Euro-Zone Retail Sales Show Modest Growth through June

Retail sales in the Euro-Zone increased 0.4% in June, reported this morning by Eurostat, to reach 104.25 (2000=100), a record high. The previous high was 104.07 in January. As seen in the first chart, these sales are fairly erratic from month to month, even adjusted for seasonal and working-day variations. Thus, despite the June rise and a strong performance in May, the net gain over the last year is just 0.9%.

Sales of food, beverages and tobacco grew 0.2% in June and non-food products, 0.3%. Over the past few years, sales of food and related products have tended to be firmer than other categories. In part this may be associated with a shift in food marketing. Sales of food at specialized food stores have plummeted, while so-called "non-specialized stores" have seen consistent growth in their food sales. "One-stop shopping" seems popular -- at least for foods. Among non-food sales, pharmaceutical and medical goods and shopping by mail order have increased more than total sales in recent years. Interestingly, while food purchases have been strong at "non-specialized stores", nonfood items have declined.

Among the various countries of the EU-12, strength has come from France, Finland, Ireland, Greece, Luxembourg, Portugal and Spain. Of these France and Luxembourg have flattened in recent months, but all are stronger than the group as a whole. The more sluggish performances have come in Germany, Austria, Belgium, Italy and the Netherlands; Austria and Belgium have recently seen some pick-up, however.

These sales do not include motor vehicle dealers and they are in volume terms, so gains are "real", not simply due to rising prices. While slow in an absolute sense -- up, as noted, less than 1% over the past year -- the gains are firmer than in the prior couple of years. We have had the preconception that the European economy is sluggish, but retail sales seem to suggest that activity there is at least holding its own, particularly in the consumer sector.