Eu­ro­zone re­tail sales slump in Oc­to­ber

House­holds across re­gion re­main gloomy about econ­omy.

Austin American-Statesman - - BUSINESS - By David Mchugh Zone

LON­DON — Re­tail sales across the 17 Euro­pean Union coun­tries that use the euro slumped far more than an­tic­i­pated in Oc­to­ber, largely due to a huge drop in Ger­many, in a devel­op­ment that will put more pres­sure on the Euro­pean Cen­tral Bank to cut bor­row­ing rates soon.

Euro­stat, the EU’s statis­tics of­fice, said Wed­nes­day that eu­ro­zone re­tail sales fell 1.2 per­cent in Oc­to­ber from the pre­vi­ous month, dou­ble Septem­ber’s de­cline and sub­stan­tially more than the 0.2 per­cent drop ex­pected in the mar­kets.

The fig­ures pro­vide fur­ther ev­i­dence that house­holds across the eu­ro­zone re­main gloomy over the econ­omy and are re­luc­tant to spend more than they have to — non-food sales were par­tic­u­larly weak dur­ing Oc­to­ber. The eu­ro­zone is back in re­ces­sion, of­fi­cially de­fined as two straight quar­ters of fall­ing out­put, and un­em­ploy­ment is up at a record high of 11.7 per­cent with 18.7 mil­lion peo­ple out of work.

“The prospects for con­sumer spend­ing in the eu­ro­zone look trou­bling in the near term at least given very low con­sumer con­fi­dence, high and ris­ing un­em­ploy­ment, gen­er­ally muted wage growth and tight­en­ing fis­cal pol­icy in many coun­tries,” said Howard Archer, chief Euro­pean econ­o­mist at IHS Global In­sight.

While five of the coun­tries at the epi­cen­ter of Europe’s debt cri­sis — Greece, Cyprus, Spain, Por­tu­gal and Italy — are in re­ces­sion, other economies, such as pow­er­house Ger­many, are also now see­ing de­mand wane. Ger­man re­tail sales fell a stag­ger­ing monthly 2.8 per­cent, ac­cord­ing to Euro­stat.

Wed­nes­day’s fig­ures come a day be­fore the ECB meets to de­cide on whether to cut its main in­ter­est rate from the record low of 0.75 per­cent. Most econ­o­mists think the ECB will wait be­fore back­ing an­other cut, though the dire eco­nomic in­di­ca­tors re­cently have cre­ated some un­cer­tainty over its de­ci­sion. The euro fell on the lat­est fig­ures, trad­ing 0.2 per­cent lower on the day at $1.3075.

“The ECB is highly un­likely

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