Retail sales in the eurozone fell unexpectedly in June, providing another indication that consumer spending remains weak and could limit the contribution of household consumption to economic growth during the second quarter of the year.
According to data released by Eurostat, the European Union’s statistics office, retail sales declined by 0.3% month-on-month in June, following a 0.4% increase in May. Economists had expected a modest 0.1% rise.
Annual Growth Slows
On an annual basis, retail sales growth slowed to 0.7% in June, down from 1.9% in the previous month. The figure also fell short of market expectations of 1%.
The latest figures highlight continued caution among eurozone consumers, as household spending remains under pressure and has yet to provide a strong boost to economic activity.
Consumer Spending Was Not a Major Growth Driver
Peter Vanden Houte, chief economist at ING, said the retail sales figures reinforced expectations that consumer spending was not a major driver of economic growth during the second quarter.
He expects household spending to improve gradually in the coming period, but ruled out the possibility of a sharp surge in consumer demand in the near term.
The outlook suggests that the recovery in household consumption across the eurozone could remain gradual, even as improving economic conditions are expected to support domestic demand over time.
Food and Non-Food Sales Decline
The decline affected several major retail categories in June.
Sales of food, beverages and tobacco fell by 0.5%, while non-food product sales declined by 0.4%.
By contrast, sales of automotive fuel at specialized stores increased by 1.5% during the month.
The latest figures point to continued weakness in consumer demand across the eurozone, with household spending still below the level needed to become a strong engine of economic growth in the near term.
