3 Jul 2015
Eurozone retail sales show domestic demand becoming more self-sustaining – ING
FXStreet (Barcelona) - Teunis Brosens of ING, reviews the Eurozone retail sales data release, and notes that any negative effects on the consumption and sentiment will stand limited in front of any possible Greece contagion.
Key Quotes
“In an encouraging sign of strength despite increasing oil and fuel prices, European consumption continues to grow. Eurozone retail sales held firm in May at 0.2%MoM and 2.4%YoY. Gains were concentrated in non-food sales, while fuel sales predictably stalled, given increasing prices. Among the major economies, retail sales growth remains especially strong in Germany (4.2%YoY) and Spain (3.4%YoY), while France saw a slight deceleration to 1.9%YoY. Greek figures for May are not yet available, but April showed a -1.9%YoY contraction.”
“The Eurozone consumption recovery was initially sparked by lower oil prices. As the stimulating effect of low oil prices wears off, employment and wage growth need to take over as drivers of consumption growth. Today’s retail sales suggest that this is starting to happen. Based on these figures, consumption growth in the second quarter is shaping up to be at least comparable to the first quarter. Other indicators support this view. The European Commission’s Economic Sentiment Indicator showed earlier this week that average consumer confidence in Q2 was slightly higher than in Q1. We therefore expect consumption to grow by another 0.4%QoQ in Q2.”
“The outlook beyond Q2 for the Eurozone economy is of course highly dependent on the Greek referendum and the follow-up in the days and weeks beyond. In a best case scenario of a quick deal and a return to relative normalcy in Greece, negative effects on sentiment and spending elsewhere in the Eurozone may remain limited.”
Key Quotes
“In an encouraging sign of strength despite increasing oil and fuel prices, European consumption continues to grow. Eurozone retail sales held firm in May at 0.2%MoM and 2.4%YoY. Gains were concentrated in non-food sales, while fuel sales predictably stalled, given increasing prices. Among the major economies, retail sales growth remains especially strong in Germany (4.2%YoY) and Spain (3.4%YoY), while France saw a slight deceleration to 1.9%YoY. Greek figures for May are not yet available, but April showed a -1.9%YoY contraction.”
“The Eurozone consumption recovery was initially sparked by lower oil prices. As the stimulating effect of low oil prices wears off, employment and wage growth need to take over as drivers of consumption growth. Today’s retail sales suggest that this is starting to happen. Based on these figures, consumption growth in the second quarter is shaping up to be at least comparable to the first quarter. Other indicators support this view. The European Commission’s Economic Sentiment Indicator showed earlier this week that average consumer confidence in Q2 was slightly higher than in Q1. We therefore expect consumption to grow by another 0.4%QoQ in Q2.”
“The outlook beyond Q2 for the Eurozone economy is of course highly dependent on the Greek referendum and the follow-up in the days and weeks beyond. In a best case scenario of a quick deal and a return to relative normalcy in Greece, negative effects on sentiment and spending elsewhere in the Eurozone may remain limited.”