Eurozone retail sales declined notably in June, signaling that the recovery in the currency bloc is unlikely to gain much momentum in the third quarter.
Retail sales fell by a seasonally-adjusted 0.6 per cent month-on-month in June, in contrast to a marginal increase of 0.1 per cent in May, as shown by figures released by Eurostat last week.
This was the first fall in three months. Economists had expected sales to fall by 0.2 per cent, offsetting May’s initially estimated growth of 0.2 per cent. In April, sales had risen 0.7 per cent.
Sales of food, drinks and tobacco decreased 0.8 per cent on a monthly basis in June, and that non-food products, except automotive fuel, dropped by 0.2 per cent.
Sales in Germany declined by 2.3 per cent from May, dampening hopes that low unemployment and rising wages in eurozone’s largest member would boost recovery in the rest of the bloc.
In the UK, the nine members on the Bank of England’s monetary policy committee last week voted eight to one to keep interest rates at their all-time low of 0.5 per cent.
Most economists had expected two or even three members to vote for a rate hike. But a collapsing stock market in China and continuing talks over Greece’s debts means that the outlook for global growth is muted.
The decision marks the 78th consecutive month of record-low interest rates in the UK. Few economists expect the bank to tighten policy before the United States Federal Reserve, which is expected to raise rates later this year. Separately, in its quarterly inflation report, the Bank of England said inflation expectations remain well anchored.
Finally, in the United States, payroll processor ADP released a report last week showing that the private sector job growth slowed more than expected in July. ADP said private sector employment climbed by 185,000 jobs in July following a downwardly revised increase of 229,000 jobs in June.
Economists had expected an increase of about 215,000 jobs compared to the addition of 237,000 jobs originally reported for the previous month.
This article was compiled by Bank of Valletta plc for general information purposes only.