Real, seasonally and workday-adjusted retail sales:

March: -1.0% m/m, -1.7% y/y

MNI survey median: +0.2% m/m, flat y/y
MNI survey range: -0.3% to +0.7% m/m

February: +0.3% m/m (revised from -0.1%)
January: +0.3% m/m (revised from +0.2%)
December: -0.2% m/m (revised from -0.3%)
November: -0.1% m/m (revised from flat)
—

FRANKFURT (MNI) – Retail sales in the Eurozone unexpectedly fell
back in March, more than retracing the recovery of the previous two
months, as spending on both food and non-food products declined,
Eurostat reported on Wednesday.

Taking into account the upward revisions for January and February,
March’s 1.0% monthly slide left sales down 1.7% on the year at their
lowest level since November 2009.

Food, drink and tobacco sales fell back 0.6% on the month to give
an annual decline of 2.1%, while non-food sales, which exclude
automotive fuel, contracted by a more pronounced 1.1%, resulting in an
annual drop of 0.8%.

Turnover in the German retail sector lost further ground in March,
falling 2.1% on the month and 0.6% on year to its lowest point since
April 2010.

Nevertheless, with unemployment falling for the 14th consecutive
month in April and jobless fears at near four-year lows, the environment
in Germany remains supportive for household consumption. Underlining
this assessment, the latest retail purchasing managers index showed
growing confidence regarding the sales outlook.

One downside risk, however, could materialize in the form of higher
consumer prices. “Experience shows that increasing price expectations
usually have a dampening effect on the propensity to buy,” the GfK Group
warned.

In France, retail sales fell 1.0% on the month, cutting the annual
gain by more than half to 3.6%.

Unlike in Germany, recent indicators in France do not suggest a
strong upturn in consumption in the near term. Despite the ongoing fall
in the number of jobseekers, a recent Insee survey showed an uptick in
households’ jobless fears. A growing proportion of respondents see now
as a good time to save, though fewer see themselves able to do so.

While data on Italian retail sales in March was not available,
figures published for February showed turnover recovering by a modest
0.1%, resulting in a 0.1% annual fall.

The Istat’s latest survey pointed to growing concerns about
unemployment, a bleaker view of personal finances and growing pipeline
price pressures, suggesting that consumer spending is likely to remain
subdued in the coming months.

In Spain, March’s 1.4% fall extended the string of consecutive
monthly declines to twelve. As a result, sales levels sank to their
lowest point since January 2000, down 9.6% on the year.

Rising inflation expectations and an unemployment level approaching
21% do not make for an ideal setting for Spaniards to open up their
pocketbooks for anything other than essentials. The Bank of Spain’s
latest forecasts see consumption growth slowing sharply to +0.7% this
year following a 1.2% rebound in 2010.

For the Eurozone as a whole, the April PMI survey showed retail
sales rising, led by gains in Germany and France. As a result, the index
remained in the growth zone for the fifth month in a row and more than
three points above the long-run average.

Still, optimism among retailers continued to dwindle in April, with
downward revisions noted in firms’ assessment of their current situation
and their outlook for the coming months, a European Commission study
showed.

Joint forecasts from Insee, Ifo and Istat last month see unabated
price pressures eroding real incomes in the coming quarters and private
consumption growth slowing to 0.2% at most through 3Q.

“Moreover, the efforts towards fiscal consolidation in many member
countries are expected to hold back the growth of disposable income,”
the statistics offices said. “Accordingly, private consumption in the
Eurozone should loose momentum.”

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

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