Sound bites: Eurozone retail sales remain on a very weak trend

The outlook for Eurozone retail sales remains very bleak. Consumer demand remains the weakest link in the economy , thanks to record high unemployment, deep debt distress, and contracting consumer credit. It all compounds a very weak picture for consumer confidence and sub-par spending trends for years to come. There is nothing on the near term horizon to offer any hope of relief. The policy environment remains restrictive, while Eurozone governments continue to press home severe austerity cuts and the ECB holds back on much bigger monetary stimulus. The recessionary environment looks set to last for at least this year, with a good chance of extending through 2014 given the very sharp squeeze on real disposable incomes throughout the Eurozone. It is not just the rising fear of unemployment and the impact of debt deflation, but the rising cost of energy is also leaving a big dent in household budgets.

At some stage a sea-change must come in the Eurozone policy environment. Either governments will start to break ranks on austerity cuts and go for growth with pro-cyclical budget measures. France seems to be straining on the leash in this respect. The alternative is that the ECB needs to be the lender of last resort in much greater size. It already has the examples set by the US Federal Reserve, the Bank of Japan and Bank of England, who have joined in a co-ordinated Great Monetary Reflation to kick-start recovery in the G7. The ECB can either throw much more caution to the wind, or else it will handicap recovery for years to come. As soon as the ECB opens up the monetary sluice-gates a lot wider, the outlook for the euro will become a lot more focused on the potential for economic recovery and survival in the longer  term.

Highlights 

RETAIL SALES VOLUME
Percentage change vs previous month (seasonally adjusted)

            Sep-12  Oct-12  Nov-12  Dec-12  Jan-13  Feb-13
 Euro zone  -1.6    -0.5    0.2     -0.7    0.9     -0.3
 EU27       -1.1    -0.6    0.3     -0.6    0.8     0.0

RETAIL SALES VOLUME
Percentage change vs same month of previous year (working day adjusted)

            Sep-12  Oct-12  Nov-12  Dec-12  Jan-13  Feb-13
 Euro zone  -2.1    -3.4    -2.2    -3.0    -1.9    -1.4
 EU27       -1.0    -2.4    -1.3    -2.0    -1.2    -0.2