Real, seasonally adjusted retail sales:

Feb preliminary: -0.1% m/m, -2.1% y/y

MNI survey median: -0.2% m/m, -0.6% y/y
MNI survey range: -0.5% to +0.2% m/m

January revision: +1.1% m/m (+0.3%)
December revision: -1.2% m/m (-0.4%)
November: -0.3% m/m
October: -0.1% m/m
September: -0.6% m/m
—

PARIS (MNI) – Eurozone retail sales edged down again in February
after January’s recovery had interrupted four straight months of
decline, according to seasonally adjusted estimates released Wednesday
by Eurostat.

Taking account of the marked upward revision for January, the 0.1%
downturn in February left sales 2.1% lower on the year and two-month
results only marginally above the 4Q average, which declined 1.1% on the
quarter.

Sales of food, drink and tobacco rose 0.6% on the month after a
0.9% upturn in January, while non-food sales excluding motor fuel were
flat after +1.0%.

Eurozone retail sales had barely recovered from the previous
economic slump before they began heading south a year ago. Amid stagnant
economic activity and rising unemployment so far this year, little
significant pick-up is likely as long as costly food and energy are
undermining consumers’ purchasing power.

While consumers now appear somewhat less alarmed about economic
prospects and their own financial situation one year down the road, they
rightly expect unemployment to continue mounting and see little relief
from inflation, the European Commission’s surveys show. On balance
consumers are not overly inclined to make major purchases.

Retailers polled by the Commission have become less pessimistic of
late about current and near-term business, thanks mainly to trends in
the core countries and Italy; but only in the core (and Slovenia and
Estonia) is their outlook optimistic.

Eurozone private consumption contracted by 0.4% in 4Q, more than
retracing the recovery in 3Q. The latest joint forecasts from the French
and Italian statistics institutes, Insee and Istat, and Germany’s Ifo
think tank see consumption sliding further through mid-year and
stagnating in 3Q.

In Germany, where leading indicators remain promising, retail sales
surprised on the downside in February, falling 1.1% after a 1.2%
downturn in January to stand 2.5% lower on the year. Although record
petrol prices are dampening income expectations, buying-propensity as
measured by the GfK group remains resilient. Retailers canvassed by Ifo
last month said current business had picked up smartly and were more
upbeat about prospects at the six-month horizon.

In France, sales volumes rose another 1.2% on the month after a
1.0% recovery in January and were 0.8% higher on the year. However, as
in most of the Eurozone, economic fundamentals here point to anemic
spending in the coming months. Insee expects per capita revenues to
decline 0.3% in real terms in the first half of this year and
consumption to lose steam in the coming months after the one-off spike
in energy outlays during February’s cold wave.

After a steep slide in the final four months of last year, Spain’s
retail sales recovered for the second month in a row in February with a
0.7% gain that still left volumes 6.2% lower on the year — the largest
annual drop after Portugal’s (-9.6%). Drastic fiscal tightening has
accentuated consumers’ concerns about job prospects and future finances,
the Commission’s surveys show. Retailers are quite pessimistic about
current and future sales. “Private consumption will be significantly
weaker this year due to high unemployment, high household debt and the
credit crunch,” the Commission predicted in February, before the latest
budget consolidation measures were unveiled.

No current data were released for Italy. In January, retail sales
were only slightly below the previous-year level — a marked improvement
from previous months. After hitting historic lows at the start of this
year, retail sentiment has rebounded on the back of improving turnover,
Istat’s surveys show. Yet prospects for the near term remain bleak.

Among the smaller reporting countries, monthly results were mixed,
with declines in Ireland (-0.3%), Austria (-0.6%) and especially
Slovenia (-5.0%), while gains were registered in Slovakia (+0.2%),
Finland and Belgium (both +0.3%), Estonia (+1.5%), Portugal (+1.6%),
Luxembourg (+2.2%) and Malta (+4.7%).

Except for Ireland, Austria, Slovenia and Portugal, the smaller
countries registered healthy annual sales growth, particularly in
Finland (+6.3%) and Estonia (+14.8%).

–Paris newsroom +331 42 71 55 40; email: ssandelius@marketnews.com

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