Eurozone October Retail Sales Rise In October

Retail sales in the 19 countries sharing the euro grew by 1.1 percent in October from September, breaking two months of declines, and by 2.4 percent from a year earlier, the European Union's statistics office Eurostat said on Monday.

There was a 0.2% increase in food sales for the month, while fuel sales decline, but the most notable feature was a strong increase in non-food sales of 2.3% on the month following a 1.2% decline previously.

Further, in October 2016 compared with October 2015 the calendar adjusted retail sales index increased by 2.4 percent in the euro area and by 3.5 percent in the EU28.

Sales of non-food products rose 2.3%, while sales of food, drinks and tobacco were 0.2% higher. Sales of automotive fuel fell 1%.

On a yearly basis, retail sales growth accelerated more-than-expected to 2.4 percent from revised 1 percent in September. Sales were forecast to climb 1.7 percent.

On a monthly basis, the increase of sales was sharpest in Slovenia, Luxembourg and Germany, while sales declined in Malta, Ireland, Slovakia and Spain. Year-on-year, the only decline was in Belgium.

Pantheon Macroeconomics said this was a solid headline, boosted by strong data in Germany. "We think the German data will be revised lower, but it won't change the story of a strong start to Q4 for the EZ consumer. Elsewhere, retail sales in Spain and France also lifted the euro area headline. Across sectors, a 2.3% month-to-month jump in non-food sales was the main driver of the October rise, offsetting a decline in spending on petrol. Food sales also rose modestly."

Overall Eurozone retail sales volumes have moved decisively above the levels seen in early 2008. Demand should also be underpinned in the short term by the combination of improved consumer confidence and falling unemployment.

There will, however, be underlying concerns that gains are being led by Germany and a wider contribution from countries such as France and Italy will be needed to boost wider confidence. There will also be some concerns that the Italian referendum no vote will trigger a renewed deterioration in consumer sentiment.

Howard Archer, chief European economist at IHS Markit, said the data boosted the prospects of consumer spending contributing to improved economic growth in the fourth quarter.

Both low inflation - of 0.6 percent in the euro zone in November - and an unemployment rate that has fallen below 10 percent should support such spending. Consumer sentiment rose to a 2016 high in November, the European Commission reported last week.

However, steadily rising inflation over the coming months and political uncertainty could limit the improvement through 2017, Archer said

Meanwhile, EUR/USD currency pair has formed a bullish candlestick at 1.06, down 0.08 percent.