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A baker carries a tower of 'Roscones de Reyes' (Kings' cakes) across the street after baking at the Antigua Pasteleria del Pozo ahead of the Three Kings Day on January 3, 2017 in Madrid, Spain.
Retail sales in the eurozone rose sharply in June, an indication that household spending has continued to support growth as exports cool.
Euro area #RetailTrade +1.1% in June over May, +2.6% over June 2018 https://t.co/J5fEyc2zor pic.twitter.com/HSqj6dQJUn
— EU_Eurostat (@EU_Eurostat) August 2, 2019
The eurozone economy slowed in the second quarter, reflecting a lengthening period of weakness in the manufacturing sector as overseas demand has eased amid uncertainty about future trade rules, which centers on the dispute between the U.S. and China and the U.K.’s plans to leave the European Union.
However, the chill in manufacturing has yet to spread to the jobs market, with the unemployment rate hitting an 11-year low in June. With more people in work and wages rising, households have more money to spend and chose to refresh their summer wardrobes in June, pushing clothing and footwear sales up by 3.5% from May.
Overall, retail sales increased by 1.1% from the previous month, the largest rise since November 2017, when the eurozone economy was enjoying its strongest growth in a decade. Compared to June 2018, sales were up 2.6%. It was a strong end to an otherwise weak quarter, with the European Union’s statistics agency now recording a 0.6% decline in sales during May, having previously estimated the fall at 0.3%.
The pickup in sales will come as a minor relief to the European Central Bank, which worries that the eurozone’s faltering factories will drag down other parts of the economy over the coming months. The central bank last week announced preparations for a cut in its key interest rate and other stimulus measures that could be delivered as soon as September.
Other figures released by Eurostat Friday offered a reminder of why the ECB is considering such a move, with the prices of goods leaving the currency area’s factory gates falling by 0.6% in June from May. Compared to a year earlier, producer prices were up just 0.7%, the smallest annual rise since November 2016.
The central bank has struggled to reach its inflation target of just under 2% over recent years, and its economists don’t expect it to do so this year or the next.
