Brussels, Belgium (4E) – Retail sales in the 18-nation euro zone grew at the fastest annual pace since early 2007, a sign that consumer spending may support economic recovery in the common currency bloc as unemployment steadily declines.
Retail sales climbed 0.4 percent in June from the prior month based on data from Eurostat, which also increased its estimate for May. The European Union’s statistics agency initially estimated sales to be unchanged in May, but now estimates they increased by 0.3 percent. Sales were up 2.4 percent in June from the year-earlier month, the biggest annual gain since March 2007.
With the jobless rate near record levels, wages rising slowly, and government austerity programs still in place, consumer spending has been a soft spot in the economy. Aside from supporting growth, an increase in consumer spending would allow businesses to raise their prices, resulting to higher inflation.
IHS Global Insight economist Howard Archer said retail sales were up 0.4 percent higher in the second quarter from the previous three months, and that the contribution of consumer spending to economic growth was “modest”.