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Business

Retail sales drop stronger than expected

Latest update : 2009-04-07

Retail sales fell by 4 % in the 16 countries of the Eurozone on a 12-month basis according to official Eurostat figures. For February, they dropped 0.6 % when forecasts had predicted a 0.4 % fall.

AFP - Retail sales in the 16 eurozone nations fell unexpectedly sharply in February, dropping 0.6 percent from January as shoppers shunned Europe's high streets, official EU data showed on Monday.
  
Analysts had forecast a drop of 0.4 percent in the month and the outcome reflects how shaky consumer confidence is despite massive government efforts to dig their economies out of the worst global crisis since the 1930s.
  
Retail sales in the entire 27-nation European Union fell 1.2 percent in February compared with January, the EU's Eurostat data agency said.
  
On a 12-month basis, retail sales in the eurozone in February dropped 4.0 percent and in the EU were down 3.4 percent, the agency said.
  
"Worryingly, the prospects for consumer spending across the eurozone currently look pretty bleak," said Howard Archer, chief European economist at IHS Global Insight.
  
"While sharply lower inflation is boosting purchasing power, this is being increasingly outweighed by faster rising unemployment across the eurozone and elevated job insecurity.
  
"On top of this, tight credit conditions and elevated consumer concerns over the economic situation and personal finances bode ill for consumption," he said.
  
Jennifer McKeown, European economist at Capital Economics, said: "February's fall in eurozone retail sales confirms that spending is not benefitting from sharp falls in inflation."
  
"Given the rapid deterioration in labour market conditions, consumer spending will probably remain very weak in the near term at least, despite the relatively healthy state of household finances," she added.
  
One analyst said a 0.2 percent drop in sales in Germany, Europe's biggest economy, reflected the impact of the country's popular car trade-in scheme whereby the government pays motorists 2,500 euros (3,300 dollars) if they scrap an old car and buy a new one.
  
Late last month, a survey by the GfK institute found that a budding pick-up in German consumer spirits had stalled amid a steady stream of bad economic news.
  
The collapse of crucial German exports and domestic industrial activity, along with rising unemployment, has made Germans more pessimistic about their future, GfK said.
  
Retail sales in recession-hit Britain meanwhile slumped 1.9 percent in February from January, worse than economists had expected and in what one expert said was a message "that high street spending growth is back on a downward trend."
  
In the United States, retail sales slipped 0.1 percent in February although this was less than expected and inspired some hopes there for a recovery in consumer spending.
  
Plunging auto sales continued to be a main drag on the headline retail number under tight credit conditions that made financing big-ticket items difficult.

Date created : 2009-04-06

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