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Economy in Brief

Italy's Retail Sector Hits the Skids
by Robert Brusca July 28, 2008

Italy’s retail sector is in a bad way. Consumer sentiment ad retail spending usually mark one another pretty well. Right now both series are telling a dismal story about the Italian consumer. The recent drop-of in spending is severe, with most of the drop coming in March and with no recovery (small real declines) in April and May.

In the quarter-to-date Italy’s real retail spending is dropping at a 4.1% annual rate. This is in keeping with other signs from the Euro Area that weakness has suddenly intensified. Even so the Germany ministry is today saying that they are not going to change their GDP outlook. There is a thin line that separates stoicism from denial. The Euro Area seems to be sinking deeper into an undesired economic funk. Meanwhile the ECB still sees inflation as public enemy number-one. Only in the EMU’s UK do the monetary authorities seem to have a grip on the true dual risk of their situation. Still they have not magic policy plan but are marking time to see which risk blows out of proportion and will need attention first.

Italy Retail Sales Growth
  mo/mo % At annual rates
Nominal May-08 Apr-08 Mar-08 3-Mo 6-Mo 12-Mo Yr Ago Q-2-Date
Retail Trade 0.2% 0.1% -0.6% -1.5% 0.0% 0.1% 0.6% -0.7%
Food Beverage & Tobacco 0.3% 0.1% -0.5% -0.7% 1.0% 1.1% 1.0% 0.2%
Clothing & Furniture 4.8% -4.1% -2.8% -9.1% -0.2% -0.2% 0.1% -14.5%
Total Real Retail -0.2% -0.1% -1.1% -5.4% -3.9% -3.4% -1.0% -4.1%
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