Eurozone: Consumers don’t Act on Lower Confidence - ING
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.”
(Market News Provided by FXstreet)
