Retail sales in euro zone moribund in July

September 3, 2010 12:13 PM EDT

The European Union reported that retail sales across the euro zone edged up only 0.1 percent month-on-month in July – below consensus expectations of a 0.4 percent gain -- following an upwardly revised 0.2 percent increase in June.

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Within the 16-member currency bloc, Portugal posted the highest monthly gain at 3.0 percent, followed by Malta (2.9 percent) and France (2.2 percent).

By contrast, retail sales dropped by 3.0 percent in Spain and 0.3 percent in Germany.

Sales of food, drinks and tobacco increased by 0.3 percent, while non-food sales (excluding fuel) slipped by 0.1 percent.

Year-on-year, however, retail sales climbed by 1.1 percent.

“Still high unemployment is keeping a lid on consumption as government stimulus programs run out and the focus turns to budget consolidation,” said Action Economics.
“The debt crisis and the push for further budget consolidation and austerity measures has added renewed pressure on confidence, although latest data are more encouraging and point to a gradual improvement in consumption trends.”

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Howard Archer, chief UK/European economist at IHS Global Insight in London commented that despite the disappointingly small gain at least July represented a third successive increase in retail sales volumes.

“The indications overall are that consumer spending has recently picked up modestly in the euro zone, helped by stabilizing labor markets and improved confidence,” he said.

“Nevertheless, consumers still appear to be pretty cautious overall in their spending and it seems unlikely that there will be a marked pick up in consumption.”

This article is copyrighted by International Business Times, the business news leader