Flat Retail Sales Confirm Stagnant GDP

Retail trade is one of the better indicators of how an economy is doing. It is an immediate “gauge” of both confidence and private finances of consumers. Therefore, given the overall stagnant nature of the European economy, the latest report on retail trade from Eurostat has some valuable information in it:

The 1.3% decrease in the volume of retail trade in the euro area in September 2014, compared with August 2014, is due to falls of 2.2% for the non-food sector and 0.1% for “Food, drinks and tobacco”, while automotive fuel rose by 0.9%. In the EU28, the 1.2% decrease in retail trade is due to a fall of 2.1% for the non-food sector, while “Food, drinks and tobacco” remained stable and automotive fuel increased by 0.4%. The highest increases in total retail trade were registered in Malta (+1.0%), Luxembourg (+0.9%), Hungary and Slovakia (both +0.7%), and the largest decreases in Germany (-3.2%), Portugal (-2.5%) and Poland (-2.4%).

Month-to-month changes are not that important. The one detail here to note, though, is the big contraction in Germany. It is a small but noteworthy sign that the German economy, as this blog has reported before, is leaving a period of exports-driven growth and returning to the new European normal, namely stagnation.

The Eurostat memo also reported annual data:

The 0.6% increase in the volume of retail trade in the euro area in September 2014, compared with September 2013, is due to rises of 0.9% for “Food, drinks and tobacco”, of 0.6% for the non-food sector and of 0.5% for automotive fuel. In the EU28, the 1.0% increase in retail trade is due to rises of 1.5% for the non-food sector and 1.2% for “Food, drinks and tobacco”, while automotive fuel fell by 0.2%. The highest increases in total retail trade were observed in Luxembourg (+12.3%), Estonia (+9.1%) and Bulgaria (+5.6%), while decreases were recorded in Finland (-3.2%), Poland (-1.8%), Denmark and Germany (both -0.8%).

Again Germany shows up on the negative side, reinforcing the impression that the largest economy in Europe is no longer its locomotive.

On the upside, there is one interesting detail worth noting. Greece has experienced three months in a row of annual, inflation-adjusted retail sales increases: four percent in June, 4.6 percent in July and 7.4 percent in August.

Is this an early sign that the Greek depression is coming to an end? Let’s hope so.

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