remain anemic this
year. Last month Ifo, Insee and Isae jointly forecast quarterly gains of
only 0.1% through the end of this year.

— Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com

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