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Economy in Brief

EMU Retail Sales Sink…Again 
by Robert Brusca February 5, 2008

EMU retail sales are doing badly. German sales look worse than they are in the yr/yr graph due to the comparison with the December base in 2006 just ahead of the introduction of the VAT hike in 2007. That pushed activity into Dec of 2006 and robbed it from early 2007. Still on shorter horizons Euro retail sales are not doing well as the growth rate in the table reminds us. Moreover German sales are doing really poorly even without suing a year/year comparison.

For the quarter-to-date EMU retail sales volumes are dropping at a 4.3% annual rate. Food is off at a 3.1% pace, and no food purchases are falling at a 4.5% pace. Germany leads this quarter–to-quarter weakness with a sales volume drop for nonfoods of 10.5%. That compares to a rise at a 2.6% pace in France and a rise in the UK (an EU, not EMU, country) of 3.1%.

What is worst is that the progressive growth rates (12-Mo to 6-Mo to 3-Mo) show that a slowing is underway in the Euro Area as well as in Germany, in Italy, in the UK and partly for France.

While the raw results for December and the fourth quarter are disquieting, the ongoing trend decline in retail sales volumes is even more disturbing. We cannot yet tell if the manufacturing sector will remain strong enough to hold growth aloft or if this weakness in the consumer sector is enough to drag the EMU economics lower.

It is hard to tell how much special factors like the strong euro or the weak finical sector or whatever drove the January services PMI lower might be responsible. What is clear is that there is more weakness in train than we had previously thought and it is showing up in various places at slightly different times.

Ezone (13) Retail Sales Volume
  Dec-07 Nov-07 Oct-07 3-Mo 6-MO 12-Mo
Euro Area (13) Total -0.1% -0.7% -0.6% -5.4% -1.8% -1.5%
Food 0.0% -1.0% -0.4% -5.3% -1.6% -1.6%
Non food -0.1% -0.4% -0.8% -5.3% -2.0% -1.4%
Textiles #N/A -0.5% -3.1% -6.3% 3.9% -0.2%
Household goods #N/A -0.7% -0.5% -9.9% -1.2% -2.4%
Books news, etc #N/A -0.1% 0.2% -1.6% 2.8% 0.9%
Pharmaceuticals #N/A 0.2% 0.3% 4.2% 3.7% 3.7%
Other Nonspecial goods #N/A -0.6% 0.1% 0.0% 1.0% -1.1%
Mail Order #N/A -1.1% -1.1% -8.2% -4.1% -2.3%
Non-food Country detail: Volume
Germany 0.7% -1.0% -2.4% -10.2% -4.7% -6.3%
France 0.7% -0.2% 0.4% 2.6% 4.0% 3.8%
Italy (Total, Value) #N/A -1.0% 0.6% -4.0% -2.5% -2.9%
UK(EU) -0.1% 0.4% 0.1% 1.5% 3.4% 4.0%
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
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