Eurozone saw retail sales take a drop

The European Central Bank is hoping for a gradual improvement later this year in the health of the 17-member single currency area, which is likely to be driven mainly by exports and low interest rates.

France bucked the trend by registering an increase in retail trade, but for the bloc as a whole volumes fell 0.5 per cent on the month, in line with expectations. That followed a revised 1.1 per cent rise in May, the EU’s statistics office Eurostat said.

The eurozone is in its longest recession since the creation of the euro in 1999, which has led to record high jobless rates and left households with less cash to spend.

Retail sales dropped by 0.9 per cent on the year, against expectations of a 1.2 per cent decline by economists polled by Reuters, following a revised 0.3 per cent increase in May.

“The negative retail sales growth figure in June is probably just a correction after the strong increase in May and not the start of a renewed downward trend,” said Peter Vanden Houte, chief euro zone economist at ING.

Shoppers in the eurozone spent more on automotive fuel in June, but it was not enough to offset a 0.6 per cent drop in spending on food, drink and tobacco and a 0.2 per cent decrease in purchases of other items.

Retail sales in the bloc’s largest economy, Germany, fell 1.5 per cent.