Eurozone retail sales fell in July for the first time in three months, indicating that the recent rebound in consumer spending in the region has run out of steam.
There were also signs of a widening north-south divide in the pace of economic recovery, with German, French and Dutch retail sales remaining above last year’s levels, while the Spanish, Portuguese and Greek figures stayed in negative territory.
This divergence was confirmed by IHS Markit’s final composite purchasing managers’ index for August, which showed Germany and France remained above the key 50 point level that separates business expansion from contraction, while Spain and Italy dropped below it.
After being hit by the lockdowns imposed to contain coronavirus, retail sales bounced back strongly once those restrictions were lifted in May.
But that rebound seems to have lost momentum after Eurostat said on Thursday that eurozone retail sales fell 1.3 per cent in July from the previous month.
The figures undershot the consensus expectations of economists for eurozone retail sales to continue their positive momentum with monthly growth of 1.5 per cent, according to a poll by Reuters. Compared with the same period last year, eurozone retail sales were still up 0.4 per cent.
Economists at Morgan Stanley said the…