Eurozone Retail Sales Plunge: Raise Questions about Growth Prospects

In some negative news for the Eurozone economies it was reported today that retail sales in the euro zone fell more than expected in June, underlining concerns over the economic outlook of the region and is being seen as a huge negative. According to a report released by Eurostat, it was stated that retail sales decreased by a seasonally adjusted 0.6 percent in June which was worse than what the analysts on the street had expected. Analysts on the street had expected retail sales to decline by 0.3 percent. It was also reported today that Retail sales for May was revised lower to 0.1 percent gain as compared to an earlier reading of 0.2 percent gain.

Retail sales are a closely watched indicator by analysts and economists as it provides an insight into the underlying strength of the economy. Retail sales play an important role to gauge consumer sentiment in the economy. It is imperative to state that consumer spending makes up for close to two thirds of the total GDP growth I ben the Eurozone economies. Analysts believe that the fall in retail sales is a huge cause for concern as many expected that the savings through the sharp decline in commodity prices would be able to push consumer spending higher.

The Euro turned lower on the back of the report and continued to trend lower during the trading session which is being seen as a huge negative. It is imperative to state that the euro has turned lower against the dollar on the back of expectations that the Federal Reserve might hike interest rates in September as against the European Central Bank’s position of continuing with its stimulus program to provide the necessary impetus to the Eurozone economy which is showing very little signs of revival in the growth trajectory.

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