Page last updated at 15:18 GMT, Wednesday, 3 February 2010

Eurozone retail sales disappoint

Christmas tree in department store
Stores across Europe felt the impact of disappointing sales at Christmas

Eurozone retail sales were unchanged in December from the month before as fragile consumer confidence underlined Europe's weak economic recovery.

The figure, for the 16 countries using the euro, surprised analysts, who had forecast a 0.4% rise in sales.

Eurostat, the European Union's statistics office, said that year-on-year, sales fell 1.6% in the eurozone.

December's sales for the wider EU fell 1% on the year. The month is usually the busiest of the year for retailers.

Among the 27-nation EU, the strongest month-on-month sales gain was recorded in Austria, up 1.64%, while the worst performance was in Romania, where sales were down 5.7%.

Martin van Vliet, an analyst at ING bank, said the numbers were "a setback to hopes that the pick-up in consumer confidence would start to feed through into higher spending".

"The breeze of recovery is not yet felt in the retail sector. Many consumers are still concerned about the possibility of losing their job and may be getting concerned about the income implications of future fiscal tightening," Mr Vliet said.

Unemployment

Economists say people are likely to keep spending tight because of growing unemployment, which rose to 10% in the eurozone in December, the highest rate since August 1998.

"Looking ahead, there are some encouraging signs for consumers: consumer confidence has risen, savings are high and inflation remains low," said Jennifer McKeown from Capital Economics.

"But with unemployment still rising, a strong consumer recovery might be too much to hope for," she added.

Eurostat said eurozone sales of food, drinks and tobacco increased 0.3% month-on-month in December, while non-food products fell 0.2%.

Gloomy figures for the Baltic republics highlighted the depth of their economic problems. In Estonia, Latvia and Lithuania, sales fell 16.4%, 30.2% and 27.2% respectively on a year-on-year basis.



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