European Retail Sales Drop as Predicted; Consumers Show Fear of Crisis
THE TAKEAWAY:European retail numbers drop > Retailers stand to take further losses > EURUSD unmoved with focus elsewhere
Eurozone data on retail sales for August (MoM), released today, showed a slight decrease in sales with the numbers matching the prediction of a 0.3% drop in sales. The data is bad news for European retailers as summertime sales have failed to recoup the relatively large retail drop of 1.2% this past May, climbing only 0.6% and 0.2% in June and July, respectively. On the annual front, sales dropped a full percentage point, more than the expected 0.7%, to record a new low against last August’s revised figure of -0.4% (previously -0.2%).
The diminished willingness to buy shown by European consumers comes amid (or as a result of) Eurozone frets about the stability of the European economy given a possible Greek loan default. European retailers stand to take further losses as governments step up austerity measures to contain the crisis. Germany, the largest European economy, showed the greatest consumer reluctance with a drop of 2.9 percent from July’s figure. French consumption was up slightly at 0.7%, with no European country topping the 1.5% mark. Monthly PMI Composite numbers from the Eurozone, also released today, showed a slight drop to 49.1 from last month’s 49.2 and the identical projected figure. A number below 50 indicates market contraction.
The market reaction to the consumer data appeared relatively subdued as focus remained on macro developments. The Euro continued its gradual drop against the Buck, after recording sharp gains yesterday to reverse most of Monday’s losses. For a full technical outlook.
Written by David Schutz, DailyFX research team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.