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Eurozone retail sales disappoint, adding to the case for ECB easing - ING

FXStreet (Delhi) – Bert Colijn, Research Analyst at ING, notes that the Eurozone retail sales declined by 0.1 percent for the second month in a row, helping the case for further monetary easing by the ECB later today.

Key Quotes

“The strong boost that retail sales received from the lower oil price earlier in the year halted in August and October data further indicates that shoppers have remained cautious ahead of the holiday season. While the low inflation environment initially boosted spending and did not seem to lead to postponing purchases, recent months show stagnation of consumption.”

“With consumption growth stalling and price growth in services stuck around 1 percent per year, the retail environment is currently not contributing towards a recovery of inflation. Later today, the ECB will likely decide on a significant second round of monetary easing this year and this release of retail trade data will just make the case for that more compelling.”

“The recent stalling of growth in sales came on the back of falling consumer confidence, as consumers became cautious during recent times of geopolitical situation, the Greek crisis and China. The sharp increase in confidence in November indicates that the consumer might have become less cautious with the holidays in sight, which bodes well for the end of the fourth quarter.”

“As the labour market continues to add jobs in the Eurozone and wage growth is slowly but surely increasing, it seems unlikely that the current slump in sales will be a new trend. Even though this is the case, retail sales have still only recovered to the level of late 2005, making this a lost decade for shopping in the Eurozone.”

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