While the euro area’s consumer spending has expanded consistently at a softer rate than GDP in the past couple of years, today’s retail sales figures imply that it might have surpassed overall economic output in the fourth quarter, noted Daiwa Capital Market Research in a report. Admittedly, retail sales ended the year with a whimper, falling in December by 1.6 percent sequentially. Stripping food and fuel, sales of ‘core’ items dropped 2.7 percent with sales of electrical goods and textiles similarly falling over 2 percent sequentially and online and mail-order sales falling sharply by 6.1 percent.
Nevertheless, the falls in sales of all major categories in December followed decent growth in November. After rising 0.8 percent sequentially in the two prior months, total retail sales rose 0.6 percent in the fourth quarter, considerably stronger than the rise of 0.2 percent in GDP. Furthermore, with the fall in the euro area in December principally because of the steep fall of over 4 percent in Germany, which appears likely to be downwardly revised in due course, euro area retail sales growth in the fourth quarter might well have been stronger than currently suggested, said Daiwa Capital Market Research.
In spite of the steep fall estimated at the end of 2018, German retail sales are still currently estimated to have grown 0.1 percent in the fourth quarter. In the meantime, in spite of the disruption of the Gilets Jaunes protest, French retail sales dropped 0.1 percent in December and rose 0.8 percent in the fourth quarter.
At 17:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 12.8603, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 115.728 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
