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Eurozone: Consumers don’t act on lower confidence - ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Apr 6, 2016.

  1. FXStreet_Team

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    Bert Colijn, Senior Economist at ING, suggests that the Eurozone retail sales increased in February and reached the highest level since early 2008, defying increased nervousness among consumers because of global turmoil.

    Key Quotes

    “The poor start of the year for financial markets still has not impacted consumption in the Eurozone much as retail trade increased by 0.2% month-on-month and 2.4% year-on-year in February. This is the highest reading of retail sales since February 2008, which was the pre-crisis peak. The improvements in sales in January and February show that consumers talked the talk of lower confidence in recent months, but have yet to walk the walk. The unemployment recovery has boosted retail sales in the Eurozone.

    Even though Eurozone consumers are wary of the global economic and political situation, the sharp downturn in consumer confidence over the past months is not yet having much of an impact on retail trade. Negative inflation has been enticing to consumers and stores are profiting. There are few signs of consumers delaying purchases because of the current spell of negative price growth so far. Besides that, the unemployment rate continued to decline in February, which is helping disposable income grow.

    The months ahead could still be bleaker though as the labour market has lost a bit of its momentum in the first months of the year and the Eurozone service sector PMI indicated a slowdown of growth in March. This means that some weakness could still be ahead of us, but the current pace of sales growth is a good sign for the overall performance of the Eurozone economy in the first quarter.”
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