Inflation, debt crisis hurt euro zone retail sales

Mon Nov 7, 2011 6:54am EST
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By Robin Emmott

BRUSSELS (Reuters) - Retail sales in the 17 countries sharing the euro fell more than expected in September despite some resilience in powerhouse Germany, the EU's statistics office said on Monday, reinforcing concern that the bloc's economy may be heading for a recession.

In the first negative reading since May, sales slipped 0.7 percent in September from the previous month, Eurostat said in an initial estimate. That was much worse than the 0.1 percent decrease forecast in a Reuters poll of economists. Sales in the 27-nation European Union fell 0.3 percent in the same period.

"It was a pretty disappointing figure," said Juergen Michels, an economist at Citigroup. "The 0.7 percent decline in retail sales really suggests there is a huge amount of uncertainty coming through to consumers."

Inflation, volatile financial markets and stress from Europe's sovereign debt crisis are combining to keep potential shoppers at home, particularly as euro zone unemployment rose slightly in September.

Retail trade in the euro zone also fell 1.5 percent on an annual basis in September and by 0.8 percent in the EU as a whole, Eurostat said.

Germany reported a 0.4 percent increase in retail sales in September, compared to August, but there was a decline in France, where sales fell 0.6 percent.

Sales in Spain, the single currency's fourth-largest economy, tumbled 1.7 percent as the country continued to struggle with the highest jobless rate in the euro zone, which is crimping consumer spending.

Sales of food, drinks and tobacco in the euro area in September were flat. Sales of goods other than fuel fell 0.8 percent, Eurostat said, although more detail was not immediately available.   Continued...