Euro area retail sales disappoint in March, private consumption likely weakened in Q1

Euro area retail sales came in weak in the month of March. After the subdued German retail sales report released this week, the figures released today showed that the other major member states did not do much to counter that drag to spending on the high street that month.

March was another disappointing month for the euro area retail sector. In all, sales grew just 0.1 percent sequentially after falling 0.3 percent in January and rising 0.3 percent in February. Delving into details, sales of non-food products fell 0.5 percent for a second straight month, while sales of auto fuel dropped at a similar rate. So, it was due to food sales that the total growth managed to stay in the positive territory, noted Daiwa Capital Market Research.

The data released today left retail sales falling 0.2 percent three-month-on-three-month in March, the lowest quarterly rate in three years and considerably subdued compared to the third and fourth quarters, when they rose 0.4 percent.

This deceleration, which seems to be at odds with still very elevated consumer sentiment levels in recent months, indicating towards a further moderation in euro area household consumption growth in the first quarter from the already weaker rates of 0.3 percent sequentially in the third and fourth quarters, which would at least to some degree signify the step down in GDP growth at the beginning of the year. The first quarter private consumption is expected to have come in the weakest for at least four years, added Daiwa Capital Market Research.

At 16:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 8.99991, while the FxWirePro's Hourly Strength Index of US Dollar was slightly bullish at 66.7652. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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