Eurozone retail sales increased for a third successive month in July, offering more signs that consumers are opening their wallets and boosting the chances of the economic recovery continuing.
Sales across the 16-nation currency bloc edged up 0.1 per cent from June and rose by a faster-than-expected 1.1 per cent year-on-year, the European Union statistical office Eurostat said on Friday.
Economists polled by Reuters had expected a 0.2 per cent monthly increase and a 0.6 per cent annual rise.
"The indications overall are that consumer spending has recently picked up modestly in the euro zone, helped by stabilizing labour markets and improved confidence," said Howard Archer, chief European economist at IHS Global Insight.
While sales fell 0.3 per cent on the month in Germany, the euro zone's biggest economy which has been driving the euro zone's recovery, sales in France jumped 2.2 per cent on the month. Spanish sales tumbled 3.0 percent as the country continued to grapple with unemployment of just above 20 per cent.
Eurostat revised up the previous month's data. It said June retail sales rose 0.2 per cent month-on-month, rather than being flat as previously estimated, and rose 1.2 percent annually, much stronger than a previous reading of 0.4 percent.
The data was another sign that consumer morale may be strengthening, auguring well for the euro zone to continue to recover from its worst crisis in decades.
Eurostat said this week that consumer spending growth had improved to 0.5 per cent quarter-on-quarter in the April-June period from 0.2 per cent in the first quarter.
Analysts say euro zone growth, so far boosted mainly by exports for rebuilding of inventories, will not be sustainable without a solid rebound in private demand.
Although the euro zone economy grew by a healthy 1.0 per cent in the second quarter from the previous three months, it could still falter if external demand falls and due to the impact of austerity measures introduced by a number of governments to stave off a sovereign debt crisis.
Unemployment remains high near a 12-year high of 10 per cent.
"All in all, then, despite the growing evidence that euro zone consumers are gradually opening their purses again, a broad-based self-sustaining recovery is not yet assured," said Martin Van Vliet, economist at ING.
Eurostat said food, drinks and tobacco sales increased 0.3 per cent month-on-month in the euro zone in July while sales of non-food products fell 0.1 percent. Year-on-year, sales in those categories rose 1.4 and 1.8 percent respectively.
In the 27-nation European Union retail sales increased by 0.1 per cent on the month and 1.0 per cent annually.
City A.M. Reporter