News

European retail sales declined in December

February 3, 2012

Unemployment at a 14-year high and government spending cuts have zapped consumer demand and caused European retail sales to take an unexpected nose dive in December, according to Bloomberg.

Sales dropped 0.4 percent in the month after a similar decrease in November, according to the European Union's statistics office in Luxembourg. Economists had forecasted a gain of 0.3 percent, the median of 16 estimates in a Bloomberg News survey showed. Sales dropped 1.6 percent from the previous year.

From the story:

European households may cut spending as governments step up austerity measures to contain the region's fiscal crisis just as companies start to eliminate jobs. Euro-region unemployment held at 10.4 percent in December, the highest in almost 14 years, suggesting the region's worsening debt crisis and cooling economic growth have prompted companies to cut jobs.

"The decline in euro-area December retail sales confirms our view that private consumption is likely to have fallen in the fourth quarter, contributing to a contraction in euro-area gross domestic product of 0.3 percent quarter on quarter," James Ashley, senior European economist at RBC Capital Markets in London, said by e-mail.

The euro was little changed after the data were released, trading at $1.3172 at 12:41 p.m. in Brussels, up 0.2 percent.

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