Real, seasonally adjusted retail sales:

April preliminary: -1.0% m/m, -2.5% y/y

MNI survey median: -0.1% m/m, -1.1% y/y
MNI survey range: -0.6% to +0.3% m/m

March: +0.3% m/m
February: -0.2% m/m
January revision: +1.1% m/m (+1.0%)
December revision: -1.3% m/m (-1.2%)
November: -0.3% m/m
—

PARIS (MNI) – Eurozone retail sales fell back more than expected in
April to their lowest level since the end of last year, with declines in
all countries except Germany, according to seasonally adjusted estimates
released Tuesday by Eurostat.

The 1.0% monthly downturn left sales 2.5% lower on the year and
0.8% below the 1Q average, which was practically flat on quarter. While
sales of food, drink and tobacco recovered 0.3% after a 0.5% decline in
March, non-food sales excluding motor fuel dropped 1.4% after a 0.6%
upturn.

Eurozone retail sales have been on an uneven downward trend for
nearly two years. Amid stagnant economic activity and rising
unemployment, little significant pick-up is likely as long as costly
food and energy continue to undermine consumers’ purchasing power.

The latest available GDP data show consumer prices rising more than
twice as fast as nominal incomes in 4Q, giving a 0.4% decline in real
earnings after -0.3% in 3Q. The declines would have been even steeper
without the cushioning effect of social transfers. Real consumption
expenditure dropped 0.7% in 4Q, as the savings rate recovered somewhat
from a three-year low in 3Q.

Consumers say their financial situation has deteriorated further in
the meantime, according to European Commission surveys. They also expect
the downward trend to continue, given their bleak outlook for the
economy. A relatively high number of consumers say they are putting off
major purchases and planning to tighten their belts over the coming
year.

Retailers polled by the Commission have become more pessimistic of
late in light of their dire outlook for turnover in most peripheral
countries and eroding prospects in many core economies, which are
crimping expectations for sales prices.

The latest joint forecasts from the French and Italian statistics
institutes, Insee and Istat, and Germany’s Ifo think tank see
consumption sliding further through mid-year and stagnating in 3Q. For
the full year, the Commission expects a 0.6% decline.

In Germany, retail sales surprised to the upside in April, gaining
another 0.6% after a 1.6% rebound in March to stand 1.3% higher on the
year. While consumer morale remains buoyed by the resilience of the
economy and the labor market, retailers have gotten cold feet of late.
Ifo’s surveys show their assessment of current business and their
outlook at the six-month horizon falling back to two-year lows in May.

In France, sales volumes dropped 1.5% on the month, retracing all
of the gain since the start of the year, but were still 0.6% higher on
the year. High energy costs have put the squeeze on spending in other
areas. As in most of the Eurozone, economic fundamentals here point to
anemic spending in the coming months. Rising unemployment is weighing on
wage gains, while tax hikes and inflation are undermining purchasing
power. Insee expects per capita revenues to decline 0.3% in real terms
in the first half of this year and consumption to lose steam in the
coming months.

In Spain, sales plunged 2.4% after a 0.5% downturn in March to
stand 3.9% lower on the year – the largest annual drop after Greece’s
(-16.1% in March). Drastic fiscal tightening has accentuated consumers’
concerns about job prospects and future finances, while retailers remain
pessimistic about sales ahead, though less so than at the start of the
year.

No current data were released for Italy. In March, sales volumes
were 0.7% below the previous-year level. Retailers’ outlook for
near-term turnover sunk in May to the lowest level in years, Istat’s
surveys show.

Among the smaller reporting countries, monthly results were mostly
weaker, with especially steep drops in Portugal (-2.1%), Malta (-2.4%),
Finland (-2.7%), Slovenia (-2.9%) and Austria (-3.5%). The only annual
gains were in Luxembourg (+2.4%) and Estonia (+8.5%).

–Paris newsroom +331 42 71 55 40; email: ssandelius@marketnews.com

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