IDEX Online Research: Euro Zone Retail Sales Decline in March

With consumer confidence in the Euro Zone unsettled, it is no surprise that retail sales are weak. On a month-to-month basis, seasonally adjusted retail sales in Europe fell by 0.8 percent in March 2006 versus February 2006. This was far below consensus estimates of +0.1 percent gain.

Compared to March 2005, retail trade in the Euro Zone declined by 0.2 percent in March 2006. Euro Zone retail sales are summarized by broad categories; thus, jewelry sales trends are not available. However, jewelry demand tends to reflect broader market trends. Based on our surveys, we believe jewelry demand in the Euro Zone is weak.

The following table summarizes retail sales trends among key Euro Zone product categories and countries.

Outlook: Consumer Demand Could Be Volatile

Consumer spending is expected to remain volatile for the foreseeable future, especially among the large mature Western European economies such as France and Germany. Further, this weakening performance does not bode well for economic growth in the Euro Zone for the longer term. Although there are signs that the Euro Zone economy is picking up from last year’s dismal performance, its growth is due to stronger exports and increased investment activity. Private consumption remains a laggard. The only good news is that unemployment continues to decline: it stood at 8.1 percent in March, down from last year’s 8.8 percent.