Euro zone retail sales down 4% on year

| April 6, 2009 | 0 Comments
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The European Union’s statistics office said today that retail sales in the euro zone declined 0.6% month-on-month in February, and fell by 4% on an annual basis.

Retail sales, which are an indication of household demand, have been under pressure in the euro zone amid rising unemployment.

Unemployment in the euro zone rose to its highest level in almost three years to 13.47 million. The unemployment rate now stands at 8.5%.

Furthermore, the euro zone which now includes 16 nations, entered recession late last year after negative growth in the second and third quarters of the year.

Jennifer McKeown of Capital Economics said: “February’s fall in euro zone retail sales confirms that spending is not benefiting from sharp falls in inflation.”

“Given the rapid deterioration in labour market conditions, consumer spending will probably remain very weak in the near term at least, despite the relatively healthy state of household finances,” McKeown added.

In a bid to drag the area out of recession, the European Central Bank (ECB) cut interest rates to a record low of 1.25% last week.

Economists believe the ECB may introduce quantitative easing (also known as printing money) - a process whereby funds are injected into the financial system to ease pressure on banks by giving them extra capital.

The process has already been introduced by both the Bank of England and the US Federal Reserve, as they endeavour to stave off a prolonged recession.

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