Retail sales in the euro zone unexpectedly fell in May from April and grew little in annual terms, Eurostat said, pointing to continued fragility in consumer demand despite optimism about an economic recovery.
The European Union's statistics office said today that retail sales in the 12 countries using the euro increased 0.8 per cent from May 2005 but fell 0.6 per cent month-on-month, mainly dragged down by declines in Germany.
Eurostat also revised downward the April figures to growth of 2.4 per cent year-on-year and 1.0 per cent in monthly terms from prior readings of 2.8 per cent and 1.4 per cent respectively.
"It's obviously disappointing, along with the revisions, suggesting by and large that it is still something hardly firing on all cylinders," said Steve Barrow, chief currency strategist at Bear Stearns Bank.
Economists had expected May sales to rise 0.1 per cent on the month and 1.8 per cent from a year earlier. Consumer demand has long been considered one of the weak points of the euro zone economy as shoppers worry about job security and the region's still relatively sluggish growth.
The sales figures, which followed a string of upbeat economic data for the euro zone, may indicate that its recovery is still mostly business- or export-driven.
The figures were overshadowed by the RBS/NTC Eurozone Services report, which showed growth in the euro zone services economy hit a six-year high in June and may be nearing a peak amid inflation pressures.
The data came a day before the European Central Bank meets, with analysts expecting no immediate change in interest rates. But ECB President Jean-Claude Trichet is expected to signal whether the bank plans to accelerate its monetary tightening in early August by raising rates from the current 2.75 per cent.
Eurostat said a 2 per cent year-on-year increase in sales of non-food products helped push up the overall figure for May. Trade in food, drinks and tobacco fell by 0.6 per cent.
In monthly terms, food, drinks and tobacco fell 0.8 per cent and non-food products by 0.4 per cent. In Germany, the euro zone's biggest economy, retail sales decreased by 2.2 per cent in May from the previous month for an annual fall of 2.0 per cent.
In France, where consumers have been traditionally more willing to open their wallets, sales grew by 1.4 per cent year-on-year and 0.1 per cent month-on-month. In the full EU of 25 countries, retail sales fell 0.1 per cent month-on-month, but rose 2.2 per cent compared with May last year, propped up by strong figures in Britain and Sweden.