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Economy in Brief

German Retail Sales Make November Gains; Much of Europe Follows
by Robert Brusca  January 4, 2022

German retail sales gained 1.1% in November after a 0.9% rise in October. Car registrations rebounded 4.4% in the month but still fell short of making up for October's 13.2% one-month drop.

On trend retail sales have improved from a 0.2% gain over 12 months to a pace of growth above 5% over both six months and three months. Car registrations, however, continue to fall over sequential horizons where sales are deeply in double-digit negative rates of growth. Of course, in the case of car registrations there are issues of demand as well as chip supply.

In real terms, sales are up in each of the last two months. But the pace of sales slows over three months compared to six months although over six months sales rise at a 2% pace and reverse a 2.9% decline over 12 months. The inflation adjusted data seem to show some ongoing life for demand over and above the impact of inflation. That is good news.

The U.K., the next largest European economy but not an EMU or EU member, shows both real and nominal sales rising for two months in a row. U.K. real sales accelerated sharply over three months but only after decelerating and declining over six months. Still, the U.K. three-month pace at 9.1% is a strong gain for real sales and well above the 12-month pace of 4.6%.

EMU members Spain, Portugal and the Netherlands all show sales gains in November against a mixed performance in October. Over three-months all three countries show strong -well into double digit-gains in sales. All three show nominal gains of 4.3% to 9.8% over 12-months.

In Northern Europe, Denmark, Sweden, and Norway show November gains for two of the three countries and three-month gains across the board. Over 12 months Northern Europe is more uneven with sales in Norway lower by 5%, sales in Sweden up by 5.7% and sales in Denmark up by 0.5%, not even ahead of inflation's pace.

The quarter-to-date trends that assess growth for October and November relative to the Q3 base accounting for two-thirds of the data for Q4, show gains in place more or less across the board. The exception (of course) is German car registrations that fall at a 44% annual rate in Q4. Nominal German sales are up at a 5.7% pace with real sales up at a 3.8% pace. The U.K. logs nominal sales QTD up at a 15.7% pace as real sales rise at a strong 6.9% pace. Spain and Portugal also log strong QTD sales at a 25.6% pace in Portugal and a 13.1% pace in Spain. Sales in Sweden rise at a 6% pace. But the Netherlands, Denmark, and Norway show QTD sales up at an inflation-lagging pace of around 2% or less.

On balance, Germany is carrying a good head of steam and appears to continue to power through the inflation and the virus outbreaks to log solid sales gains. The U.K. is in that same club along with Spain, Portugal and Sweden. But elsewhere countries are having a harder time sustaining true retail gains in the face of inflation and with the virus back in play.

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