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Economy in Brief

EU Retail Trends: At Odds
by Robert Brusca September 5, 2007

Euro area sales trends point lower. Food as well as nonfood trends are on the decline. These trends are weighted significantly toward the trends for Germany where the recent deterioration is severe. The UK (an EU not EMU member) and France on the other hand still have relatively strong trends in force.

Detailed data lag by one month but they show weakness in household items, books and other spending. Pharmacy and textile spending has held up.

We can calculate the growth in the new quarter which is one month old by assessing the July growth rate of sales over the Q2 average and annualizing it appropriately. In Q3 total retail sales volumes in the Euro area are growing at a 1.2% pace; for nonfood items the pace is 2.2%.

We are past the point of being able to blame Germany’s VAT tax for the weakness. Year/year measures will still be impacted by that effect but three-month trends are free from it and they are weak. Germany has not been able to engage its consumer in the recovery. So far that has not been a problem since having an industry-led recovery is normal for Germany. But now, just when the consumer is expected to show up, the financial turmoil could keep the wary Germany consumer away. Italy already is weakened. France is ripe for a slowdown and, after some real post election euphoria, Europe faces question marks over the future of consumer spending.

 Euro area (13) Retail Sales Volume
  Jul-07 Jun-07 May-07 3-Mo 6-Mo 12-Mo
Zone-13 Total 0.1% 0.6% -0.8% -0.5% 1.6% 0.7%
Food 0.2% -0.1% -0.8% -2.7% 0.2% -1.2%
Non-food -0.1% 1.0% -0.8% 0.8% 2.7% 2.1%
Textiles #N/A 2.8% -3.5% 2.8% 2.6% 4.0%
Household Goods #N/A 1.4% -0.4% 0.1% -2.2% 3.5%
Books news #N/A 1.3% -0.9% 0.8% 1.5% 2.7%
Pharmaceuticals #N/A 0.1% 0.5% 2.9% 2.3% 3.0%
Other Non-special Goods #N/A 1.2% -0.8% -1.7% -1.2% 0.1%
Mail Order #N/A -0.2% 1.3% 7.3% -5.5% 0.1%
Non-Food Country Detail: Volume
Germany -0.6% 2.8% -4.3% -8.5% 6.9% 0.7%
France #N/A 1.1% 0.1% 5.4% 6.1% 6.1%
Italy (Total Value) #N/A 0.0% -0.2% -3.0% -1.8% -1.2%
UK (EU) 0.9% 0.9% 0.4% 9.1% 10.1% 8.0%
Shaded areas calculated on a one-month lag due to lagging data
The EA 13 countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia and Spain.
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